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# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

(Mark	One)

# ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

# For	the	fiscal	year	ended	December	31,	2007

# o TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF 1934

# Commission	file	number:	1-7933

# Aon	Corporation

(Exact	name	of	registrant	as	specified	in	its	charter)

DELAWARE

(State	or	Other	Jurisdiction	of Incorporation	or	Organization)

200	E.	RANDOLPH	STREET

CHICAGO,	ILLINOIS

(Address	of	Principal	Executive	Offices)

(Registrant's	telephone	number,	including	area	code)

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	Each	Class

Common	Stock,	$1	par	value

(I.R.S.	Employer Identification	No.)

(Zip	Code)

Name	of	Each	Exchange on	Which	Registered

New	York	Stock	Exchange

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	NONE

									Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.	YES	ý				NO	o

									Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Exchange	Act.	YES	o				NO	ý

									Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past 90	days.	YES	ý				NO	o

									Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.	ý

									Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the definitions	of	"large	accelerated	filer,"	"accelerated	filer,"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer	ý

Accelerated	filer	o Non-accelerated	filer	o Smaller	reporting	company	o (Do	not	check	if	a	smaller	reporting	company)

									Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Exchange	Act).	YES	o				NO	ý

									As	of	June	29,	2007,	the	aggregate	market	value	of	the	registrant's	common	stock	held	by	non-affiliates	of	the	registrant	was	$11,534,593,022	based	on	the	closing sales	price	as	reported	on	the	New	York	Stock	Exchange—Composite	Transaction	Listing.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

									Portions	of	Aon	Corporation's	Proxy	Statement	for	the	2008	Annual	Meeting	of	Stockholders	to	be	held	on	May	16,	2008	are	incorporated	by	reference	in	this Form	10-K	in	response	to	Part	III,	Items	10,	11,	12,	13	and	14.

# PART	I

# OVERVIEW

								Upon	the	completion	of	Aon	Corporation's	("Aon,"	"we,"	"us,"	or	"our")	planned	sales	of	its	Combined	Insurance	Company	of	America	("CICA")	and	Sterling	Life Insurance	Company	("Sterling")	subsidiaries,	Aon	will	serve	its	clients	through	two	operating	segments	via	its	various	subsidiaries	worldwide:

•Risk	and	Insurance	Brokerage	Services	acts	as	an	advisor	and	insurance	broker,	helping	clients	manage	their	risks,	as	well	as	negotiating	and	placing insurance	risk	with	insurance	carriers	through	our	global	distribution	network.

•Consulting	provides	advice	and	services	to	clients	for	employee	benefits,	compensation,	management	consulting,	communications,	strategic	human resource	consulting,	financial	advisory	and	litigation	consulting,	and	human	resource	outsourcing.

								In	December	2007,	we	announced	that	we	signed	separate	definitive	agreements	to	sell	our	CICA	and	Sterling	subsidiaries.	These	two	subsidiaries	represented	the majority	of	the	operations	of	our	former	Insurance	Underwriting	segment,	and	their	results	have	been	reclassified	to	discontinued	operations	for	all	periods	presented.

								In	2006,	we	ceased	writing	property	and	casualty	insurance	and	placed	our	remaining	property	and	casualty	operations	in	runoff.	The	results	of	these	operations have	been	reclassified	to	unallocated	income	and	expense	for	all	periods	presented.

								Our	clients	include	corporations	and	businesses,	insurance	companies,	professional	organizations,	independent	agents	and	brokers,	governments,	and	other	entities. We	also	serve	individuals	through	personal	lines,	affinity	groups,	and	certain	specialty	operations.

								Incorporated	in	1979,	Aon	is	the	parent	corporation	of	both	long-established	and	more	recently	acquired	companies.	Aon	has	approximately	42,500	employees	and does	business	in	more	than	120	countries	and	sovereignties.

# SEGMENT	OPERATIONS

# Risk	and	Insurance	Brokerage	Services

								The	Risk	and	Insurance	Brokerage	Services	segment	generated	approximately	82%	of	our	total	operating	segment	revenues	in	2007.	This	is	the	largest	of	our operating	segments,	with	approximately	28,500	employees	worldwide.	Risk	and	Insurance	Brokerage	and	related	services	are	provided	by	certain	indirect	subsidiaries, including	Aon	Risk	Services	Companies,	Inc.,	Aon	Holdings	International	bv,	Aon	Re	Global,	Inc.,	Aon	Limited	(U.K.),	and	Cananwill,	Inc.

# Subsegments

								We	measure	our	revenues	in	this	segment	using	the	following	subsegments:

								Risk	Management	and	Insurance	Brokerage	encompasses	our	retail	brokerage	services,	affinity	products,	managing	general	underwriting,	placement,	and	captive management	services	and	premium	finance	services	for	small,	mid-sized,	and	large	companies,	including	Fortune	500	corporations.	The	Americas'	operations	provide products	and	services	to	clients	in	North,	Central	and	South	America,	the	Caribbean,	and	Bermuda.	Our	United	Kingdom;	Europe,	Middle	East	&	Africa;	and	Asia Pacific	operations	offer	similar	products	and	services	to	clients	throughout	the	rest	of	the	world.	Risk

management	services	also	include	risk	identification	and	assessment,	safety	engineering,	claims	and	loss	cost	management,	and	program	administration.

								Retail	brokerage	operates	through	industry-focused	practice	areas	to	deliver	specialized	advice	and	services	in	such	industries	as	entertainment,	media,	financial institutions,	marine,	aviation,	construction,	healthcare	and	energy,	among	others.

								As	a	retail	broker,	we	generally	serve	as	an	advisor	to	corporate	clients	and	can	arrange	a	wide	spectrum	of	risk	management	solutions,	including	property,	general liability,	professional	and	directors'	and	officers'	liability,	workers'	compensation,	and	other	exposures.	We	also	provide	affinity	products	for	professional	liability,	life, disability	income	and	personal	lines	for	individuals,	associations,	and	businesses.

								Our	managing	general	underwriting	("MGUs")	units	partner	with	leading	insurers	to	produce	a	diverse	line	of	specialty	products	including	professional	liability, errors	and	omissions,	workers	compensation,	fine	arts	and	marine.	The	MGUs	also	serve	the	special	needs	of	particular	customer	segments	such	as	banks	(depository and	mortgage),	sports,	leisure	and	entertainment,	and	contractors.

								We	are	also	a	major	provider	in	managing	captive	insurance	companies	that	enable	our	clients	to	manage	risks	that	would	be	cost	prohibitive	or	unavailable	in traditional	insurance	markets.

								Reinsurance	Brokerage	and	Related	Services	offers	sophisticated	advisory	services	in	program	design	and	claim	recoveries	that	enhance	the	risk/return characteristics	of	insurance	policy	portfolios,	improve	capital	utilization,	and	evaluate	and	mitigate	catastrophic	loss	exposures	worldwide.	An	insurance	or	reinsurance company	may	seek	reinsurance	or	other	risk-transfer	solutions	on	all	or	a	portion	of	the	risks	it	insures.	Our	reinsurance	brokerage	services	use	dynamic	financial analysis	and	capital	market	alternatives,	such	as	transferring	catastrophe	risk	through	securitization.

								Aon	Re	Global,	Inc.,	its	subsidiaries,	and	its	affiliates	provide	reinsurance	services	to	insurance	and	reinsurance	companies	and	other	risk	assumption	entities	by acting	as	brokers	or	intermediaries	on	all	classes	of	reinsurance.	While	our	reinsurance	activities	are	principally	focused	on	property	and	casualty	lines,	these	activities also	include	specialty	lines	such	as	professional	liability,	medical	malpractice,	accident,	life	and	health.	Services	include	advice,	placement	of	reinsurance	and	alternative risk	transfer	arrangements	with	capital	markets,	and	related	services	such	as	actuarial,	financial	and	regulatory	consulting,	portfolio	analysis,	catastrophe	modeling,	and claims	services.

# Compensation	for	Services

								We	generate	revenues	through	commissions,	fees	from	clients,	and	compensation	from	insurance	and	reinsurance	companies	for	services	we	provide	to	them.

								Commission	rates	and	fees	vary	depending	upon	several	factors,	which	may	include	the	amount	of	premium,	the	type	of	insurance	or	reinsurance	coverage provided,	the	particular	services	provided	to	an	insurer	or	reinsurer,	and	the	capacity	in	which	the	Aon	entity	acts.	We	also	receive	investment	income	on	funds	held	on behalf	of	clients	and	insurance	carriers.

# Competitive	Conditions

								We	believe	we	are	the	largest	insurance	broker	worldwide	based	on	pure	brokerage	operations.	The	risk	and	insurance	brokerage	services	business	is	highly competitive,	and	we	compete	with	two	other	global	insurance	brokers	in	addition	to	numerous	specialist,	regional	and	local	firms	in	almost	every	area	of	our	business; insurance	and	reinsurance	companies	that	market	and	service	their	insurance	products	without	the	assistance	of	brokers	or	agents;	and	with	other	businesses,	including commercial	and	investment	banks,	accounting	firms,	and	consultants	that	provide	risk-related	services	and	products.

# Consulting

								The	Consulting	segment	generated	approximately	18%	of	our	total	operating	segment	revenues	in	2007.	This	segment	has	approximately	6,300	employees worldwide	with	operations	in	the	U.S.,	Canada,	Europe,	the	Pacific	region,	and	South	Africa.	Based	on	total	revenues,	we	believe	we	are	the	third	largest	employee benefit	consultant	in	the	world,	and	the	second	largest	in	the	U.S.

								Through	our	Aon	Consulting	Worldwide,	Inc.	subsidiary	("Aon	Consulting"),	we	provide	a	broad	range	of	consulting	services	in	two	subsegments	(Consulting Services	and	Outsourcing)	that	operate	in	the	following	practice	areas:

# Consulting	Services:

								Employee	Benefits	advises	clients	about	structuring,	funding,	and	administering	employee	benefit	programs,	which	attract,	retain,	and	motivate	employees.	Benefits consulting	includes	health	and	welfare,	retirement,	executive	benefits,	absence	management,	compliance,	employee	commitment,	investment	advisory,	and	elective benefits	services.

								Compensation	focuses	on	designing	salary,	bonus,	commission,	stock	options	and	other	pay	structures,	with	special	expertise	in	the	financial	services	and technology	industries.

								Management	Consulting	assists	clients	in	process	improvement	and	design;	leadership,	organization	and	human	capital	development;	and	change	management.

								Communications	advises	clients	on	how	to	communicate	initiatives	that	support	their	corporate	vision.

								Strategic	Human	Resource	Consulting	advises	complex	global	organizations	on	talent,	change,	and	organization	effectiveness	issues,	including	assessment, selection	performance	management,	succession	planning,	organization	design,	and	related	people-management	programs.

								Financial	Advisory	and	Litigation	Consulting	provides	consulting	services	including	financial	statement	and	white	collar	investigations,	securities	litigation, financial	due	diligence,	financial	valuation	services,	and	other	related	specialties.

# Outsourcing:

								Human	Resource	Outsourcing	offers	employment	processing,	performance	improvement,	benefits	administration,	and	other	employment-related	services.

								Aon	Consulting	works	to	maximize	the	value	of	clients'	human	resources	spending,	increase	employee	productivity,	and	improve	employee	performance.	Our approach	addresses	a	trend	toward	more	diverse	workforces	(demographics,	nationalities,	cultures	and	work/lifestyle	preferences)	that	require	more	choices	and flexibility	among	employers	—	with	benefit	options	suited	to	individual	needs.

								Our	consulting	professionals	and	their	clients	also	identify	options	in	human	resource	outsourcing	and	process	improvement.	Prime	areas	where	companies	choose to	use	outsourcing	services	include	the	assessment	and	selection	of	job	candidates,	employment	processing,	training	and	development,	benefits	administration,	and	the individual	benefits	enrollment	process.

								Aon	Consulting	revenues	are	principally	derived	from	fees	paid	by	clients	for	advice	and	services.	In	addition,	insurance	companies	pay	us	commissions	for	placing individual	and	group	insurance

contracts,	primarily	life,	health	and	accident	coverages,	and	pay	us	fees	for	consulting	and	other	services	that	we	provide	to	them.

								Our	consulting	business	faces	strong	competition	from	other	worldwide	and	national	consulting	companies,	as	well	as	regional	and	local	firms.	Competitors	include independent	consulting	firms	and	consulting	organizations	affiliated	with	accounting,	information	systems,	technology,	and	financial	services	firms.	Some	of	our competitors	provide	administrative	or	consulting	services	as	an	adjunct	to	other	primary	services.

# Insurance	Underwriting

								Our	insurance	underwriting	operations,	with	approximately	6,700	employees	worldwide,	have	operations	in	the	U.S.,	Canada,	Europe,	and	Asia	Pacific.	In December	2007,	we	signed	separate	definitive	agreements	to	sell	our	CICA	and	Sterling	subsidiaries,	which	represented	the	majority	of	the	operations	of	our	former Insurance	Underwriting	segment.	The	remainder	of	our	insurance	underwriting	operations	consists	of	property	and	casualty	insurance,	which	we	have	ceased	writing	and have	placed	in	runoff.	See	"Key	Recent	Events"	in	Item	7,	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations,	for	further	details.

# Accident	&	Health	and	Life

								Our	CICA	subsidiaries	provide	accident,	health,	and	life	insurance.	CICA	is	a	leading	underwriter	and	distributor	of	specialty	individual	accident,	disability,	health, and	life	insurance	products	that	are	targeted	to	middle-income	consumers	in	the	U.S.,	Europe,	Canada,	and	Asia	Pacific.	CICA	also	provides	coverage	in	the	U.S.	senior market	through	its	Sterling	subsidiary.	Sterling	provides	coverage	in	the	Medicare	Advantage	market.	Distribution	is	to	individuals	through	an	exclusive	agency	sales force.

								A	worldwide	sales	force	of	approximately	7,000	exclusive	career	agents,	of	which	approximately	3,000	are	employees	and	4,000	are	international	career	agents who	are	considered	independent	contractors	and	are	not	our	employees,	service	clients	regularly	to	initiate	and	renew	coverage	and	to	sell	additional	coverage.	CICA offers	a	wide	range	of	accident	and	sickness	insurance	products,	including	short-term	disability,	critical	conditions	and	cancer	aid,	Medicare	products,	hospital confinement/recovery,	and	long-term	care	coverage.	Most	of	these	products	are	primarily	fixed-indemnity	obligations	and	are	not	subject	to	escalating	medical	cost inflation.

								CICA's	Worksite	Solutions	program	complements	existing	benefits	packages	offered	by	employers	with	no	additional	cost	to	a	company.	Individual	employees choose	among	insurance	product	options	and	pay	for	them	through	payroll	deductions.

								Accident	and	health	revenues	are	based	on	premiums	paid	by	policyholders	for	insurance	coverage	and	services.

								The	accident	and	health	insurance	industry	in	the	U.S.	is	highly	diverse,	with	more	than	1,500	accident	and	health	and	life	insurance	companies	competing	in various	industry	segments.	We	believe	that	competition	in	the	accident	&	health	and	life	business	is	based	on	service,	product	features,	price,	commission	structure, financial	strength,	claims-paying	ability	ratings,	and	name	recognition.

# Property	and	Casualty

								We	have	ceased	writing	property	and	casualty	insurance.	These	operations	are	now	comprised	entirely	of	runoff	activities	for	various	commercial	risks,	such	as:

# •professional	liability	errors	and	omissions,

•excess	liability,

•workers'	compensation,	and

•commercial	property	and	casualty	risk.

# Disposal	of	Operations

								Aon	hereby	incorporates	by	reference	Note	5,	"Disposal	of	Operations,"	of	the	Notes	to	Consolidated	Financial	Statements	in	Part	II,	Item	8	of	this	report.

# Licensing	and	Regulation

								Regulatory	authorities	in	the	states	or	countries	in	which	the	operating	subsidiaries	of	our	Risk	and	Insurance	Brokerage	Services	segment	conduct	business	may require	individual	or	company	licensing	to	act	as	brokers,	agents,	third	party	administrators,	managing	general	agents,	reinsurance	intermediaries,	or	adjusters.

								Under	the	laws	of	most	states	in	the	U.S.	and	most	foreign	countries,	regulatory	authorities	have	relatively	broad	discretion	with	respect	to	granting,	renewing	and revoking	brokers'	and	agents'	licenses	to	transact	business	in	the	state	or	country.	The	operating	terms	may	vary	according	to	the	licensing	requirements	of	the	particular state	or	country,	which	may	require,	among	other	things,	that	a	firm	operate	in	the	state	or	country	through	a	local	corporation.	In	a	few	states	and	countries,	licenses	are issued	only	to	individual	residents	or	locally	owned	business	entities.	In	such	cases,	our	subsidiaries	have	arrangements	with	residents	or	business	entities	licensed	to	act in	the	state	or	country.

								Our	subsidiaries	must	comply	with	laws	and	regulations	of	the	jurisdictions	in	which	they	do	business.	These	laws	and	regulations	are:

•enforced	by	the	states	in	the	U.S.,	by	the	Financial	Services	Authority	("FSA")	in	the	U.K.,	and	by	various	regulatory	agencies	in	other	countries	through the	granting	and	revoking	of	licenses	to	do	business,	licensing	of	agents,	monitoring	of	trade	practices,	policy	form	approval,	minimum	loss	ratio requirements,	limits	on	premium	and	commission	rates,	and	minimum	reserve	and	capital	requirements.	State	insurance	departments	monitor	compliance through	periodic	regulatory	reporting	procedures	and	periodic	examinations.

•designed	to	ensure	financial	solvency	of	insurance	companies	and	to	require	fair	and	adequate	service	and	treatment	for	policyholders.

								Our	insurance	underwriting	subsidiaries	submit	quarterly	and	annual	financial	reports	to	regulators	in	the	U.S.	using	statutory	accounting	principles,	which	differ from	U.S.	generally	accepted	accounting	principles	("GAAP").	Statutory	accounting	principles,	which	are	intended	to	protect	policyholders,	are	based,	in	general,	on	a liquidation	concept,	while	U.S.	GAAP	are	based	on	a	going-concern	concept.

								State	insurance	regulators	are	members	of	the	National	Association	of	Insurance	Commissioners	("NAIC").	The	NAIC	has	a	formula	for	analyzing	insurers	called risk-based	capital	("RBC").	RBC	establishes	"minimum"	capital	threshold	levels	that	vary	with	the	size	and	mix	of	a	company's	business.	This	formula	is	designed	to identify	companies	with	capital	levels	that	may	require	regulatory	attention.

								State	insurance	holding	company	laws	require	prior	notice	to,	and	approval	of,	the	domestic	state	insurance	department	of	intracorporate	transfers	of	assets	within the	holding	company	structure,

including	the	payment	of	dividends	by	insurance	company	subsidiaries.	In	addition,	premium	finance	loans	by	Cananwill,	our	indirect	wholly	owned	subsidiary,	are subject	to	one	or	more	truth-in-lending	and	credit	regulations,	insurance	premium	finance	acts,	retail	installment	sales	acts,	and	other	similar	consumer	protection legislation.	Failure	to	comply	with	such	laws	or	regulations	can	result	in	the	temporary	suspension	or	permanent	loss	of	the	right	to	engage	in	business	in	a	particular jurisdiction	as	well	as	other	penalties.

								Our	principal	U.K.	subsidiary,	Aon	Limited,	must	be,	and	is,	authorized	by	the	FSA.	FSA	oversight	was	introduced	following	the	European	Union	Insurance Mediation	Directive,	("the	Directive")	which:

•set	minimum	standards	for	those	involved	in	advising	on,	arranging,	administering,	or	introducing	contracts	of	insurance,	and

•includes	rules	governing	handling	funds	held	on	behalf	of	clients	that	affect	all	brokers	operating	in	the	London	market.

								This	regulation	has,	and	will	continue	to,	require	significant	operational	changes,	such	as	enhanced	disclosures,	particularly	in	connection	with	retail	(private	and non-commercial)	customers.	FSA	regulations	also	include	rules	regarding	the	handling	of	funds	held	on	behalf	of	clients	that	affect	all	brokers	operating	in	the	London market.	As	other	member	states	of	the	European	Union	("EU")	adopt	regulations	to	comply	with	the	Directive,	our	operations	in	the	EU	have	become	or	will	become subject	to	enhanced	regulatory	requirements.

# Clientele

								Our	clients	operate	in	many	businesses	and	industries	throughout	the	world.	No	one	client	accounted	for	more	than	10%	of	our	revenues	in	2007.	Additionally,	we place	insurance	with	many	insurance	carriers,	none	of	which	individually	accounted	for	more	than	10%	of	the	total	premiums	we	placed	on	behalf	of	our	clients	in	2007.

# Employees

								At	December	31,	2007,	we	employ	through	our	operating	subsidiaries	approximately	42,500	employees,	of	whom	approximately	39,500	are	salaried	and	hourly employees	and	the	remaining	3,000	are	career	agents	who	are	generally	compensated	wholly	or	primarily	by	commission.	In	addition,	there	are	approximately	4,000 international	career	agents	who	are	considered	independent	contractors	and	are	not	our	employees.	Of	the	total	number	of	employees,	approximately	17,200	work	in	the U.S.

# Information	Concerning	Forward-Looking	Statements

								This	report	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	successfully	close	the	sales	of	our	CICA	and	Sterling	businesses,	the	impact	of	current,	pending	and	future regulatory	and	legislative	actions	that	affect	our	ability	to	market	and	sell,	and	be	reimbursed	at	current	levels	for,	our	Sterling	subsidiary's	Medicare	Advantage	health plans,	changes	in	commercial	property	and	casualty	markets	and

commercial	premium	rates	that	could	impact	revenues,	the	impact	of	investigations	brought	by	U.S.	state	attorneys	general,	U.S.	state	insurance	regulators,	U.S.	federal prosecutors,	U.S.	federal	regulators,	and	regulatory	authorities	in	the	U.K.	and	other	countries,	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,	the	difference	in ultimate	paid	claims	in	our	underwriting	companies	from	actuarial	estimates	and	other	factors	disclosed	under	"Risk	Factors"	in	Item	1A,	below.

# Website	Access	to	Reports	and	Other	Information

								Our	annual	report	on	Form	10-K,	quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K	and	all	amendments	to	those	reports	are	made	available	free	of charge	through	our	website	(http://www.aon.com)	as	soon	as	practicable	after	such	material	is	electronically	filed	with	or	furnished	to	the	Securities	and	Exchange Commission	("SEC").	Also	posted	on	our	website	and	available	in	print	upon	request,	are	the	charters	for	our	Audit,	Compliance,	Organization	and	Compensation, Governance/Nominating	and	Investment	Committees,	our	Governance	Guidelines,	our	Code	of	Ethics	and	our	Code	of	Ethics	for	Senior	Financial	Officers.	Within	the time	period	required	by	the	SEC	and	the	New	York	Stock	Exchange,	we	will	post	on	our	website	any	amendment	to	or	waiver	of	the	Code	of	Ethics	for	Senior	Financial Officers,	as	well	as	any	amendment	to	the	Code	of	Ethics	or	waiver	thereto	applicable	to	any	executive	officer	or	director.	The	information	provided	on	our	website	is not	part	of	this	report	and	is	therefore	not	incorporated	herein	by	reference.

								The	following	are	risks	related	to	our	business	and	the	insurance	industry	that	could	adversely	affect	our	business,	financial	condition	and	results	of	operation.	The risk	factors	are:

Our	results	may	fluctuate	due	to	many	factors,	including	cyclical	or	permanent	changes	in	the	insurance	and	reinsurance	industries.

								Our	results	historically	have	been	subject	to	significant	fluctuations	arising	from	uncertainties	and	changes	in	the	insurance	industry.	Changes	in	premium	rates affect	not	only	the	potential	profitability	of	our	underwriting	businesses	but	also	generally	affect	the	commissions	and	fees	payable	to	our	brokerage	businesses.	In addition,	insurance	industry	developments	that	can	significantly	affect	our	financial	performance	include	factors	such	as:

•rising	levels	of	actual	costs	that	are	not	known	by	companies	at	the	time	they	price	their	products

•volatile	and	unpredictable	developments,	including	weather-related	and	other	natural	and	man-made	catastrophes,	including	acts	of	terrorism

•changes	in	levels	of	capacity	and	demand,	including	reinsurance	capacity

•changes	in	reserves	resulting	from	the	general	claims	and	legal	environments	as	different	types	of	claims	arise	and	judicial	interpretations	relating	to	the scope	of	insurers'	liabilities	develop

•changes	in	business	practices	and	business	compensation	models.

# Our	results	may	be	adversely	affected	by	changes	in	the	mode	of	compensation	in	the	insurance	industry.

								Since	the	Attorney	General	of	New	York	brought	charges	against	one	of	our	competitors	in	October	2004,	there	has	been	a	great	deal	of	uncertainty	concerning then-longstanding	methods	of	compensating	insurance	brokers.	Soon	after	the	Attorney	General	brought	those	charges,	Aon	and	certain	other	large	insurance	brokers announced	that	they	would	terminate	contingent	commission	arrangements	with	underwriters.	Most	insurance	brokers,	however,	currently	continue	to	enter	into	such arrangements,	and	regulators	have	not	taken	action	to	end	such	arrangements	throughout	the	industry.

# We	face	significant	competitive	pressures	in	each	of	our	businesses.

								We	believe	that	competition	in	our	lines	of	business	is	based	on	service,	product	features,	price,	commission	structure,	financial	strength,	claims-paying	ability ratings	and	name	recognition.	In	particular,	we	compete	with	a	large	number	of	national,	regional	and	local	insurance	companies	and	other	financial	services	providers and	brokers.

								We	encounter	strong	competition	for	both	clients	and	professional	talent	in	our	insurance	brokerage	and	risk	management	services	operations	from	other	insurance brokerage	firms	which	also	operate	on	a	nationwide	or	worldwide	basis,	from	a	large	number	of	regional	and	local	firms	throughout	the	world,	from	insurance	and reinsurance	companies	that	market	and	service	their	insurance	products	without	the	assistance	of	brokers	or	agents	and	from	other	businesses,	including	commercial	and investment	banks,	accounting	firms	and	consultants	that	provide	risk-related	services	and	products.	Our	consulting	operations	compete	with	independent	consulting	firms and	consulting	organizations	affiliated	with	accounting,	information	systems,	technology	and	financial	services	firms	around	the	world.

								In	addition,	the	increase	in	competition	due	to	new	legislative	or	industry	developments	could	adversely	affect	us.	These	developments	include:

•an	increase	in	capital-raising	by	insurance	underwriting	companies,	which	could	result	in	new	entrants	to	our	markets	and	an	influx	of	capital	into	the industry

•the	selling	of	insurance	by	insurance	companies	directly	to	insureds

•changes	in	our	business	compensation	model	as	a	result	of	regulatory	investigations

•the	establishment	of	programs	in	which	state-sponsored	entities	provide	property	insurance	in	catastrophe	prone	areas	or	other	alternative	markets	types of	coverage

•additional	regulations	promulgated	by	the	FSA	in	the	U.K.,	or	other	regulatory	bodies	in	jurisdictions	in	which	we	operate.

								New	competition	as	a	result	of	these	developments	could	cause	the	supply	of,	and	demand	for,	our	products	and	services	to	change,	which	could	adversely	affect our	results	of	operations	and	financial	condition.

# We	may	not	realize	all	of	the	expected	benefits	from	our	restructuring	plans.

								In	third	quarter	2007,	we	announced	a	global	restructuring	plan	intended	to	create	a	more	streamlined	organization	and	to	reduce	future	expense	growth	to	better serve	clients	("the	2007	Plan").	As	a	result,	we	have	adopted	restructuring	initiatives	that	are	expected	to	result	in	the	elimination	of	an	estimated	2,700	employee positions,	the	closing	or	consolidation	of	several	offices,	asset	impairments	and	other	expenses	necessary	to	implement	these	initiatives.	We	currently	expect	that	the 2007	Plan	will	result	in	cumulative	pretax	charges	of	$360	million.	We	anticipate	that	our	annualized	savings	from	the	2007	Plan	will	be	approximately	$240	million	by 2010.	We	cannot	assure	that	we	will	achieve	the	targeted	savings.	In	2005,	we	began	a	restructuring	initiative	to	reduce	our	fixed	cost	base	and	increase

efficiency	("the	2005	Plan").	The	2005	Plan	is	substantially	complete,	and	resulted	in	cumulative	pretax	charges	totaling	$366	million.	Restructuring	costs	included	the elimination	of	approximately	3,600	employee	positions,	the	closing	of	various	offices,	asset	impairments	and	other	expenses	necessary	to	implement	these	initiatives. We	anticipate	that	our	annualized	savings	from	the	2005	Plan	will	be	approximately	$270	million	by	2008.	Estimated	savings	from	the	2007	and	2005	Plans	do	not include	any	benefits	related	to	businesses	placed	in	discontinued	operations.	We	cannot	assure	that	we	will	achieve	the	targeted	savings.

Changes	in	interest	rates	and	investment	prices	could	reduce	the	value	of	our	investment	portfolio	and	adversely	affect	our	financial	condition	or	results.

								We	carry	an	investment	portfolio	of	fixed-maturity	and	other	long-term	investments.	As	of	December	31,	2007,	our	continuing	operations	had	fixed-maturity investments	(approximately	96%	was	investment	grade)	that	had	a	carrying	value	of	$150	million	and	our	other	long-term	investments	had	a	carrying	value	of $317	million.	Funds	held	on	behalf	of	clients,	which	were	$3.1	billion	at	December	31,	2007,	are	held	in	short-term	investments.	Changes	in	interest	rates	and investment	prices	could	reduce	the	value	of	our	investment	portfolio	and	adversely	affect	our	financial	condition	or	results.

								For	example,	changes	in	domestic	and	international	interest	rates	directly	affect	our	income	from,	and	the	market	value	of,	fixed-maturity	investments.	Similarly, general	economic	conditions,	stock	market	conditions	and	other	factors	beyond	our	control	affect	the	value	of	our	equity	investments.	We	monitor	our	portfolio	for other-than-temporary	impairments	in	carrying	value.	For	securities	judged	to	have	an	other-than-temporary	impairment,	we	recognize	a	realized	loss	through	the statement	of	income	to	write	down	the	value	of	those	securities.

								We	are	also	subject	to	potential	declines	in	credit	quality,	either	related	to	issues	specific	to	certain	industries	or	to	a	weakening	in	the	economy	in	general.	The concentration	of	our	investment	portfolio	in	any	particular	industry,	group	of	related	industries	or	geographic	sector	could	have	an	adverse	effect	on	our	investment portfolio	and,	consequently,	on	our	results	of	operations	and	financial	condition.	A	decline	in	the	quality	of	our	investment	portfolio	as	a	result	of	adverse	economic conditions	or	otherwise	could	cause	realized	losses	on	securities,	including	realized	losses	relating	to	derivative	strategies.	The	financial	and	liquidity	needs	of	our business	could	also	cause	us	to	sell	assets	from	our	investment	portfolio	at	unfavorable	prices.

Our	net	pension	liabilities	may	grow,	which	could	adversely	affect	our	stockholders'	equity,	net	income,	cash	flow	and	liquidity	and	require	us	to	make additional	cash	contributions	to	our	pension	plans.

								To	the	extent	that	the	present	value	of	the	benefits	incurred	to	date	for	pension	obligations	in	the	major	countries	in	which	we	operate	continues	to	exceed	the	value of	the	assets	supporting	these	obligations,	our	financial	position	and	results	of	operations	may	be	adversely	affected.	In	certain	previous	years,	there	have	been	declines in	interest	rates.	As	a	result	of	lower	interest	rates,	the	present	value	of	plan	liabilities	increased	faster	than	the	value	of	plan	assets,	resulting	in	significantly	higher unfunded	positions	in	several	of	our	major	pension	plans.

								Cash	contributions	of	approximately	$195	million	will	be	required	in	2008	for	our	major	pension	plans,	although	we	may	elect	to	contribute	more.	Total	cash contributions	to	these	pension	plans	in	2007	were	$211	million,	which	was	an	increase	of	$7	million	from	2006.	In	2006,	we	also	contributed	$166	million	of	non-cash financial	instruments	to	certain	of	our	U.K.	plans.	In	total,	our	2007	contributions	to	these	pension	plans	were	$159	million	less	than	in	2006.	Future	estimates	are	based on	certain	assumptions,	including	discount	rates,	interest	rates,	mortality,	fair	value	of	assets	and	expected	return	on	plan	assets.

								Periodic	revision	of	pension	assumptions	can	materially	change	the	present	value	of	future	benefits,	and	therefore	the	funded	status	of	the	plans	and	the	resulting periodic	pension	expense.	Changes	in	our	pension	benefit	obligations	and	the	related	net	periodic	costs	or	credits	may	occur	in	the	future

due	to	any	variance	of	actual	results	from	our	assumptions	and	changes	in	the	number	of	participating	employees.	As	a	result,	there	can	be	no	assurance	that	we	will	not experience	future	decreases	in	stockholders'	equity,	net	income,	cash	flow	and	liquidity	or	that	we	will	not	be	required	to	make	additional	cash	contributions	in	the	future beyond	those	which	have	been	estimated.

We	are	subject	to	a	number	of	contingencies	and	legal	proceedings	which,	if	determined	unfavorably	to	us,	would	adversely	affect	our	financial	results.

								We	are	subject	to	numerous	claims,	tax	assessments,	lawsuits	and	proceedings	that	arise	in	the	ordinary	course	of	business.	The	damages	claimed	in	these	matters are	or	may	be	substantial,	including,	in	many	instances,	claims	for	punitive,	treble	or	extraordinary	damages.	It	is	possible	that,	if	the	outcomes	of	these	contingencies and	legal	proceedings	were	not	favorable	to	us,	it	could	materially	adversely	affect	our	future	financial	results.	In	addition,	our	results	of	operations,	financial	condition or	liquidity	may	be	adversely	affected	if	in	the	future	our	insurance	coverage	proves	to	be	inadequate	or	unavailable	or	there	is	an	increase	in	liabilities	for	which	we self-insure.	Aon	has	purchased	errors	and	omissions	("E&O")	insurance	and	other	insurance	to	provide	protection	against	losses	that	arise	in	such	matters.	Accruals	for these	items,	net	of	insurance	receivables,	when	applicable,	have	been	provided	to	the	extent	that	losses	are	deemed	probable	and	are	reasonably	estimable.	These accruals	and	receivables	are	adjusted	from	time	to	time	as	developments	warrant.

								In	2004,	Aon,	other	insurance	brokers,	insurers	and	numerous	other	industry	participants	received	subpoenas	and	other	requests	for	information	from	the	office	of the	Attorney	General	of	the	State	of	New	York	and	from	other	states	relating	to	certain	practices	in	the	insurance	industry.

								On	March	4,	2005,	Aon	entered	into	an	agreement	(the	"Settlement	Agreement")	with	the	Attorney	General	of	the	State	of	New	York,	the	Superintendent	of Insurance	of	the	State	of	New	York,	the	Attorney	General	of	the	State	of	Connecticut,	the	Illinois	Attorney	General	and	the	Director	of	the	Division	of	Insurance,	Illinois Department	of	Financial	and	Professional	Regulation	(collectively,	the	"State	Agencies")	to	resolve	all	the	issues	related	to	investigations	conducted	by	the	State Agencies.	The	2005	Settlement	Agreement,	under	which	Aon	distributed	funds	to	certain	clients	and	implemented	business	reforms,	has	been	described	in	detail	in Aon's	previous	financial	filings.	Aon	has	also	entered	into	a	comprehensive	settlement	agreement,	under	the	auspices	of	the	NAIC,	with	numerous	other	states,	that	also incorporates	these	same	business	reforms.

								Purported	clients	have	also	filed	civil	litigation	against	Aon	and	other	companies	under	a	variety	of	laws	and	legal	theories	relating	to	broker	compensation	practices and	other	issues	under	investigation	by	New	York	and	other	states.	As	previously	reported,	a	putative	class	action	styled	Daniel	v.	Aon	(Affinity)	has	been	pending	in	the Circuit	Court	of	Cook	County,	Illinois	since	August	1999.	In	March	2005,	the	Court	gave	preliminary	approval	to	a	nationwide	class	action	settlement	under	which	Aon agreed	to	pay	a	total	of	$38	million	to	its	policyholders.	The	Court	granted	final	approval	to	the	settlement	in	March	2006.	Parties	that	objected	to	the	settlement	have appealed.

								Beginning	in	June	2004,	a	number	of	other	putative	class	actions	were	filed	against	Aon	and	other	companies	by	purported	classes	of	clients	under	a	variety	of	legal theories,	including	state	tort,	contract,	fiduciary	duty,	antitrust	and	statutory	theories	and	federal	antitrust	and	Racketeer	Influenced	and	Corrupt	Organizations	Act ("RICO")	theories.	The	federal	actions	were	consolidated	in	the	U.S.	District	Court	for	the	District	of	New	Jersey,	and	a	state	court	collective	action	was	filed	in California.	In	the	New	Jersey	actions,	the	Court	dismissed	plaintiffs'	federal	antitrust	and	RICO	claims	in	separate	orders	in	August	and	October	2007,	respectively. Plaintiffs	have	appealed	these	dismissals.	Aon	believes	it	has	meritorious	defenses	in	all	of	these	cases	and	intends	to	vigorously	defend	itself	against	these	claims.	The outcome	of	these	lawsuits,	and	any	losses	or	other	payments	that	may	occur	as	a	result,	cannot	be	predicted	at	this	time.

								Beginning	in	late	October	2004,	several	putative	securities	class	actions	were	filed	against	Aon	in	the	U.S.	District	Court	for	the	Northern	District	of	Illinois.	Also beginning	in	late	October	2004,	several	putative	ERISA	class	actions	were	filed	against	Aon	in	the	U.S.	District	Court	for	the	Northern	District	of	Illinois.	Aon	believes it	has	meritorious	defenses	in	all	of	these	cases	and	intends	to	vigorously	defend	itself	against	these	claims.	The	outcome	of	these	lawsuits,	and	any	losses	or	other payments	that	may	occur	as	a	result,	cannot	be	predicted	at	this	time.	With	respect	to	the	various	securities	and	ERISA	class	actions,	we	are	unable	to	estimate	a	range	of possible	losses,	as	these	actions	have	not	yet	progressed	to	the	stages	where	damages,	if	any,	can	be	estimated.

								Following	inquiries	from	regulators,	the	Company	commenced	an	internal	review	of	its	compliance	with	certain	U.S.	and	non-U.S.	anti-bribery	laws,	including	the U.S.	Foreign	Corrupt	Practices	Act	("FCPA").	An	outside	law	firm	with	significant	experience	in	the	area	is	overseeing	this	review.	Certain	governmental	agencies, including	the	U.K.	Financial	Services	Authority,	the	City	of	London	police,	the	U.S.	Securities	and	Exchange	Commission,	and	the	U.S.	Department	of	Justice	are	also investigating	these	matters.	Aon	is	fully	cooperating	with	these	investigations,	and	has	agreed	with	the	U.S.	agencies	to	toll	any	applicable	statute	of	limitations	pending completion	of	the	investigations.	Based	on	current	information,	the	Company	is	unable	to	predict	at	this	time	when	these	matters	will	be	concluded,	or	what	regulatory	or other	outcomes	may	result.

								A	financial	institution	in	the	U.K.	called	Standard	Life	Assurance	Ltd.	brought	an	action	in	London	Commercial	Court	against	Aon	seeking	more	than	£50	million ($99	million	at	December	31,	2007	exchange	rates)	for	alleged	errors	or	omissions	in	the	placement	of	a	professional	indemnity	policy	with	certain	underwriters.	In	a decision	issued	on	February	13,	2008,	the	court	construed	the	relevant	policy	language	to	excuse	underwriters	from	paying	Standard	Life	and	concluded	that	Aon	was negligent	in	not	seeking	changes	to	the	language.	The	court	granted	Aon	leave	to	file	an	interlocutory	appeal	on	these	issues	and	stated	in	granting	leave	that	the	issue	in the	case	was	a	"difficult	question	of	construction	on	which	views	may	legitimately	differ."	Aon	believes	that	the	decision	is	incorrect,	is	appealing	this	decision	and,	if the	appeal	is	unsuccessful,	will	vigorously	contest	other	issues	that	have	not	yet	been	litigated	in	the	Commercial	Court.	Aon	further	believes	that,	as	a	result	of	an indemnity	given	to	Aon	by	a	third	party,	Aon	may	be	entitled	to	indemnification	in	whole	or	part	should	it	ultimately	suffer	a	loss	in	this	matter.	Because	of	the uncertainty	inherent	in	the	appeals	process,	the	ability	to	contest	issues	in	subsequent	proceedings,	the	potential	indemnity,	and	potential	recoveries	from	Aon's	errors and	omissions	insurance,	Aon	is	unable	to	predict	at	this	time	the	probable	loss,	if	any,	from	this	matter.

								Although	the	ultimate	outcome	of	all	matters	referred	to	above	cannot	be	ascertained,	and	liabilities	in	indeterminate	amounts	may	be	imposed	on	Aon	or	its subsidiaries,	on	the	basis	of	present	information,	amounts	already	provided,	availability	of	insurance	coverages	and	legal	advice	received,	it	is	the	opinion	of management	that	the	disposition	or	ultimate	determination	of	such	claims	will	not	have	a	material	adverse	effect	on	the	consolidated	financial	position	of	Aon.	However, it	is	possible	that	future	results	of	operations	or	cash	flows	for	any	particular	quarterly	or	annual	period	could	be	materially	affected	by	an	unfavorable	resolution	of	these matters.

# We	are	subject	to	increasing	costs	arising	from	E&O	claims	against	us.

								In	our	insurance	brokerage	and	consulting	businesses,	we	often	assist	our	clients	with	matters	which	include	the	placement	of	insurance	coverage	or	employee benefit	plans	and	the	handling	of	related	claims.	E&O	claims	against	us	may	allege	our	potential	liability	for	all	or	part	of	the	amounts	in	question.	E&O	claims	could include,	for	example,	the	failure	of	our	employees	or	sub-agents,	whether	negligently	or	intentionally,	to	place	coverage	correctly	or	notify	carriers	of	claims	on	behalf	of clients	or	to	provide	insurance	carriers	with	complete	and	accurate	information	relating	to	the	risks	being	insured.	It	is	not	always	possible	to	prevent	and	detect	errors and	omissions,	and	the	precautions

we	take	may	not	be	effective	in	all	cases.	In	addition,	E&O	claims	may	harm	our	reputation	or	divert	management	resources	away	from	operating	our	business.

# Our	success	depends,	in	part,	on	our	ability	to	attract	and	retain	experienced	and	qualified	personnel.

								Our	future	success	depends	on	our	ability	to	attract	and	retain	experienced	personnel,	including	underwriters,	brokers	and	other	professional	personnel.	Competition for	such	experienced	professional	personnel	is	intense.	If	we	cannot	hire	and	retain	talented	personnel,	our	business,	operating	results	and	financial	condition	could	be adversely	affected.

# Our	businesses	are	subject	to	extensive	governmental	regulation	which	could	reduce	our	profitability	or	limit	our	growth.

								Our	businesses	are	subject	to	extensive	federal,	state	and	foreign	governmental	regulation	and	supervision,	which	could	reduce	our	profitability	or	limit	our	growth by	increasing	the	costs	of	regulatory	compliance,	limiting	or	restricting	the	products	or	services	we	sell	or	the	methods	by	which	we	sell	our	products	and	services	or subjecting	our	businesses	to	the	possibility	of	regulatory	actions	or	proceedings.	With	respect	to	our	insurance	brokerage	businesses,	this	supervision	generally	includes the	licensing	of	insurance	brokers	and	agents	and	third-party	administrators	and	the	regulation	of	the	handling	and	investment	of	client	funds	held	in	a	fiduciary	capacity. Our	continuing	ability	to	provide	insurance	brokering	and	third-party	administration	in	the	jurisdictions	in	which	we	currently	operate	depends	on	our	compliance	with the	rules	and	regulations	promulgated	from	time	to	time	by	the	regulatory	authorities	in	each	of	these	jurisdictions.	Also,	we	can	be	affected	indirectly	by	the governmental	regulation	and	supervision	of	other	insurance	companies.	For	instance,	if	we	are	providing	managing	general	underwriting	services	for	an	insurer,	we	may have	to	contend	with	regulations	affecting	our	client.	Further,	regulation	affecting	the	insurance	companies	with	whom	our	brokers	place	business	can	affect	how	we conduct	those	operations.

								Most	insurance	regulations	are	designed	to	protect	the	interests	of	policyholders	rather	than	stockholders	and	other	investors.	In	the	U.S.,	this	system	of	regulation, generally	administered	by	a	department	of	insurance	in	each	state	in	which	we	do	business,	affects	the	way	we	can	conduct	our	insurance	underwriting	business.	Laws	in each	of	the	states	in	which	we	operate	extensively	regulate	our	sales	practices,	operations,	marketing	and	advertising	by	requiring,	among	other	things,	prior	approval and/or	notice	of	new	products,	premium	rates,	benefit	changes	and	certain	material	transactions,	including	dividend	payments	to	stockholders,	purchases	or	sales	of assets	and	inter-company	agreements.	Furthermore,	state	insurance	departments	conduct	periodic	examinations,	audits	and	investigations	of	the	affairs	of	insurance companies	and	require	the	filing	of	annual	and	other	reports	relating	to	the	financial	condition	of	insurance	companies,	holding	company	issues	and	other	matters.

								Although	the	federal	government	does	not	directly	regulate	the	insurance	business,	federal	legislation	and	administrative	policies	in	several	areas,	including employee	benefit	plan	regulation,	Medicare,	age,	race,	disability	and	sex	discrimination,	investment	company	regulation,	financial	services	regulation,	securities	laws and	federal	taxation,	do	affect	the	insurance	industry	generally	and	our	insurance	underwriting	subsidiaries	in	particular.	For	instance,	several	laws	and	regulations adopted	by	the	federal	government,	including	the	Gramm-Leach-Bliley	Act,	the	Health	Insurance	Portability	and	Accountability	Act	of	1996,	the	Medicare	Prescription Drug,	Improvement	and	Modernization	Act	of	2003	and	"Do	Not	Call"	regulations,	have	created	additional	administrative	and	compliance	requirements	for	us.

								With	respect	to	our	international	operations,	we	are	subject	to	various	regulations	relating	to,	among	other	things,	licensing,	currency,	policy	language	and	terms, reserves	and	the	amount	of	local	investment.	These	various	regulations	also	add	to	our	cost	of	doing	business	through	increased	compliance	expenses,	the	financial impact	of	use	of	capital	restrictions	and	increased	training	and

employee	expenses.	Furthermore,	the	loss	of	a	license	in	a	particular	jurisdiction	could	restrict	or	eliminate	our	ability	to	conduct	business	in	that	jurisdiction.

								In	all	jurisdictions	the	applicable	laws	and	regulations	are	subject	to	amendment	or	interpretation	by	regulatory	authorities.	Generally,	such	authorities	are	vested with	relatively	broad	discretion	to	grant,	renew	and	revoke	licenses	and	approvals	and	to	implement	regulations.	Accordingly,	we	may	be	precluded	or	temporarily suspended	from	carrying	on	some	or	all	of	our	activities	or	otherwise	fined	or	penalized	in	a	given	jurisdiction.	No	assurances	can	be	given	that	our	businesses	can continue	to	be	conducted	in	any	given	jurisdiction	as	it	has	been	conducted	in	the	past.

# Our	significant	global	operations	expose	us	to	various	international	risks	that	could	adversely	affect	our	business.

								A	significant	portion	of	our	operations	are	conducted	outside	the	U.S.	Accordingly,	we	are	subject	to	legal,	economic	and	market	risks	associated	with	operating	in foreign	countries,	including:

•the	general	economic	and	political	conditions	existing	in	those	countries

•devaluations	and	fluctuations	in	currency	exchange	rates

•imposition	of	limitations	on	conversion	of	foreign	currencies	or	remittance	of	dividends	and	other	payments	by	foreign	subsidiaries

•imposition	or	increase	of	withholding	and	other	taxes	on	remittances	and	other	payments	by	subsidiaries

•difficulties	in	staffing	and	managing	our	foreign	offices,	and	the	increased	travel,	infrastructure	and	legal	and	compliance	costs	associated	with	multiple international	locations

•hyperinflation	in	certain	foreign	countries

•imposition	or	increase	of	investment	and	other	restrictions	by	foreign	governments

•longer	payment	cycles

•greater	difficulties	in	accounts	receivables	collection

•the	requirement	of	complying	with	a	wide	variety	of	foreign	laws.

								Some	of	our	foreign	brokerage	subsidiaries	receive	revenues	in	currencies	that	differ	from	their	functional	currencies.	We	must	also	translate	the	financial	results	of our	foreign	subsidiaries	into	U.S.	dollars.	Although	we	use	various	derivative	financial	instruments	to	help	protect	against	adverse	transaction	and	translation	effects	due to	exchange	rate	fluctuations,	we	cannot	eliminate	such	risks	and	significant	changes	in	exchange	rates	may	adversely	affect	our	results.

Our	financial	results	could	be	adversely	affected	if	assumptions	used	in	establishing	our	underwriting	reserves	differ	from	actual	experience.

								We	maintain	reserves	as	an	estimate	of	our	liability	under	insurance	policies	issued	by	our	insurance	underwriting	operations	that	are	in	runoff.	The	reserves	that we	maintain	that	could	cause	variability	in	our	financial	results	are	policy	and	contract	claim	reserves.

								Policy	and	contract	claim	reserves	reflect	our	estimated	liability	for	unpaid	claims	and	claims	adjustment	expenses,	including	legal	and	other	fees	and	general expenses	for	administering	the	claims	adjustment	process,	and	for	reported	and	unreported	losses	incurred	as	of	the	end	of	each	accounting	period.	If	the	reserves originally	established	for	future	claims	prove	inadequate,	we	would	be	required	to	increase	our	liabilities,	which	could	have	an	adverse	effect	on	our	business,	results	of operations	and	financial	condition.

								The	obligation	for	policy	and	contract	claims	does	not	represent	an	exact	calculation	of	liability.	Rather,	reserves	represent	our	best	estimate	of	what	we	expect	the ultimate	settlement	and	administration	of	claims	will	cost.	These	estimates	represent	informed	judgments	based	on	our	assessment	of	currently	available	data,	as	well	as estimates	of	future	trends	in	claims	severity,	frequency,	judicial	theories	of	liability	and	other	factors.	Many	of	these	factors	are	not	quantifiable	in	advance	and	both internal	and	external	events,	such	as	changes	in	claims	handling	procedures,	inflation,	judicial	and	legal	developments	and	legislative	changes,	can	cause	our	estimates to	vary.	The	inherent	uncertainty	of	estimating	reserves	is	greater	for	certain	types	of	liabilities,	where	the	variables	affecting	these	types	of	claims	are	subject	to	change and	long	periods	of	time	may	elapse	before	a	definitive	determination	of	liability	is	made.	Reserve	estimates	are	periodically	refined	as	experience	develops	and	further losses	are	reported	and	settled.	Adjustments	to	reserves	are	reflected	in	the	results	of	the	periods	in	which	such	estimates	are	changed.	Because	setting	the	level	of reserves	for	policy	and	contract	claims	is	inherently	uncertain,	we	cannot	assure	you	that	our	current	reserves	will	prove	adequate	in	light	of	subsequent	events.

# Each	of	our	business	lines	may	be	adversely	affected	by	an	overall	decline	in	economic	activity.

								The	demand	for	property	and	casualty	insurance	generally	rises	as	the	overall	level	of	economic	activity	increases	and	generally	falls	as	such	activity	decreases, affecting	both	the	commissions	and	fees	generated	by	our	brokerage	and	consulting	businesses	and	the	premiums	generated	by	our	underwriting	businesses.	In	particular, a	growing	number	of	insolvencies	associated	with	an	economic	downturn,	especially	insolvencies	in	the	insurance	industry,	could	adversely	affect	our	brokerage business	through	the	loss	of	clients	or	by	hampering	our	ability	to	place	insurance	and	reinsurance	business.	Moreover,	the	results	of	our	consulting	business	are generally	affected	by	the	level	of	business	activity	of	our	clients,	which	in	turn	is	affected	by	the	level	of	economic	activity	in	the	industries	and	markets	these	clients serve.	As	our	clients	become	adversely	affected	by	declining	business	conditions,	they	may	choose	to	delay	or	forgo	consulting	engagements	with	us.

# We	have	debt	outstanding	that	could	adversely	affect	our	financial	flexibility.

								As	of	December	31,	2007,	we	had	total	consolidated	debt	outstanding	of	approximately	$2.1	billion.	The	level	of	debt	outstanding	could	adversely	affect	our financial	flexibility.

A	decline	in	the	credit	ratings	of	our	senior	debt	and	commercial	paper	may	adversely	affect	our	borrowing	costs	and	financial	flexibility.

								A	downgrade	in	the	credit	ratings	of	our	senior	debt	and	commercial	paper	could	increase	our	borrowing	costs	and	reduce	our	financial	flexibility.	In	addition, certain	downgrades	may	trigger	obligations	of	our	company	to	fund	certain	amounts	with	respect	to	our	premium	finance	securitizations.	Similarly,	a	downgrade	would increase	our	commercial	paper	interest	rates	or	may	result	in	our	inability	to	access	the	commercial	paper	market	altogether.	We	cannot	assume	that	our	financial position	would	not	be	adversely	affected	if	we	are	unable	to	access	the	commercial	paper	market.	A	downgrade	in	the	credit	ratings	of	our	senior	debt	may	also adversely	affect	the	claims-paying	ability	or	financial	strength	ratings	of	our	insurance	company	subsidiaries.	See	"A	decline	in	the	financial	strength	or	claims-paying ability	ratings	of	our	insurance	underwriting	subsidiaries	may	increase	policy	cancellations	and	negatively	impact	new	sales	of	insurance	products"	above.

# Changes	in	our	accounting	estimates	and	assumptions	could	negatively	affect	our	financial	position	and	results.

								We	prepare	our	financial	statements	in	accordance	with	U.S.	GAAP.	These	accounting	principles	require	us	to	make	estimates	and	assumptions	that	affect	the reported	amounts	of	assets	and	liabilities,	and	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	our	financial	statements.	We	are	also	required	to	make certain	judgments	that	affect	the	reported	amounts	of	revenues	and	expenses	during	each	reporting	period.	We	periodically	evaluate	our	estimates	and	assumptions including	those

relating	to	reserves	to	pay	policy	liabilities,	deferred	policy	acquisition	costs,	the	valuation	of	investments,	income	taxes,	stock-based	compensation	and	contingencies and	litigation.	We	base	our	estimates	on	historical	experience	and	various	assumptions	that	we	believe	to	be	reasonable	based	on	specific	circumstances.	Actual	results could	differ	from	these	estimates,	and	changes	in	accounting	standards	could	increase	costs	to	our	organization	and	could	have	an	adverse	impact	on	our	future	financial position	and	results	of	operations.

# We	are	a	holding	company	and,	therefore,	may	not	be	able	to	receive	dividends	in	needed	amounts	from	our	subsidiaries.

								Our	principal	assets	are	the	shares	of	capital	stock	of	our	subsidiaries,	including	our	insurance	underwriting	companies.	We	have	to	rely	on	dividends	from	these subsidiaries	to	meet	our	obligations	for	paying	principal	and	interest	on	outstanding	debt	obligations	and	for	paying	dividends	to	stockholders	and	corporate	expenses. Payments	from	our	underwriting	subsidiaries	are	limited	by	governmental	regulation	and	depend	on	the	surplus	and	future	earnings	of	these	subsidiaries.	In	some circumstances,	specific	payments	from	our	insurance	underwriting	subsidiaries	may	require	prior	regulatory	approval	and	we	may	not	be	able	to	receive	dividends	from these	subsidiaries	at	times	and	in	the	amounts	we	anticipate	or	require.

We	cannot	guarantee	that	our	underwriting	subsidiaries'	reinsurers	or	our	reinsurers	of	our	property	and	casualty	business	will	pay	in	a	timely	fashion,	if	at	all.

								To	better	manage	our	portfolio	of	underwriting	risk,	we	purchase	reinsurance	by	transferring	part	of	the	risk	that	we	assume	(known	as	ceding)	to	a	reinsurance company	in	exchange	for	part	of	the	premium	that	we	receive	in	connection	with	the	risk.	Although	reinsurance	makes	the	reinsurer	liable	to	us	to	the	extent	the	risk	is transferred	(or	ceded)	to	the	reinsurer,	it	does	not	relieve	us	of	our	liability	to	our	policyholders.	Accordingly,	we	bear	credit	risk	with	respect	to	our	reinsurers.	Recently, due	to	industry	and	general	economic	conditions,	there	is	an	increasing	risk	of	insolvency	among	reinsurance	companies,	resulting	in	a	greater	incidence	of	litigation	and affecting	the	recoverability	of	claims.	We	cannot	assure	that	our	reinsurers	will	pay	the	reinsurance	recoverables	owed	to	us	or	that	they	will	pay	these	recoverables	on	a timely	basis.

								In	connection	with	the	sale	of	Aon	Warranty	Group	("AWG")	on	November	30,	2006,	Aon	sold	the	capital	stock	of	Virginia	Surety	Company,	Inc.	("VSC"). Because	VSC	issued	property	and	casualty	policies,	VSC	continues	to	remain	liable	to	property	and	casualty	policyholders.	However,	pursuant	to	contractual arrangements	entered	into	as	part	of	the	sale	of	AWG,	we	have	agreed	to	indemnify	the	buyer	of	VSC	for	all	obligations	arising	out	of	the	property	and	casualty business,	including	any	failure	by	reinsurers	to	meet	their	obligations	with	respect	to	the	property	and	casualty	business.	We	have	also	agreed	to	guarantee	amounts	owed by	reinsurers	in	respect	of	the	Construction	Program	Group	("CPG")	business	issued	prior	to	the	closing	of	that	transaction.	If	reinsurers	fail	to	pay	the	reinsurance recoverables	owed	to	VSC	with	respect	to	the	property	and	casualty	business	(including	with	respect	to	CPG	business)	or	do	not	pay	on	a	timely	basis,	we	will	be responsible	for	these	amounts.

# The	occurrence	of	natural	or	man-made	disasters	could	adversely	affect	our	financial	condition	and	results	of	operations.

								We	are	exposed	to	various	risks	arising	out	of	natural	disasters,	including	earthquakes,	hurricanes,	fires,	floods	and	tornadoes,	and	pandemic	health	events	such	as avian	influenza,	as	well	as	man-made	disasters,	including	acts	of	terrorism	and	military	actions.	For	example,	a	natural	or	man-made	disaster	could	lead	to	unexpected changes	in	persistency	rates	as	policyholders	and	contract	holders	who	are	affected	by	the	disaster	may	be	unable	to	meet	their	contractual	obligations,	such	as	payment of	premiums	on	our	insurance	policies.	The	continued	threat	of	terrorism	and	ongoing	military	actions	may	cause	significant	volatility	in	global	financial	markets,	and	a natural	or	man-made	disaster	could

trigger	an	economic	downturn	in	the	areas	directly	or	indirectly	affected	by	the	disaster.	These	consequences	could,	among	other	things,	result	in	a	decline	in	business and	increased	claims	from	those	areas.	Disasters	also	could	disrupt	public	and	private	infrastructure,	including	communications	and	financial	services,	which	could disrupt	our	normal	business	operations.

								A	natural	or	man-made	disaster	also	could	disrupt	the	operations	of	our	counterparties	or	result	in	increased	prices	for	the	products	and	services	they	provide	to	us. In	addition,	a	disaster	could	adversely	affect	the	value	of	the	assets	in	our	investment	portfolio	if	it	affects	companies'	ability	to	pay	principal	or	interest	on	their securities.	Finally,	a	natural	or	man-made	disaster	could	increase	the	incidence	or	severity	of	E&O	claims	against	the	Company.

In	connection	with	the	implementation	of	our	corporate	strategy,	we	face	certain	risks	associated	with	the	acquisition	or	disposition	of	businesses.

								In	pursuing	our	corporate	strategy,	we	may	acquire	other	businesses	or	dispose	of	or	exit	businesses	we	currently	own.	The	success	of	this	strategy	is	dependent upon	our	ability	to	identify	appropriate	acquisition	and	disposition	targets,	negotiate	transactions	on	favorable	terms	and	ultimately	complete	such	transactions.	If acquisitions	are	made,	there	can	be	no	assurance	that	we	will	realize	the	anticipated	benefits	of	such	acquisitions,	including	revenue	growth,	operational	efficiencies	or expected	synergies.	In	addition,	we	may	not	be	able	to	integrate	acquisitions	successfully	into	our	existing	business,	and	we	could	incur	or	assume	unknown	or unanticipated	liabilities	or	contingencies,	which	may	impact	our	results	of	operations.	If	we	dispose	of	or	otherwise	exit	certain	businesses,	there	can	be	no	assurance that	we	will	not	incur	certain	disposition-related	charges,	or	that	we	will	be	able	to	reduce	overhead	related	to	the	divested	assets.

# The	planned	sale	of	our	CICA	and	Sterling	subsidiaries	may	not	occur.

								In	December	2007,	we	signed	separate	definitive	agreements	to	sell	our	CICA	and	Sterling	subsidiaries.	We	anticipate	that	the	sale	of	both	CICA	and	Sterling	will be	finalized	in	the	second	quarter	of	2008.	We	cannot	be	certain	that	either	of	these	transactions	will	be	completed.	If	the	closing	of	these	transactions	does	not	occur	and we	continue	to	own	these	subsidiaries,	we	may	be	subject	to	additional	risk	factors	as	follows:

A	decline	in	the	financial	strength	or	claims-paying	ability	ratings	of	our	insurance	underwriting	subsidiaries	may	increase	policy	cancellations	and	negatively impact	new	sales	of	insurance	products.

								Financial	strength	and	claims-paying	ability	ratings	are	factors	in	establishing	the	competitive	position	of	insurance	companies.	These	ratings	are	based	upon	criteria established	by	the	rating	agencies	for	the	purpose	of	rendering	an	opinion	as	to	an	insurance	company's	financial	strength,	operating	performance,	strategic	position	and ability	to	meet	its	obligations	to	policyholders.	They	are	not	evaluations	directed	toward	the	protection	of	investors,	nor	are	they	recommendations	to	buy,	sell	or	hold specific	securities.	Periodically,	the	rating	agencies	evaluate	our	insurance	underwriting	subsidiaries	to	confirm	that	they	continue	to	meet	the	criteria	of	the	ratings previously	assigned	to	them.	A	downgrade,	or	the	potential	for	a	downgrade,	of	these	ratings	could,	among	other	things,	increase	the	number	of	policy	cancellations, adversely	affect	relationships	with	brokers,	retailers	and	other	distributors	of	our	products	and	services,	negatively	impact	new	sales	and	adversely	affect	our	ability	to compete.

								CICA,	the	principal	insurance	subsidiary	that	underwrites	our	supplemental	accident	and	health	and	life	insurance	business,	is	currently	rated	"A"	(excellent;	third highest	of	16	rating	levels)	by	A.M.	Best	Company,	"A-"	(strong;	third	highest	of	nine	rating	levels)	for	financial	strength	by	Standard	and	Poor's	Rating	Services,	and "A3"	(good;	third	highest	of	nine	rating	levels)	for	financial	strength	by	Moody's	Investors	Service	and	"A-"(strong;	third	highest	of	nine	rating	levels)	for	financial strength	by	Fitch	Ratings.	We	cannot	assure	that	one	or	more	of	the	rating	agencies	will	not	downgrade	or	withdraw	their	financial	strength	or	claims-paying	ability ratings	in	the	future.

# Certain	legislative	and	regulatory	changes	to	the	Medicare	program	have	materially	impacted	our	operations	and	could	reduce	our	operating	results.

								Due	to	a	legislative	change	enacted	in	late	2006,	Private	Fee	for	Service	("PFFS")	plans,	including	those	offered	by	Sterling,	were	authorized	to	market	and	enroll beneficiaries	within	Medicare	Advantage	products	year-round.	This	authorization	was	originally	scheduled	to	remain	in	place	until	December	31,	2008.	In	July,	this	law was	changed	back	to	the	pre-2007	policy,	which	only	permitted	PFFS	plan	companies	and	other	Medicare	Advantage	plans	to	maintain	an	open	enrollment	period	from January	1 	to	March	31 .	Accordingly,	beginning	on	August	1,	2007,	Sterling	and	all	other	Medicare	Advantage	plans	no	longer	generally	maintain	the	ability	to	enroll st st beneficiaries	within	their	plans	all	year	long.

								In	2008	and	beyond,	Sterling	and	all	other	Medicare	Advantage	plans	will	be	permitted	to	enroll	Medicare	beneficiaries	until	March	31 	of	a	calendar	year,	unless	a st special	enrollment	period	applies.	Additionally,	Sterling	will	be	able	to	enroll	year-round	those	individuals	just	becoming	eligible	for	Medicare.	As	a	result	of	this	repeal of	year-round	open	enrollment,	Sterling's	primary	revenue	growth	opportunities	will	now	largely	be	contained	to	its	sales	activities	of	Medicare	Advantage	products	in the	first	quarter	of	future	years	beginning	in	2008	(coinciding	with	the	open	enrollment	period).

								We	maintain	reserves	as	an	estimate	of	our	liability	under	insurance	policies	issued	by	our	insurance	underwriting	subsidiaries.	The	reserves	that	we	maintain	that could	cause	variability	in	our	financial	results	consist	of	(1)	unearned	premium	reserves,	(2)	policy	and	contract	claim	reserves	and	(3)	future	policy	benefit	reserves. Unearned	premium	reserves	generally	reflect	our	liability	to	return	premiums	we	have	collected	under	policies	in	the	event	of	the	lapse	or	cancellation	of	those	policies. Under	U.S.	GAAP,	premiums	we	have	collected	generally	become	"earned"	over	the	life	of	a	policy	by	means	of	a	reduction	in	the	amount	of	the	unearned	premium reserve	associated	with	the	policy.

								Future	policy	benefit	reserves	generally	relate	to	our	liability	to	provide	future	life	insurance	benefits	and	future	supplemental	accident	and	health	insurance benefits.	Future	policy	benefit	reserves

on	supplemental	accident	&	health	and	life	products	have	been	provided	on	the	net	level	premium	method.	These	reserves	are	calculated	based	on	assumptions	as	to investment	yield,	mortality,	morbidity	and	withdrawal	rates	that	were	determined	at	the	date	of	issue	and	provide	for	possible	adverse	deviations.

The	volume	of	premiums	we	write	and	our	profitability	are	affected	by	the	availability	of	reinsurance	and	the	size	and	adequacy	of	our	insurance	company subsidiaries'	capital	base.

								The	level	of	business	that	our	insurance	underwriting	subsidiaries	are	able	to	write	depends	on	the	size	and	adequacy	of	their	capital	base.	Many	state	insurance laws	to	which	they	are	subject	impose	risk-based	capital	requirements	for	purposes	of	regulating	insurer	solvency.	Insurers	having	less	statutory	surplus	than	that required	by	the	risk-based	capital	model	formula	generally	are	subject	to	varying	degrees	of	regulatory	scrutiny	and	intervention,	depending	on	the	level	of	capital inadequacy.	As	of	December	31,	2007,	each	of	our	insurance	company	subsidiaries	met	the	statutory	surplus	requirements	in	each	jurisdiction	in	which	it	conducts business.

								We	purchase	reinsurance	for	certain	of	the	risks	underwritten	by	our	insurance	company	subsidiaries.	Market	conditions	beyond	our	control	determine	the availability	and	cost	of	the	reinsurance	protection	we	purchase,	which	may	affect	the	level	of	business	we	are	able	to	write	and	our	profitability.	We	cannot	assure	that we	will	be	able	to	maintain	our	current	reinsurance	facilities	or	that	we	can	obtain	other	reinsurance	facilities	in	adequate	amounts	and	at	favorable	rates.	If	we	are	unable to	renew	our	expiring	facilities	or	to	obtain	new	reinsurance	facilities,	either	our	net	exposures	would	increase	or,	if	we	are	unwilling	to	bear	an	increase	in	net exposures,	we	would	have	to	reduce	the	level	of	our	underwriting	commitments.	Either	of	these	potential	developments	could	adversely	affect	our	underwriting business.

# Item	1B.				Unresolved	Staff	Comments.

								Aon	has	offices	in	various	locations	throughout	the	world.	Substantially	all	of	our	offices	are	located	in	leased	premises.	The	Company's	executive	offices	occupy approximately	530,000	square	feet	at	200	E.	Randolph	Street,	Chicago,	Illinois,	under	an	operating	lease	agreement	that	expires	in	2013.	There	are	two	five-year renewal	options	at	current	market	rates.

								In	general,	no	difficulty	is	anticipated	in	negotiating	renewals	as	leases	expire	or	in	finding	other	satisfactory	space	if	the	premises	become	unavailable.	We	believe that	the	facilities	we	occupy	are	adequate	for	the	purposes	for	which	they	are	currently	used	and	are	well	maintained.	In	certain	circumstances,	we	may	have	unused space	and	may	seek	to	sublet	such	space	to	third	parties,	depending	upon	the	demands	for	office	space	in	the	locations	involved.

# Item	3.				Legal	Proceedings.

								We	hereby	incorporate	by	reference	Note	15,	"Contingencies,"	of	the	Notes	to	Consolidated	Financial	Statements	in	Part	II,	Item	8	of	this	report.

# Item	4.				Submission	of	Matters	to	a	Vote	of	Security	Holders.

# Executive	Officers	of	the	Registrant

								Our	executive	officers	are	regularly	elected	by	our	Board	of	Directors	at	the	meeting	of	the	Board	which	is	held	immediately	following	each	annual	meeting	of	our stockholders.	Our	executive	officers	were	elected	to	their	current	positions	on	May	18,	2007	to	serve	until	the	meeting	of	the	Board	following	the	annual	meeting	of stockholders	to	be	held	on	May	16,	2008.	The	information	presented	for	executive	officers,	including	with	respect	to	ages	and	positions	held,	is	shown	as	of December	31,	2007,	unless	otherwise	noted.

Prior	to	joining	Aon,	Mr.	Bolger	served	for	21	years	in	various	capacities	for Bank	One	Corporation	and	its	predecessor	companies,	most	recently	serving as	Executive	Vice	President.

# PART	II

# Item	5.				Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities.

								Aon's	common	stock,	par	value	$1.00	per	share,	is	traded	on	the	New	York	Stock	Exchange.	We	hereby	incorporate	by	reference	the	"Dividends	paid	per	share" and	"Price	range"	data	under	the	heading	"Quarterly	Financial	Data"	in	Part	II,	Item	8	of	this	report.

								We	hereby	incorporate	by	reference	Note	10,	"Stockholders'	Equity"	of	the	Notes	to	Consolidated	Financial	Statements	in	Part	II,	Item	8	of	this	report.

								The	following	information	relates	to	the	repurchase	of	equity	securities	by	Aon	or	any	affiliated	purchaser	during	any	month	within	the	fourth	quarter	of	the	fiscal year	covered	by	this	report:

| Period | Total	Number	of<br>Shares	Purchased |  | Average	Price<br>Paid	per	Share | Purchased	as	Part	of<br>Publicly	Announced<br>Plans	or	Programs | Maximum	Dollar	Value	of	Shares<br>that	May	Yet	Be	Purchased	Under<br>the	Plans	or	Programs |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 10/1/07\t-\t10/31/07 |  | —\t $— | —\t $— | — | $202,847,776 |
| 11/1/07\t-\t11/30/07 |  | 544,700 | 47.29 | 544,700 | 177,089,820 |
| 12/1/07\t-\t12/31/07 |  | — | — | — | 2,777,089,820 |
|  |  | 544,700 | $47.29 | 544,700 |  |

								On	November	3,	2005,	the	Company	announced	that	its	Board	of	Directors	had	authorized	the	repurchase	of	up	to	$1	billion	of	Aon's	common	stock.	On November	20,	2006,	the	Company	announced	that	its	Board	of	Directors	had	increased	the	authorized	share	repurchase	program	to	$2	billion.	On	December	17,	2007, the	Company	announced	that	its	Board	of	Directors	had	increased	the	authorized	share	repurchase	program	to	$4.6	billion.	Shares	may	be	repurchased	through	the	open market	or	in	privately	negotiated	transactions.	Through	December	31,	2007,	the	Company	has	repurchased	48.1	million	shares	of	common	stock	at	an	average	price (excluding	commissions)	of	$37.87	per	share	for	an	aggregate	purchase	price	of	$1,823	million	since	inception	of	the	stock	repurchase	program,	and	the	remaining authorized	amount	for	stock	repurchase	under	the	program	is	$2,777	million,	with	no	termination	date.

								Information	relating	to	the	compensation	plans	under	which	equity	securities	of	Aon	are	authorized	for	issuance	is	set	forth	under	Part	III,	Item	12	of	this	report	and is	incorporated	herein	by	reference.

# Item	6.				Selected	Financial	Data.

# Selected	Financial	Data	(millions	except	stockholder,	employee	and	per	share	data)

|  | 2007 | 2006 | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Income\tStatement\tData |  |  |  |  |  |
| Commissions,\tfees\tand\tother | $7,170 | $6,660 | $6,507 | $6,697 | $6,545 |
| Investment\tincome | 301 | 221 | 144 | 154 | 163 |
| Total\trevenue | $7,471 | $6,881 | $6,651 | $6,851 | $6,708 |
| Income\tfrom\tcontinuing\toperations | $672 | $447 | $416 | $347 | $444 |
| Discontinued\toperations | 192 | 272 | 319 | 196 | 175 |
| Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple,\tnet\tof |  |  |  |  |  |
| tax\t(1) | — | 1 | — | — | — |
| Net\tincome | $864 | $720 | $735 | $543 | $619 |
| Diluted\tNet\tIncome\tPer\tShare |  |  |  |  |  |
| Continuing\toperations | $2.10 | $1.33 | $1.24 | $1.05 | $1.35 |
| Discontinued\toperations | 0.59 | 0.80 | 0.93 | 0.58 | 0.53 |
| Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple\t(1) | — | — | — | — | — |
| Net\tincome | $2.69 | $2.13 | $2.17 | $1.63 | $1.88 |
| Basic\tNet\tIncome\tPer\tShare |  |  |  |  |  |
| Continuing\toperations | $2.25 | $1.41 | $1.28 | $1.08 | $1.40 |
| Discontinued\toperations | 0.65 | 0.86 | 0.99 | 0.61 | 0.55 |
| Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple\t(1) | — | — | — | — | — |
| Net\tincome | $2.90 | $2.27 | $2.27 | $1.69 | $1.95 |
| Balance\tSheet\tData |  |  |  |  |  |
| Brokerage\tand\tconsulting\treceivables | $8,323 | $8,597 | $8,039 | $8,235 | $8,335 |
| Intangible\tassets | 5,139 | 4,666 | 4,238 | 4,726 | 4,638 |
| Total\tassets | 24,948 | 24,384 | 27,832 | 28,346 | 27,044 |
| Insurance\tpremiums\tpayable | 9,498 | 9,704 | 9,380 | 9,775 | 9,822 |
| Long-term\tdebt | 1,893 | 2,243 | 2,105 | 2,115 | 2,095 |
| Redeemable\tpreferred\tstock | — | — | — | 50 | 50 |
| Stockholders'\tequity | 6,221 | 5,218 | 5,317 | 5,103 | 4,515 |
| Common\tStock\tand\tOther\tData |  |  |  |  |  |
| Dividends\tpaid\tper\tshare | $0.60 | $0.60 | $0.60 | $0.60 | $0.60 |
| Price\trange | 51.32-34.30 | 42.76-31.01 | 37.14-20.65 | 29.40-18.17 | 26.79-17.41 |
| At\tyear-end: |  |  |  |  |  |
| Stockholders'\tequity\tper\tshare | $20.42 | $17.42 | $16.56 | $16.16 | $14.37 |
| Market\tprice | $47.69 | $35.34 | $35.95 | $23.86 | $23.94 |
| Common\tstockholders | 9,437 | 10,013 | 10,523 | 11,291 | 11,777 |
| Shares\toutstanding | 304.6 | 299.6 | 321.2 | 316.8 | 314.0 |
| Number\tof\temployees | 42,500 | 43,100 | 46,600 | 47,900 | 54,400 |

# Item	7.				Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

								This	Management's	Discussion	and	Analysis	is	organized	as	follows:

# I. OVERVIEW

Executive	Summary	of	2007	Financial	Results

# II. KEY	RECENT	EVENTS

# Tender	Offer

# III. CRITICAL	ACCOUNTING	POLICIES	AND	ESTIMATES

Restructuring

Pensions

Contingencies

Policy	Liabilities

Valuation	of	Investments

Intangible	Assets

Share-based	Payments

# Income	Taxes

# IV. REVIEW	OF	CONSOLIDATED	RESULTS

# General

Consolidated	Results	for	2007	Compared	to	2006

# V. REVIEW	BY	SEGMENT

Unallocated	Income	and	Expense

# FINANCIAL	CONDITION	AND	LIQUIDITY

Liquidity

Cash	Flows

Financial	Condition

Investments

Borrowings

Stockholders'	Equity

Off	Balance	Sheet	Arrangements

# Key	Drivers	of	Financial	Performance

# Operations

								The	key	drivers	of	financial	performance	vary	among	our	operations.

								Risk	and	Insurance	Brokerage	Services.				Brokerage	segment	results	are	principally	affected	by:

•conditions	in	insurance	markets,	particularly	fluctuations	in	premiums	charged	by	insurance	companies,

•success	in	attracting	and	keeping	clients,

•fluctuations	in	foreign	exchange	rates,

•interest	income	on	our	investments,

# •expense	management,	and

# •employee	retention.

								Consulting.				Consulting	segment	results	are	principally	affected	by:

•our	clients'	employment	levels,	which	are	driven	mainly	by	economic	conditions,

•governmental	regulations	affecting	the	health	care	market,	employee	benefit	programs	and	our	clients'	respective	industries,

•our	success	attracting	and	keeping	clients,

								As	more	fully	discussed	below	in	"Key	Recent	Events,"	in	December	2007,	we	announced	that	we	had	signed	separate	definitive	agreements	to	sell	our	Combined Insurance	Company	of	America	("CICA")	and	Sterling	Life	Insurance	Company	("Sterling")	subsidiaries.	The	results	of	these	operations,	which	were	previously included	in	an	Insurance	Underwriting	segment,	have	been	reclassified	to	discontinued	operations	for	all	periods	presented.	The	results	of	these	operations	are	affected by:

•consumer	buying	habits,	which	are	influenced	by	economic	conditions,

•competition	with	other	underwriters,	including	competition	based	upon	claims-paying	ratings,

•our	success	selling	new	policies,	selling	existing	policyholders	more	services,	and	having	customers	renew	their	policies,	and

•our	investment	results.

								We	have	ceased	writing	property	and	casualty	insurance	and	have	placed	our	remaining	property	and	casualty	operations	in	runoff.	Results	of	these	operations	are affected	primarily	by	claims	management	and	reinsurance	collectibility.

								Liquidity	is	derived	from	cash	flows	from	our	businesses,	excluding	funds	held	on	behalf	of	clients,	and	from	financing.	We	use	liquidity	to:

•pay	for	capital	expenditures,

# •repay	debt,

•fund	acquisitions	and	pension	obligations,

# •repurchase	shares,	and

•pay	dividends	to	our	stockholders.

								Because	we	are	a	holding	company,	our	subsidiaries	may	not	have	available	cash	to	pay	us	dividends;	in	the	case	of	our	insurance	underwriting	subsidiaries,	this ability	is	limited	by	regulatory	and	rating	agency	considerations.	Our	access	to	cash	generated	from	operations	outside	the	U.S.	may	be	affected	by	tax	considerations and	by	pension	funding	requirements	in	our	international	pension	plans.

								Below	is	a	summary	of	our	2007	financial	results.	Refer	to	our	detailed	discussion	below	for	further	details.

•Our	revenues	from	continuing	operations	increased	$590	million	or	9%	overall	(2%	on	an	organic	basis).	More	specifically:

•Risk	and	Insurance	Brokerage	Services	revenue	increased	$431	million	or	8%	(3%	on	an	organic	basis),	and

•Consulting	revenue	increased	$70	million,	driven	primarily	by	changes	in	foreign	exchange	rates.

We	use	supplemental	information	related	to	organic	revenue	growth	to	help	us	and	our	investors	evaluate	business	growth	from	existing operations.	Organic	revenue	growth	excludes	from	reported	revenues	the	impact	of	foreign	exchange	rate	changes,	acquisitions,	divestitures, transfers	between	business	units,	investment	income,	reimbursable	expenses	and	unusual	items.

•Expenses	increased	4%	in	2007	due	primarily	to	unfavorable	foreign	exchange	and	higher	compensation	costs,	partially	offset	by	pension	savings,	lower restructuring	costs	and	savings	related	to	our	2005	restructuring	program.

•We	announced	that	we	signed	separate	definitive	agreements	to	sell	our	CICA	and	Sterling	subsidiaries.	We	expect	that	both	transactions	will	be completed	in	the	second	quarter	of	2008.

•We	substantially	completed	the	restructuring	plan	that	began	in	late	2005.	Total	expenses	of	$366	million	were	incurred,	of	which	$41	million	was incurred	in	2007.	We	expect	these	efforts	to	reduce	annual	costs	from	our	continuing	operations	by	approximately	$270	million	in	2008.

•Beginning	in	the	third	quarter	2007,	we	began	a	global	restructuring	effort,	intended	to	create	a	more	streamlined	organization	and	reduce	future	expense growth	to	better	serve	clients.	As	a	result	of	this	effort,	we:

•incurred	$46	million	in	2007	for	workforce	reduction	and	lease	consolidation	costs,	asset	impairments	and	other	associated	costs,	and

•expect	these	efforts	to	reduce	annual	costs	from	our	continuing	operations	by	approximately	$240	million	by	2010.

•Our	Board	of	Directors	increased	our	share	repurchase	program	in	December	2007	to	$4.6	billion.	At	December	31,	2007,	the	Company	had $2,777	million	remaining	under	the	authorized	share	repurchase	program.

								In	managing	our	cash	and	investments	during	the	year,	we:

•spent	$751	million	to	repurchase	19.1	million	of	our	outstanding	shares,

•contributed	$211	million	in	cash	to	our	major	defined	benefit	pension	plans,	and

•repaid	$250	million	of	notes	payable	in	January	2007.

								In	November	2007,	we	redeemed	all	of	our	remaining	outstanding	3 /2%	Senior	Convertible	Debentures	that	were	due	in	2012.	As	a	result	of	this	redemption	and 1 earlier	voluntary	redemptions,	we	issued	approximately	14	million	shares	of	our	common	stock.

								All	of	our	financial	information	reflects	the	application	of	critical	accounting	policies,	estimates,	assumptions	and	judgments,	as	discussed	below	under	"Critical Accounting	Policies	and	Estimates."

								These	items	are	discussed	further	in	the	remainder	of	this	Management's	Discussion	and	Analysis.

# KEY	RECENT	EVENTS

# Sale	of	Businesses	and	Disposal	of	Operations

								In	December	2007,	we	announced	that	we	signed	separate	definitive	agreements	to	sell	our	CICA	and	Sterling	subsidiaries.	These	two	subsidiaries	were	previously included	in	an	Insurance	Underwriting	segment.	We	expect	that	both	transactions	will	be	completed	in	the	second	quarter	of	2008.	In	more	detail:

•CICA	is	being	sold	to	ACE	Limited	for	cash	consideration	of	$2.4	billion.	Additionally,	we	expect	a	one-time	dividend	of	$325	million	from	CICA	before this	transaction	closes.

•Sterling	is	being	sold	to	Munich	Re	Group	for	cash	consideration	of	$352	million.

•The	net	assets	of	both	subsidiaries	were	approximately	$1.4	billion	at	December	31,	2007.

								These	dispositions	are	subject	to	various	closing	conditions,	including	receipt	of	required	regulatory	approvals.	We	have	included	CICA	and	Sterling's	operating results	in	discontinued	operations	for	all	periods	presented.

								Over	the	last	three	years,	we	have	sold	the	following	additional	businesses	that	are	also	included	in	discontinued	operations:

•Aon	Warranty	Group	("AWG")	and	its	worldwide	warranty	and	credit	operations,	which	were	previously	included	in	the	Insurance	Underwriting segment,

•Construction	Program	Group	("CPG"),	a	managing	general	underwriter	whose	policies	were	underwritten	by	Aon's	property	and	casualty	operation, which	was	previously	included	in	both	the	Risk	and	Insurance	Brokerage	Services	and	Insurance	Underwriting	segments,

•our	U.S.	wholesale	brokerage	business,	Swett	&	Crawford,	and

•a	small	Australian	brokerage	unit.

								Results	of	the	businesses	included	in	discontinued	operations	are	as	follows:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Revenues | $2,502 | $3,430 | $3,379 |
| Pretax\tincome\t(loss): |  |  |  |
| Operations | $326 | $373 | $379 |
| Sale | (10) | 46 | 236 |
| Total | $316 | $419 | $615 |
| After-tax\tincome: |  |  |  |
| Operations | $189 | $263 | $218 |
| Sale | 3 | 9 | 101 |
| Total | $192 | $272 | $319 |

								In	2007,	we	sold	the	following	businesses	that	remain	in	our	continuing	operating	results:

•Media	Professionals,	Inc.	and	two	other,	smaller	operations,	which	were	included	in	the	Risk	and	Insurance	Brokerage	Services	segment.	We	recognized total	pretax	gains	of	$32	million	on	these	sales.

•25%	of	our	Botswana	subsidiary,	which	is	included	in	the	Risk	and	Insurance	Brokerage	Services	segment.	A	pretax	gain	of	$4	million	was	recognized on	the	sale.

								See	Note	5	to	the	consolidated	financial	statements,	"Disposal	of	Operations,"	for	further	information.

# Restructuring	Initiatives

# 2007	Restructuring	Plan

•announced	a	global	restructuring	plan	intended	to	create	a	more	streamlined	organization	and	reduce	expense	growth	to	better	serve	clients.

•estimate	this	restructuring	plan	will	result	in	cumulative	pretax	charges	totaling	approximately	$360	million.	Expenses	will	include	workforce	reduction and	lease	consolidation	costs,	asset	impairments,	and	other	expenses	necessary	to	implement	the	restructuring	initiative.	We	recorded	approximately $46	million	of	restructuring	and	related	expenses	through	December	31,	2007,	and	expect	the	remaining	restructuring	and	related	expenses	to	affect continuing	operations	through	the	end	of	2009.

•anticipate	that	these	initiatives	will	lead	to	annualized	cost-savings	of	approximately	$50-$70	million	in	2008,	$175-$200	million	in	2009,	and $240	million	of	annualized	savings	by	2010.	However,	there	can	be	no	assurances	that	we	will	achieve	the	targeted	savings.

								The	2007	Restructuring	Plan	eliminates	an	estimated	2,700	jobs	beginning	in	the	third	quarter	of	2007	and	continuing	into	2009.	We	also	expect	to	close	or consolidate	several	offices	resulting	in	sublease	losses	or	lease	buy-outs.	These	efforts	will	also	trigger	asset	impairments	in	the	form	of	accelerated	amortization	of	any remaining	leasehold	improvements.

								The	following	table	summarizes	2007	restructuring	and	related	expenses	by	type	incurred,	and	estimated	to	be	incurred	through	the	end	of	the	restructuring initiative:

| (millions) | Actual	2007 | Estimated	Total	for<br>Restructuring	Period	(1) |
| :--- | :--- | :--- |
| Workforce\treduction | $17 | $220 |
| Lease\tconsolidation | 22 | 79 |
| Asset\timpairments | 4 | 41 |
| Other\tcosts\tassociated\twith\trestructuring | 3 | 20 |
| Total\trestructuring\tand\trelated\texpenses | $46 | $360 |

(1) Actual	costs,	when	incurred,	will	vary	due	to	changes	in	the	assumptions	built	into	this	plan.	Significant	assumptions	likely	to	change	when	plans	are	finalized and	approved	include,	but	are	not	limited	to,	changes	in	severance	calculations,	changes	in	the	assumptions	underlying	our	sublease	loss	calculations	due	to changing	market	conditions,	and	changes	in	our	overall	analysis	that	might	cause	us	to	add	or	cancel	component	initiatives.

								Workforce	reductions	reflect	a	cash	expense,	though	we	may	recognize	the	expense	before	paying	for	the	expenditure.	Asset	impairments	are	non-cash	expenses. Lease	consolidation	accruals	reflect	the	present	value	of	future	cash	flows.	Other	costs	are	cash	expenses,	which	are	expensed	in	the	period	in	which	they	are	incurred.

								The	following	table	summarizes	actual	restructuring	and	related	expenses	incurred,	and	estimated	to	be	incurred	through	the	end	of	the	restructuring	initiative,	by segment.

| (millions) | Actual	2007 | Estimated	Total	for<br>Restructuring	Period |
| :--- | :--- | :--- |
| Risk\t&amp;\tInsurance\tBrokerage\tServices | $41 | $320 |
| Consulting | 5 | 40 |
| Total\trestructuring\tand\trelated\texpenses | $46 | $360 |

								In	2005,	we	commenced	a	restructuring	to	reduce	our	fixed	cost	base	and	increase	efficiency.	This	three-year	plan	is	substantially	complete,	and	resulted	in cumulative	pretax	expenses	totaling	$366	million.	Restructuring	costs	include	workforce	reductions,	lease	consolidation	costs,	asset	impairments	and	other	expenses.	For 2007,	the	estimated	restructuring	benefits	were	approximately	$225	million.	We	expect	these	initiatives	will	lead	to	annualized	cost	savings	of	approximately $270	million	in	2008.	This	estimate	does	not	include	any	benefits	related	to	businesses	placed	into	discontinued	operations.

								We	estimate	this	initiative	will	eliminate	3,600	positions,	of	which	over	3,500	of	these	eliminations	had	already	occurred	by	December	31,	2007.

								The	following	table	details	the	restructuring	and	related	expenses	incurred	by	type.

| (millions) | 2005 | 2006 | 2007 | Incurred |
| :--- | :--- | :--- | :--- | :--- |
| Workforce\treduction | $116 | $116 | $21 | $253 |
| Lease\tconsolidation | 20 | 27 | 13 | 60 |
| Asset\timpairments | 17 | 12 | 3 | 32 |
| Other\trelated\texpenses | 5 | 12 | 4 | 21 |
| Total\trestructuring\tand\trelated\texpenses | $158 | $167 | $41 | $366 |

								The	following	is	a	summary	of	actual	restructuring	and	related	costs	incurred,	by	segment.

| (millions) | 2005 | 2006 | 2007 | Total<br>Incurred |
| :--- | :--- | :--- | :--- | :--- |
| Risk\t&amp;\tInsurance\tBrokerage\tServices | $143 | $136 | $33 | $312 |
| Consulting | 8 | 20 | 6 | 34 |
| Unallocated | 4 | 3 | — | 7 |
| Total\trestructuring\tand\trelated\texpenses\t—\tcontinuing\toperations | 155 | 159 | 39 | 353 |
| Discontinued\toperations | 3 | 8 | 2 | 13 |
| Total\trestructuring\tand\trelated\texpenses | $158 | $167 | $41 | $366 |

# Redemption	of	Senior	Convertible	Debentures

								In	November	2007,	we	redeemed	all	of	our	remaining	outstanding	3 /2%	Senior	Convertible	Debentures	that	were	due	in	2012.	All	of	the	holders	of	the 1 Debentures	elected	to	convert	their	debentures	into	our	common	stock	at	a	conversion	rate	of	46.5658	shares	of	common	stock	for	each	$1,000	principal	amount	of Debentures.	As	a	result	of	this	redemption	and	earlier	voluntary	redemptions,	approximately	14	million	shares	of	our	common	stock	were	issued.

# Distributions	from	PEPS	I

								We	received	income	distributions	from	our	preferred	investment	in	Private	Equity	Partnership	Structures	I,	LLC	("PEPS	I")	of	$61	million	during	2007,	which	are included	in	investment	income:

•Prior	to	2007,	income	distributions	received	from	PEPS	I	were	limited	to	interest	payments	on	various	PEPS	I	debt	instruments.

•Beginning	in	2007,	PEPS	I	had	redeemed	or	collateralized	all	of	its	debt,	and	as	a	result,	began	to	pay	preferred	income	distributions.

								Whether	we	receive	additional	preferred	returns	depends	on	the	performance	of	the	limited	partnership	(LP)	interests	underlying	PEPS	I,	which	we	expect	will	vary from	period	to	period.	We	do	not	control	the	timing	of	the	distributions.

# Stock	Repurchase	Program

								In	November	2005,	our	Board	of	Directors	authorized	the	repurchase	of	up	to	$1	billion	of	Aon's	common	stock.	In	November	2006,	the	Board	increased	that amount	to	$2	billion.	In	December	2007,	the	Board	increased	the	authorization	amount	to	$4.6	billion,	designating	that	the	proceeds	from	the	sale	of	our	CICA	and Sterling	subsidiaries	be	used	to	repurchase	shares.	We	may	repurchase	shares	using	available	capital	through	the	open	market	or	in	privately	negotiated	transactions from	time	to	time,	based	on	prevailing	market	conditions.	We	anticipate	that	the	volume	of	share	repurchases	will

increase	substantially	after	we	receive	the	proceeds	from	the	sales	of	CICA	and	Sterling.	Any	repurchased	shares	will	be	available	for	employee	stock	plans	and	for other	corporate	purposes.	In	2007,	we	repurchased	19.1	million	shares	at	a	cost	of	$751	million.	Since	the	program	began,	we	have	repurchased	48.1	million	shares	at	a cost	of	$1,823	million.	Of	the	shares	repurchased	since	the	program's	inception,	we	have	reissued	approximately	13.8	million	shares	for	stock	options,	stock	awards,	and other	benefit	plans.

								Based	upon	a	review	of	option	grant	practices	in	early	2007	by	the	Audit	Committee	of	the	Board	of	Directors,	we	determined	that	certain	stock	options	were granted	at	a	discount	from	fair	market	value	and	therefore	are	subject	to	adverse	tax	consequences	under	Section	409A	of	the	Internal	Revenue	Code	of	1986,	as amended.

								The	Company	issued	a	Tender	Offer	Statement	in	2007	to	permit	our	eligible	employees	to	amend	certain	options	(the	"Eligible	Options")	that	were	granted	by	Aon under	our	Stock	Incentive	Plan	("Plan").	The	Eligible	Options	include	only	those	stock	options	granted	by	Aon:	(i)	that	were	granted	under	the	Plan;	(ii)	that	had	an exercise	price	per	share	that	was	less	than	the	fair	market	value	per	share	of	our	common	stock	underlying	the	options	on	the	options'	measurement	dates	for	accounting purposes	(the	"deemed	grant	date");	(iii)	that	were	unvested	as	of	December	31,	2004;	(iv)	that	were	outstanding	as	of	the	last	date	on	which	the	Offer	remained	open	for acceptance	and	(v)	that	were	held	by	individuals	who	were	subject	to	taxation	in	the	United	States.	Current	and	former	directors	and	executive	officers	of	Aon	were	not eligible	employees.

								Eligible	employees	could	elect	to:	(i)	amend	all	(but	not	a	portion)	of	their	Eligible	Options	to	increase	the	exercise	price	per	share	to	be	equal	to	the	fair	market value	of	a	share	of	our	common	stock	on	the	deemed	grant	date	(the	"Amended	Exercise	Price");	and	(ii)	for	each	amended	Eligible	Option,	receive	a	cash	payment equal	to	the	difference	between	the	Amended	Exercise	Price	and	the	original	exercise	price,	multiplied	by	the	number	of	shares	of	our	common	stock	subject	to	such unexercised	option.

								The	cash	payments	were	paid	on	the	first	regular	payroll	date	in	January	2008.	We	also	paid	penalties,	excise	and	other	taxes	of	$7	million.

# CRITICAL	ACCOUNTING	POLICIES	AND	ESTIMATES

								Aon's	consolidated	financial	statements	have	been	prepared	according	to	U.S.	generally	accepted	accounting	principles	("GAAP").	To	prepare	these	financial statements,	we	made	estimates,	assumptions	and	judgments	that	affect:

•what	we	report	as	our	assets	and	liabilities,

•what	we	disclose	as	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements,	and

•the	reported	amounts	of	revenues	and	expenses	during	the	periods	presented.

								In	accordance	with	our	policies,	we:

•regularly	evaluate	our	estimates,	assumptions	and	judgments,	including	those	concerning	pensions,	contingencies,	policy	liabilities,	investments, intangible	assets,	share-based	payments	and	income	taxes.

•base	our	estimates,	assumptions,	and	judgments	on	our	historical	experience	and	on	factors	we	believe	reasonable	under	the	circumstances.

								The	results	involve	judgments	about	the	carrying	values	of	assets	and	liabilities	not	readily	apparent	from	other	sources.	If	our	assumptions	or	conditions	change, the	actual	results	we	report	may	differ	from	these	estimates.

								We	believe	the	following	critical	accounting	policies	affect	the	more	significant	estimates,	assumptions,	and	judgments	we	used	to	prepare	these	consolidated financial	statements.

								Restructuring	costs	are	expensed	as	incurred	in	accordance	with	FASB	Statement	No.	112,	Employers	Accounting	for	Postemployment	Benefits	and	FASB Statement	No.	146,	Accounting	for	Costs	Associated	with	Exit	or	Disposal	Activities.	Statement	No.	146	applies	to	one-time	workforce	reduction	benefits	and	requires companies	to	use	Statement	No.	112	when	severance	is	paid	under	an	ongoing	severance	policy.	Lease	consolidation	costs,	asset	impairments	and	other	costs	associated with	restructuring	are	accounted	for	under	Statement	No.	146	and	FASB	Statement	No.	144,	Accounting	for	the	Impairment	or	Disposal	of	Long-Lived	Assets.

# Workforce	reduction	costs

								We	account	for	workforce	reduction	costs	that	result	from	an	ongoing	severance	plan	under	Statement	No.	112.	Such	instances	occur	when	(1)	we	have	an established	severance	policy,	(2)	statutory	requirements	dictate	the	severance	amounts,	or	(3)	we	have	an	established	pattern	of	paying	by	a	specific	formula.

								We	estimate	our	one-time	workforce	reduction	costs	related	to	exit	and	disposal	activities	not	resulting	from	an	ongoing	severance	plan	based	on	the	benefits available	to	the	employees	being	terminated.	We	recognize	these	costs	when	we:

•identify	the	specific	classification	(or	functions)	and	locations	of	the	employees	being	terminated,

•notify	the	employees	who	might	be	included	in	the	termination,	and

•expect	to	terminate	employees	within	the	legally	required	notification	period.

								When	employees	are	receiving	incentives	to	stay	beyond	the	legally	required	notification	period,	we	record	the	cost	of	their	severance	over	the	remaining	service period.

# Lease	consolidation	costs

								Where	we	have	provided	notice	of	cancellation	pursuant	to	a	lease	agreement	or	abandoned	space	and	have	no	intention	of	reoccupying	it,	we	recognize	a	loss.	The loss	reflects	our	best	estimate	of	the	net	present	value	of	the	future	cash	flows	associated	with	the	lease	at	the	date	we	vacate	the	property	or	sign	a	sublease	arrangement. To	determine	the	loss,	we	make	assumptions	about	the	time	period	over	which	the	building	will	remain	vacant	and	the	sublease	terms.

								We	estimate	sublease	income	based	on	current	market	quotes	for	similar	properties.	When	we	finalize	definitive	agreements	with	the	sublessee,	we	adjust	our sublease	losses	for	actual	outcomes.

# Fair	value	concepts	of	severance	arrangements	and	sublease	losses

								Accounting	guidance	requires	that	our	exit	and	disposal	accruals	reflect	the	fair	value	of	the	liability.	Where	material,	we	discount	back	sublease	loss	calculations	to arrive	at	their	net	present	value.

								Most	workforce	reductions	happen	over	a	short	span	of	time,	so	no	discounting	is	necessary.	However,	we	discount	the	severance	arrangement	when	we	terminate an	employee	who	will	provide	no	future	service	and	we	pay	their	severance	over	an	extended	period.	Accretion	of	the	discount	occurs	over	the	remaining	life	of	the liability.

								For	the	remaining	lease	term	or	severance	payout,	we	decrease	the	liability	for	payments	and	increase	the	liability	for	accretion	of	the	discount.	The	discount	reflects our	incremental	borrowing	rate,	which	matches	the	lifetime	of	the	liability.

# Other	associated	costs	of	exit	and	disposal	activities

								We	recognize	other	restructuring	costs	as	they	are	incurred,	including	moving	costs	and	consulting	and	legal	fees.

								Asset	impairments	may	result	from	large-scale	restructurings	and	we	account	for	these	impairments	in	the	period	when	they	become	known.	Furthermore,	we record	impairments	in	accordance	with	Statement	No.	144	by	reducing	the	book	value	to	the	net	present	value	of	future	cash	flows	(in	situations	where	the	asset	had	an identifiable	cash	flow	stream)	or	accelerating	the	depreciation	to	reflect	the	revised	useful	life.

								We	sponsor	defined	benefit	pension	plans	throughout	the	world.	Our	most	significant	plans	are	located	in	the	United	States,	the	United	Kingdom,	the	Netherlands and	Canada.

# Significant	changes	to	pension	plans

								Our	U.S.	pension	plans	are	closed	to	new	entrants,	and	effective	January	1,	2007,	we	began	determining	future	pension	benefits	using	a	"career	average	pay" formula	rather	than	the	prior	"final	average	pay"	formula.

								Our	U.K.	pension	plans	have	been	closed	to	new	entrants	since	1999.	On	March	31,	2007	future	benefit	accruals	relating	to	salary	and	service	ceased	in	the	U.K. plans.	Future	retirement	benefits	are	now	provided	in	a	defined	contribution	segment	of	a	pension	scheme.

# Market-related	value	of	assets

								The	U.S.	pension	plans	use	the	market-related	value	of	assets	to	determine	expected	return	on	assets.

•the	market-related	value	of	pension	assets	does	not	yet	reflect	accumulated	asset	gains	of	$6	million.	These	gains	will	decrease	pension	expense	as	they are	graded	into	the	market-related	asset	value	and	may	be	offset	by	future	asset	losses.	We	recognize	20%	of	the	asset	gain	or	loss	in	the	current	year's market-related	value,	with	the	remaining	80%	spread	over	the	next	four	years.

•we	reported	a	fair	value	of	pension	assets	of	$1,514	million,	while	market-related	value	of	assets	is	$1,508	million.

								The	U.K.,	Dutch	and	Canadian	plans	use	fair	value	to	determine	expected	return	on	assets.

# Recognition	of	gains	and	losses	and	prior	service

								In	accordance	with	FASB	Statement	No.	87,	we	defer	recognition	of	gains	and	losses	that	arise	from	events	such	as	changes	in	the	discount	rate	and	actuarial assumptions,	actual	demographic	experience	and	asset	performance.

								Unrecognized	gains	and	losses	are	amortized	as	a	component	of	pension	expense	based	on	the	average	expected	future	service	of	active	employees	in	the	U.S., Dutch	and	Canadian	plans,	or	the	average	life	expectancy	of	the	U.K.	plan	members.	We	amortize	prior	service	costs	or	credits	which

arise	as	a	result	of	plan	changes	over	a	period	based	on	the	average	expected	future	service	of	active	employees	in	the	plans	at	the	time	the	prior	service	costs	or	credits were	established.

								As	of	December	31,	2007,	the	pension	plans	have	deferred	losses	that	have	not	yet	been	recognized	through	income	in	the	financial	statements.	We	amortize	the actuarial	losses	outside	of	a	corridor,	which	is	defined	as	10%	of	the	greater	of	market-related	value	of	plan	assets	or	projected	benefit	obligation	("PBO").	To	the	extent not	offset	by	future	gains,	incremental	amortization	as	calculated	above	will	continue	to	affect	future	pension	expense	similarly	until	fully	amortized.

								The	following	table	discloses	our	combined	experience	loss,	prior	service	costs	or	credits,	the	number	of	years	that	we	are	amortizing	the	experience	loss	over,	and the	estimated	2008	amortization	by	each	plan:

# Rate	of	return	on	plan	assets	and	asset	allocation

								The	following	table	summarizes	the	expected	long-term	rate	of	return	on	plan	assets	for	future	pension	expense	and	the	related	target	asset	mix:

								We	base	our	U.S.	expected	long-term	return	on	capital	market	expectations	for	various	asset	classes.	U.S.	equities	and	fixed	income	expectations	are	estimated using	a	theoretical	Capital	Asset	Pricing	("CAP")	Model.	The	CAP	Model	for	equities	included	three	factors:

•Current	dividend	yield	(1.7%)

•Corporate	earnings	nominal	growth	(6.7%)

								A	fixed	income	expectation	factor	of	5.6%	included	the	then-current	10-year	U.S.	Treasury	Note	yields	and	simulations	of	future	yields	based	on	expected	inflation and	other	factors.	We	based:

•other	asset	class	expectations	on	risk	premiums	relative	to	U.S.	equities	and	fixed	income	expected	returns,	and

•estimates	of	volatilities	and	correlations	among	asset	classes	on	historical	data.

								In	determining	the	expected	rate	of	return	for	our	U.K.,	Dutch	and	Canadian	plans,	we	analyzed	investment	community	forecasts	and	current	market	conditions	to develop	expected	returns	for	each	of	the	asset	classes	used	by	the	plans.	We:

•consider	historical	performance	data	by	asset	class	over	long	periods,	and

•weight	the	expected	returns	for	each	asset	class	by	target	asset	allocations	of	the	plans.

								Generally,	the	U.K.	plans'	trustees	determine	the	investment	policy	for	each	plan.	Because	there	are	eight	pension	plans	maintained	in	the	U.K.,	our	target	allocation represents	a	weighted	average	of	the	target	allocation	of	each	plan.	Further,	target	allocations	are	subject	to	change.

								In	total,	at	the	end	of	the	2007	valuation	year,	the	U.K.	plans	were	invested	66%	in	equities	and	34%	in	fixed	income	securities.	The	Dutch	plan	was	invested	38% in	equities	and	62%	in	fixed	income	securities.	The	Canadian	plan	was	invested	65%	in	equities	and	35%	in	fixed	income	securities.

# Impact	of	changing	economic	assumptions

								Changes	in	the	discount	rate	and	expected	return	on	assets	can	have	a	material	impact	on	pension	obligations	and	pension	expense.

								The	following	table	reflects,	holding	all	other	assumptions	constant,	what	a	one	percentage	point	increase	and	decrease	in	our	estimated	liability	discount	rate would	have	on	our	estimated	2008	pension	expense.

| Increase	(Decrease)	in	expense	(in	millions) | Increase | Decrease |
| :--- | :--- | :--- |
| U.S.\tplans | $(27) | $33 |
| U.K.\tplans | (29) | 31 |
| Dutch\tplans | (6) | 9 |
| Canadian\tplans | (6) | 7 |

								The	following	table	reflects,	holding	other	assumptions	constant,	what	a	one	percentage	point	increase	and	decrease	in	our	estimated	long-term	rate	of	return	on plan	assets	would	have	on	our	estimated	2008	pension	expense.

| Increase	(Decrease)	in	expense	(in	millions) | Increase | Decrease |
| :--- | :--- | :--- |
| U.S.\tplans | $(15) | $15 |
| U.K.\tplans | (39) | 39 |
| Dutch\tplans | (5) | 5 |
| Canadian\tplans | (3) | 3 |

# Estimated	future	contributions

								In	the	U.S.,	we	anticipate	minimum	cash	funding	requirements	of	$8	million	and	$9	million	in	2008	and	2009,	respectively.

								The	closure	of	the	U.K.	schemes	to	future	accrual	and	the	renegotiation	of	cash	contributions	from	the	Company	during	2007	both	impacted	recent	and	expected future	cash	requirements	to	the	U.K.	plans.	Under	current	rules	and	assumptions,	we	anticipate	U.K.	funding	requirements	of	$143	million	in	2008	and	$146	million	in 2009.	These	contributions	reflect	minimum	funding	requirements	plus	other	amounts	agreed	with	U.K.	plan	trustees.

								Contributions	to	the	Dutch	and	Canadian	plans	are	estimated	to	be	$28	million	and	$16	million	in	2008,	respectively.

								We	define	a	contingency	as	any	material	condition	that	involves	a	degree	of	uncertainty	that	will	ultimately	be	resolved.	Under	GAAP,	we	are	required	to	establish reserves	for	contingencies	when	a	loss	is	probable	and	we	can	reasonably	estimate	its	financial	impact.	We	do	not	recognize	gain	contingencies	until	the	contingency	is resolved.

								We	are	required	to	assess	the	likelihood	of	material	adverse	judgments	or	outcomes	as	well	as	potential	ranges	or	probability	of	losses.	We	determine	the	amount	of reserves	required,	if	any,	for	contingencies	after	carefully	analyzing	each	individual	issue.	The	required	reserves	may	change	due	to	new	developments	in	each	issue,	or changes	in	approach,	such	as	changing	our	settlement	strategy.

								We	collect	premiums	from	policyholders,	and	we	establish	liabilities	(reserves)	to	pay	benefits	to	policyholders.	The	liabilities	for	policy	benefits,	claims,	and unearned	premiums	represent	our	best	estimates	of	what	we	expect	to	pay	to	policyholders	in	the	future.	If	these	liabilities	prove	inadequate,	we	would	be	required	to increase	the	reserves,	which	could	hurt	our	results	and	financial	condition.

# Property	&	Casualty

								Loss	reserves	reflect	our	estimated	liability	for	unpaid	claims	and	claims	adjustment	expenses	and	for	reported	and	unreported	losses	incurred	as	of	the	end	of	each accounting	period.	Because	setting	loss	reserve	levels	is	inherently	uncertain,	we	cannot	guarantee	that	our	current	reserves	will	prove	adequate	in	light	of	subsequent events.	Loss	reserves	represent	our	best	estimate	of	what	we	expect	the	ultimate	settlement	and	administration	of	claims	will	cost,	given	our	informed	judgments	based on:

# •currently	available	data,

•future	trends	in	claims	severity	and	frequency,

•judicial	theories	of	liability,	and

# •other	factors.

								Many	of	these	factors	are	not	quantifiable	in	advance,	and	both	internal	and	external	events,	such	as	changes	in	claims	handling	procedures,	inflation,	judicial	and legal	developments,	and	legislative	changes,	can	cause	our	estimates	to	vary.	The	inherent	uncertainty	of	estimating	reserves	is	greater	for	certain	types	of	liabilities, where	the	variables	affecting	the	claims	are	subject	to	change	and	long	periods	of	time	may	elapse	before	we	can	definitively	determine	liability.	We	periodically	refine our	reserve	estimates	as	further	losses	are	reported	and	settled	and	we	continue	to	refine	our	experience	and	reflect	adjustments	to	reserves	in	the	results	of	the	periods during	which	such	estimates	are	changed.

								We	estimate	loss	reserves	for	all	property	and	casualty	lines	of	business	by	accident	year	using	several	standard	actuarial	techniques,	which	include,	but	are	not limited	to	incurred	and	paid	loss	development	methods,	the	Bornhuetter-Ferguson	method,	and	frequency/severity	methods.	We	project	ultimate	losses	on	a	direct, assumed,	ceded	and	net	basis,	and	deduct	paid	losses	from	the	selected	ultimate	losses	to	arrive	at	the	total	indicated	reserve.	The	total	indicated	reserve	includes	case reserves	and	incurred	but	not	reported	reserves.

								Our	loss	reserve	estimates	are	influenced	by	factors	such	as	the	consistency	of	the	results	from	actuarial	techniques	and	our	knowledge	of	emerging	loss	trends	and rate	or	benefit	changes.

								To	establish	policy	liabilities,	we	develop	estimates	of	reported	and	anticipated	claims,	based	on	our	historical	experience,	other	actuarial	data,	and	assumptions	on investment	yields.	The	actuarial	data	reflects	our	best	estimates	of	future	expectations	regarding	claim	frequency,	claim	severity,	and	the	length	of	time	that	a	customer	is insured.	Morbidity	and	mortality	patterns	may	change	over	time	due	to	many	factors	including	improvements	in	the	general	health	of	the	insured	population,	changes	in lifestyle,	advances	in	medical	diagnosis	and	treatment,	or	the	occurrence	of	a	widespread	pandemic.

								Although	mortality,	morbidity,	persistency,	and	interest	rate	assumptions	are	set	when	we	issue	new	insurance	policies,	we	may	need	to	provide	for	additional	losses on	a	product	by	increasing	reserves,	reducing	previously	capitalized	acquisition	costs	established	for	that	product,	or	establishing	premium	deficiency	reserves	if	there are	significant	changes	in	our	experience	or	assumptions.

								Liabilities	for	incurred	but	unpaid	claims	include	estimated	costs	relating	to	reported	claims,	and	incurred,	but	not	reported,	claims.	We	base	the	liability	for	unpaid claims	on	the	estimated	ultimate	cost	of	settling	claims	using	best	estimates	from	past	experience.	These	estimates	incorporate	current	trends	and	any	other	factors	that influence	historical	data.	Actual	experience,	however,	may	vary	from	our	estimates,	due	to	changes	in	claim	reporting,	processing	patterns,	and	variations	from	historic averages	for	the	amount	paid	per	claim.	Variations	from	historic	patterns	and	averages	could	result	in	additional	changes	that	increase	or	decrease	unpaid	claim liabilities.

								We	generally	accrue	a	liability	for	future	policy	benefits	relating	to	long-duration	contracts	when	we	recognize	premium	revenue.	The	liability	represents	the present	value	of	future	benefits	to	be	paid	to	policyholders	less	the	present	value	of	future	premiums.	We	estimate	this	liability	using	methods	that	include	estimates	of expected	investment	yields,	mortality,	morbidity,	and	policy	persistency.

								Actual	experience	may	vary	from	our	estimates	due	to	emerging	trends	in	morbidity,	mortality,	persistency,	and	asset	yields	—	and	some	of	these	trends	can fluctuate	significantly	over	time.	As	we	realize	the	actual	experience,	we	take	into	account	the	financial	impacts	of	these	variations	from	our	original	assumptions.	When current	estimates	of	the	present	value	of	future	benefits	and	expenses	exceed	the	present	value	of	future	premiums	for	a	product	line,	we	recognize	all	excess	amounts	as a	loss.

								We	periodically	review	securities	with	unrealized	losses	and	evaluate	them	for	other-than-temporary	impairment.	We	analyze	various	risk	factors	and	determine	if any	specific	asset	impairment	exists.	If	there	is	a	specific	asset	impairment,	we	recognize	a	realized	loss	and	adjust	the	cost	basis	of	the	impaired	asset	to	its	fair	value.

								We	review	invested	assets	with	unrealized	losses	separated	into	two	categories:

1. Assets	with	unrealized	losses	due	to	issuer-specific	events.

2. Assets	with	unrealized	losses	due	to	market	conditions	or	industry-related	events.

								At	least	quarterly,	we	review	the	following	types	of	information:

•the	creditworthiness	of	corporate	obligors	for	changes	in	ratings	and	financial	performance,

•cash	flow	trends	and	underlying	levels	of	collateral	for	asset-backed	securities,	and

•issuer	financial	trends	and	market	expectations	based	on	third-party	analytical	reports.

								We	recognize	an	other-than-temporary	impairment	loss	when	appropriate	for	these	investments	with	continuous	unrealized	losses	due	to	issuer-specific	events.	We base	our	decision	on	the	facts	and	circumstances	for	each	investment.

								Invested	assets	with	unrealized	losses	due	to	market	conditions	or	industry-related	events	include	those	affected	by:

•increasing	U.S.	Treasury	or	local	sovereign	interest	rates,

•corporate	and	asset-backed	credit	spread	widening,

•common	stock	price	volatility	due	to	conditions	in	the	overall	market	or	a	particular	industry,	and

# •illiquid	market	conditions.

								In	certain	circumstances,	we	assume	that	a	decline	in	value	below	cost	is	temporary	for	fixed-maturity	investments,	with	unrealized	losses	due	to	market	conditions or	industry-related	events	from	which	the	market	is	expected	to	recover;	in	these	cases,	we	can	hold	the	investment	until	maturity	or	the	market	recovers,	which	is	a decisive	factor	when	considering	an	impairment	loss.	If	we	decide	that	holding	the	investment	to	maturity	is	no	longer	appropriate,	we	will	reevaluate	that	investment	for other-than-temporary	impairment.

								We	evaluate	other-than-temporary	impairment	for	preferred	and	common	stock	and	other	investments	with	continuous	unrealized	losses	for	two	consecutive quarters	due	to	market	conditions	or	industry-related	events.	We	recognize	an	other-than-temporary	impairment	loss	based	upon	each	investment's	facts	and circumstances	and	monitor	these	securities	quarterly	to	ensure	that	unrealized	losses	are	not	the	result	of	issuer-specific	events.

								Note	6	to	the	consolidated	financial	statements	provides	additional	information	about	our	investments.

								Intangible	assets	represent	the	excess	of	cost	over	the	value	of	net	tangible	assets	of	acquired	businesses.	We	classify	our	intangible	assets	as	either	goodwill,	client lists,	non-compete	agreements,	or	other	purchased	intangibles.

								Although	goodwill	is	not	amortized,	we	test	it	for	impairment	at	least	annually.	We	test	more	frequently	if	there	are	indicators	of	impairment	or	whenever	business circumstances	suggest	that	the	carrying	value	of	goodwill	may	not	be	recoverable.	We	perform	impairment	reviews	at	the	reporting	unit	level.	If	the	fair	value	of	a reporting	unit	is	determined	to	be	less	than	the	carrying	value	of	the	reporting	unit,	we	complete	further	analysis	to	determine	whether	there	was	an	impairment	loss.	No further	analysis	was	required	in	2007	or	2006.	We	determine	fair	value	based	on	estimates	and	assumptions	related	to	the	amount	and	timing	of	future	cash	flows	and future	interest	rates.	Different	estimates	or	assumptions	could	produce	different	results.

								Stock-based	compensation	expense	is	based	on	the	value	of	the	portion	of	share-based	payment	awards	that	we	ultimately	expect	to	vest	during	that	period.	Thus, we	have	reduced	expense	for	estimated	forfeitures.	We	estimate	forfeitures	at	the	time	of	grant	and	revise	our	estimates,	if	necessary,	in	subsequent	periods	if	actual forfeitures	differ	from	those	estimates.	When	the	terms	of	an	award	require	no	additional	service,	the	award	is	fully	expensed	at	the	grant	date.	When	awards	are modified,

we	account	for	the	incremental	shares	at	the	fair	market	value	at	the	date	of	modification.	Expense	recognition	begins	on	the	date	the	service	period	begins,	which	can precede	or	be	after	the	grant	date,	depending	on	the	provisions	of	the	award.

# Option	Accounting

								Before	2006,	Aon	was	subject	to	Accounting	Principles	Board	("APB")	Opinion	No.	25,	Accounting	for	Stock	Issued	to	Employees,	in	accounting	for	its	stock- based	compensation	plans.	Under	APB	No.	25,	we	recognized	no	compensation	expense	for	stock	options	when	the	exercise	price	of	the	options	equaled	the	market price	of	the	stock	at	the	date	of	grant.

								In	2006,	we	adopted	Statement	No.	123(R),	Share-Based	Payments,	and	changed	our	method	of	valuation	for	stock	options	granted.	Beginning	in	2006,	we	moved to	a	lattice-binomial	option-pricing	model	from	the	Black-Scholes	option-pricing	model,	which	we	previously	used	for	our	required	pro	forma	information.	Lattice- based	option	valuation	models:

•use	a	range	of	assumptions	over	the	expected	term	of	the	options.

•estimate	expected	volatilities	based	on	the	average	of	the	historical	volatility	of	Aon's	stock	price	and	the	implied	volatility	of	traded	options	on	Aon's stock.

•use	historical	data	to	estimate	option	exercise	and	employee	terminations	within	the	valuation	model,	differentiating	between	executives	and	key employees.

•base	the	expected	dividend	yield	assumption	on	our	current	dividend	rate.

•base	the	risk-free	rate	for	the	contractual	life	of	the	option	on	the	U.S.	Treasury	yield	curve	in	effect	at	the	time	of	grant.

								The	expected	life	of	employee	stock	options	represents	the	weighted-average	period	stock	options	are	expected	to	remain	outstanding,	which	is	a	derived	output	of the	lattice-binomial	model.

# Service-Based	RSU	Awards

								Before	2006,	restricted	stock	units	("RSUs")	granted	to	employees	were	generally	service-based	and	accounted	for	by	expensing	the	total	award	value	over	the service	period.	We	calculated	the	total	award	value	by	multiplying	the	total	number	of	shares	to	be	delivered	by	the	quoted	market	value	on	the	date	of	grant.	In connection	with	the	adoption	of	Statement	No.	123(R)	in	2006,	we	began	to	estimate	forfeitures	and	considered	dividend	discounts	when	determining	the	fair	value	of the	RSUs.

# Performance-Based	Awards

								Beginning	in	2006,	executives	and	key	employees	may	receive	performance-based	awards,	which	ultimately	result	in	the	receipt	of	RSUs,	if	the	employee	achieves his	or	her	objectives.	Such	objectives	may	be	made	on	a	personal,	group	or	company	level.	The	RSUs	may	be	immediately	vested	or	have	a	future	additional	service period.	Generally,	our	performance	awards	are	fixed,	which	means	we	determine	the	fair	value	of	the	award	at	the	grant	date,	and	recognize	the	expense	over	the performance	or	vesting	period,	whichever	is	longer.

# To	expense	performance-based	awards,	we:

•estimate	the	number	of	shares	to	be	delivered	at	the	end	of	the	performance	period	multiplied	by	the	fair	value	of	those	shares.

•recognize	the	resulting	value	by	multiplying	the	fair	value	to	be	delivered	times	the	percentage	of	the	performance	period	completed.

								These	estimates	take	into	account	performance	to	date	as	well	as	the	assessment	of	future	performance.	These	assessments	are	made	by	management	using subjective	estimates,	such	as	long-term	plans.	As	a	result,	changes	in	the	underlying	assumptions	could	have	a	material	impact	on	the	expense	recognized.

								The	largest	performance-based	stock	plan	is	the	Leadership	Performance	Plan	("LPP").	The	LPP	currently	has	two	performance	periods	—	2006	to	2008	and	2007 to	2009.	A	10%	upward	or	downward	adjustment	in	our	estimated	performance	targets	would	increase	or	decrease	total	expense	by	approximately	$8	million.	As	the percent	of	expected	performance	increases	or	decreases,	the	potential	change	in	expense	can	go	from	0%	to	200%	of	the	targeted	total	expense.

								We	earn	income	in	numerous	foreign	countries	and	this	income	is	subject	to	the	laws	of	taxing	jurisdictions	within	those	countries,	as	well	as	U.S.	federal	and	state tax	laws.

								The	carrying	values	of	deferred	income	tax	assets	and	liabilities	reflect	the	application	of	our	income	tax	accounting	policies	in	accordance	with	FASB	Statement No.	109,	Accounting	for	Income	Taxes,	and	are	based	on	management's:

•assumptions	and	estimates	about	future	operating	results	and	levels	of	taxable	income	and

•judgments	regarding	the	interpretation	of	the	provisions	of	Statement	No.	109.

								We	assess	carryforwards	and	tax	credits	for	realization	as	a	reduction	of	future	taxable	income	by	using	a	"more	likely	than	not"	determination.	We	have	not recognized	a	U.S.	deferred	tax	liability	for	undistributed	earnings	of	certain	foreign	subsidiaries	of	our	continuing	operations	because	they	are	considered	permanently reinvested.	Distributions	may	be	subject	to	additional	U.S.	income	taxes	if	we	either	distribute	these	earnings,	or	we	are	deemed	to	have	distributed	these	earnings, according	to	the	Internal	Revenue	Code.

								We	base	the	carrying	values	of	liabilities	for	income	taxes	currently	payable	on	management's	interpretation	of	applicable	tax	laws,	and	incorporate	management's assumptions	and	judgments	about	using	tax	planning	strategies	in	various	taxing	jurisdictions.	Using	different	estimates,	assumptions	and	judgments	in	accounting	for income	taxes,	especially	those	which	deploy	tax	planning	strategies,	may	result	in	materially	different	carrying	values	of	income	tax	assets	and	liabilities	and	changes	in our	results	of	operations.

								We	operate	in	many	foreign	jurisdictions	where	tax	laws	relating	to	our	businesses	are	not	well	developed.	In	such	jurisdictions,	we	obtain	professional	guidance and	consider	existing	industry	practices	before	using	tax	planning	strategies	and	meeting	our	tax	obligations.	Tax	returns	are	routinely	subject	to	audit	in	most jurisdictions,	and	tax	liabilities	are	frequently	finalized	through	negotiations.	While	historically	we	have	not	experienced	significant	adjustments	to	previously recognized	tax	assets	and	liabilities	as	a	result	of	finalizing	tax	returns,	there	can	be	no	assurance	that	significant	adjustments	will	not	arise.	In	addition,	several	factors could	increase	the	future	level	of	uncertainty	over	our	tax	liabilities,	including	the	following:

•During	recent	years,	the	portion	of	our	overall	operations	conducted	in	foreign	tax	jurisdictions	has	been	increasing,	and	we	anticipate	this	trend	will continue.

•To	deploy	tax	planning	strategies	and	conduct	foreign	operations	efficiently,	our	subsidiaries	frequently	enter	into	transactions	with	affiliates,	which	are generally	subject	to	complex	tax	regulations	and	are	frequently	reviewed	by	tax	authorities.

•We	may	conduct	future	operations	in	certain	tax	jurisdictions	where	tax	laws	are	not	well	developed,	and	it	may	be	difficult	to	secure	adequate professional	guidance.

•Tax	laws,	regulations,	agreements	and	treaties	change	frequently,	requiring	us	to	modify	existing	tax	strategies	to	conform	to	such	changes.

								In	first	quarter	2007,	we	adopted	FASB	Interpretation	No.	48	(FIN	48),	Accounting	for	Uncertainty	in	Income	Taxes	—	an	Interpretation	of	FASB	Statement No.	109.	FIN	48	clarifies	the	accounting	for	uncertainty	in	income	taxes	which	are	recognized	in	a	company's	financial	statements	in	accordance	with	Statement	No.	109, and	prescribes	a	recognition	threshold	and	measurement	of	a	tax	position	taken,	or	expected	to	be	taken,	in	a	company's	tax	return.	As	a	result	of	our	adoption	of	FIN	48, we	did	not	record	any	adjustments	to	the	liability	for	unrecognized	tax	benefits.

# REVIEW	OF	CONSOLIDATED	RESULTS

								In	our	discussion	of	operating	results,	we	sometimes	refer	to	supplemental	information	derived	from	consolidated	financial	information.

								Supplemental	organic	revenue	growth	information	should	be	viewed	in	addition	to,	not	instead	of,	our	consolidated	statements	of	income.	Industry	peers	provide similar	supplemental	information	about	their	revenue	performance,	although	they	may	not	make	identical	adjustments.

								Because	we	conduct	business	in	more	than	120	countries,	foreign	exchange	rate	fluctuations	have	a	significant	impact	on	our	business.	In	comparison	to	the	U.S. dollar,	foreign	exchange	rate	movements	may	be	significant	and	may	distort	true	period-to-period	comparisons	of	changes	in	revenue	or	pretax	income.	Therefore,	we have:

•isolated	the	impact	of	the	change	in	currencies	between	periods	by	providing	percentage	changes	on	a	comparable	currency	basis	for	revenue,	and	have disclosed	the	impact	on	expenses	and	earnings	per	share,	and

•provided	this	form	of	reporting	to	give	financial	statement	users	more	meaningful	information	about	our	operations.

								Some	tables	in	the	segment	discussions	reconcile	organic	revenue	growth	percentages	to	the	reported	revenue	growth	percentages	for	the	segments	and subsegments.	We	disclose	separately:

# •the	impact	of	foreign	currency,	and

•the	impact	from	acquisitions,	divestitures,	and	transfers	of	business	units,	which	represent	the	most	significant	reconciling	items.

								In	an	"all	other"	category,	we	total	other	reconciling	items	that	are	not	generally	significant	individually	or	in	the	aggregate.	If	there	is	a	significant	individual reconciling	item	within	the	"all	other"	category,	we	provide	additional	disclosure	in	a	note.

# Summary	of	Results	for	2005	through	2007

								The	consolidated	results	of	continuing	operations	follow:

| (millions)												Years	ended	December	31, | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Revenue: |  |  |  |
| Commissions,\tfees\tand\tother | $7,170 | $6,660 | $6,507 |
| Investment\tincome | 301 | 221 | 144 |
| Total\tconsolidated\trevenue | 7,471 | 6,881 | 6,651 |
| Expenses: |  |  |  |
| Compensation\tand\tbenefits | 4,388 | 4,225 | 4,084 |
| Other\tgeneral\texpenses | 1,726 | 1,637 | 1,616 |
| Depreciation\tand\tamortization | 194 | 224 | 244 |
| Interest\texpense | 138 | 129 | 125 |
| Provision\tfor\tNew\tYork\tand\tother\tstate\tsettlements | 1 | 3 | 5 |
| Total\texpenses | 6,447 | 6,218 | 6,074 |
| Income\tfrom\tcontinuing\toperations\tbefore\tprovision\tfor\tincome\ttax | $1,024 | $663 | $577 |
| Pretax\tmargin\t—\tcontinuing\toperations | 13.7% | 9.6% | 8.7% |

# Revenue

•Commissions,	fees	and	other	increased	$510	million	or	8%	driven	primarily	by	the	impact	of	changes	in	foreign	exchange	rates	and	organic	revenue growth	of	2%.

•Investment	income	increased	$80	million	or	36%.	The	increase	was	driven	by:

•non-liquidating	distributions	from	our	PEPS	I	investment	of	$61	million,

•$14	million	of	realized	losses	on	our	Endurance	warrants	in	2006,

•realized	gains	from	the	sale	of	investments,	and

•higher	interest	rates	on	our	investment	portfolio.

								These	increases	were	partially	offset	by	a	$35	million	gain	recognized	in	2006	in	connection	with	the	contribution	of	our	preferred	stock	investment	in	Scandent, received	from	the	sale	of	our	Cambridge	operation,	to	a	U.K.	pension	plan.

# 								Consolidated	revenue	by	geographic	area	follows:

| (millions)								Years	ended	December	31, | 2007 | %	of<br>Total | 2006 | %	of<br>Total | 2005 | %	of<br>Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| United\tStates | $2,855 | 38% | $2,789 | 41% | $2,726 | 41% |
| Americas,\tother\tthan\tU.S. | 809 | 11 | 723 | 10 | 646 | 10 |
| United\tKingdom | 1,305 | 18 | 1,172 | 17 | 1,226 | 18 |
| Europe,\tMiddle\tEast\t&amp;\tAfrica | 1,876 | 25 | 1,636 | 24 | 1,530 | 23 |
| Asia\tPacific | 626 | 8 | 561 | 8 | 523 | 8 |
| Total\trevenue | $7,471 | 100% | $6,881 | 100% | $6,651 | 100% |

								We	attribute	revenues	to	geographic	areas	based	on	the	location	of	the	resources	producing	the	revenues.

•U.S.		revenue	increased	$66	million	or	2%,	reflecting	growth	in	our	retail	business	and	affinity	operations,	partially	offset	by	soft	market	conditions	in reinsurance	and	investment	gains	being	impacted	by	last	year's	gain	on	the	contribution	of	our	Scandent	preferred	stock.

•Americas	other	than	U.S.		revenue	increased	$86	million	or	12%,	due	to	strong	growth	in	Latin	America	and	the	impact	of	foreign	exchange	rates.

•United	Kingdom	revenue	increased	$133	million	or	11%	driven	by	favorable	foreign	exchange,	the	impact	of	acquisitions,	higher	investment	income and	a	gain	on	the	sale	of	a	book	of	business.

•Europe,	Middle	East	&	Africa	revenue	increased	$240	million	or	15%	as	a	result	of	favorable	foreign	exchange,	higher	investment	income,	acquisitions and	organic	revenue	growth,	most	notably	in	France,	Italy,	Spain,	Africa	and	the	Middle	East.

•Asia	Pacific	revenue	increased	$65	million	to	$626	million,	driven	by	favorable	foreign	exchange	and	organic	revenue	growth	in	most	countries	in	Asia, which	more	than	offset	softness	in	Australia	and	the	impact	of	certain	regulatory	changes	in	Japan.

# Expenses

•$163	million	or	4%	increase	in	compensation	and	benefits,	reflecting	$189	million	of	unfavorable	foreign	exchange	as	well	as	higher	salary	and incentive	costs,	which	more	than	offset	significant	pension	savings,	lower	restructuring	costs	and	the	benefits	of	the	2005	restructuring	program.	Reduced pension	expense	was	due	primarily	to	plan	amendments	in	the	U.S.	and	U.K.

•$89	million	or	5%	increase	in	other	general	expenses,	reflecting	unfavorable	foreign	exchange,	the	gain	on	the	2006	sale	of	our	building	in	Spain,	the impact	of	acquisitions	and	the	settlement	of	litigation	in	early	2007	for	acquired	employees	in	our	U.K.	reinsurance	business.	These	items	more	than offset	a	2006	property	and	casualty	reserve	increase	and	2007	gains	from	the	sale	of	businesses.

•$9	million	increase	in	interest	expense	resulting	from	higher	interest	rates	and	foreign	exchange	translation.

								These	increases	in	expenses	were	partially	offset	by	a	$30	million	decrease	in	depreciation	and	amortization	due	to	lower	write-offs	and	a	lower	depreciable	base than	the	prior	year.

# Income	from	Continuing	Operations	before	Provision	for	Income	Tax	and	Cumulative	Effect	of	a	Change	in	Accounting	Principle

								Income	from	continuing	operations	was	$1,024	million,	a	54%	increase	from	$663	million	in	2006.	The	increase	was	driven	by	improved	profitability	in	our brokerage	and	consulting	segments,	distributions	from	our	PEPS	I	investment,	and	an	increase	in	our	property	and	casualty	reserves	in	2006.

# Provision	for	Income	Taxes

								Differences	between	the	overall	effective	tax	rate	and	the	U.S.	federal	statutory	rate	are	typically	due	to	U.S.	state	income	taxes	and	differences	between	U.S.	and international	tax	rates.	Changes	in	the	mix	between	our	U.S.	and	international	pretax	income	directly	affect	our	effective	tax	rates.	In	2007	and	2006,	our	effective	tax rate	also	reflects	the	favorable	resolution	of	tax	examination	issues,	adjustments,	and	tax	credits.	In	addition,	our	2007	rate	was	impacted	by	changes	in	corporate	tax rates	in	certain	foreign	countries,	most	notably	in	the	United	Kingdom,	which	reduced	the	enacted	corporate	tax	rate	from	30%	to	28%.	While	the	lower	U.K.	tax	rate will	benefit	Aon's	recurring	effective	tax	rate	in	future	periods,	we	had	to	remeasure	our	U.K.	deferred	tax	assets	using	the	new	enacted	tax	rate,	resulting	in	a	one-time non-cash	expense	of	$24	million.	For	a	summary	of	these	effects,	please	see	the	rate	reconciliation	provided	in	Note	8	to	the	consolidated	financial	statements.

# Income	from	Continuing	Operations

•Income	from	continuing	operations	rose	to	$672	million	($2.10	diluted	net	income	per	share)	from	$447	million	($1.33	diluted	net	income	per	share). 2007	income	from	continuing	operations	included	currency	translation	gains	of	$0.06	per	share,	compared	to	currency	translation	losses	of	$0.04	per share	in	2006.

# •Basic	net	income	per	share	from	continuing	operations	increased	to	$2.25	from	$1.41.

# Discontinued	Operations

								After-tax	income	from	discontinued	operations	was:

•$192	million	in	2007	($0.65	and	$0.59	per	basic	and	dilutive	net	income	per	share,	respectively).	These	results	include	a	full	year	of	operations	for	CICA and	Sterling	($0.63	and	$0.58	per	basic	and	dilutive	net	income	per	share,	respectively)	as	well	as	residual	settlement	activity	relating	to	our	2006	AWG and	CPG	disposals.

•$272	million	in	2006	($0.86	and	$0.80	per	basic	and	dilutive	income	per	share,	respectively).	Results	in	2006	include	a	full	year	of	operations	for	CICA and	Sterling	($0.56	and	$0.52	per	basic	and	dilutive	net	income	per	share,	respectively)	and	eleven	months	of	operations	and	the	gain	on	sale	of	AWG and	CPG	($0.27	and	$0.25	per	basic	and	dilutive	net	income	per	share,	respectively).

								Revenue	for	discontinued	operations	decreased	to	$2.5	billion	in	2007	from	$3.4	billion	in	2006	due	to	the	inclusion	in	2006	of	AWG	and	CPG.	CICA's	revenue increased	21%	to	$2.5	billion	on	the	strength	of	Sterling's	Medicare	Advantage	product.	After-tax	income	from	discontinued	operations	declined	$80	million	to $192	million,	driven	by	the	inclusion	last	year	of	AWG	and	CPG	results,	along	with	the	gain	on	the	sale	of	those	two	operations.	CICA's	results	improved	$7	million	to $186	million.	An	increase	in	pretax	income,	driven	by	increased	revenue,	was	mainly	offset	by	lower	margins	at

Sterling	and	a	higher	tax	provision,	resulting	from	a	$28	million	non-recurring	tax	adjustment	related	to	the	recognition	of	deferred	taxes	of	CICA's	foreign	subsidiaries.

•Commissions,	fees	and	other	increased	by	$153	million	or	2%,	driven	by	2%	organic	revenue	growth	in	Risk	and	Insurance	Brokerage	Services	and	4% organic	growth	in	Consulting.

•Investment	income	increased	$77	million	or	53%,	driven	by	higher	interest	rates	and	a	$35	million	gain	recognized	in	connection	with	the	contribution of	our	Scandent	preferred	stock	investment	to	a	U.K.	pension	plan.

•U.S.		revenue,	which	represented	41%	of	total	revenue,	increased	$63	million	or	2%,	reflecting	improved	results	in	our	retail	business	and	increased investment	income.

•Americas	other	than	U.S.	revenue	increased	12%	to	$723	million,	due	to	strong	growth	in	Latin	America.

•United	Kingdom	revenue	decreased	$54	million	or	4%,	reflecting	soft	market	conditions	in	our	retail	and	reinsurance	lines,	partially	offset	by	growth	in our	consulting	business.

•Europe,	Middle	East	&	Africa	revenue	increased	7%	to	$1.6	billion,	as	a	result	of	acquisitions	and	organic	growth	in	our	retail	business.

								Asia	Pacific	revenue	increased	$38	million	or	7%	to	$561	million,	driven	by	acquisitions	and	organic	revenue	growth	in	emerging	markets	in	Asia.

•$141	million	or	3%	increase	in	compensation	and	benefits,	reflecting	higher	salary	and	incentive	costs,	the	impact	of	acquisitions	and	unfavorable foreign	exchange,	and

•an	increase	of	$21	million	or	1%	in	other	general	expenses,	primarily	reflecting	a	property	and	casualty	reserve	increase,	hedging	losses,	and unfavorable	foreign	exchange,	partially	offset	by	a	$30	million	gain	on	the	sale	of	our	building	in	Spain.

These	increases	were	somewhat	offset	by	a	decrease	of	$20	million	in	depreciation	and	amortization	expense,	reflecting	greater	asset	disposals	and impairments	in	2005.

								Income	from	continuing	operations	before	provision	for	income	tax	increased	$86	million	to	$663	million.	The	increase	was	driven	by	organic	revenue	growth across	each	segment	along	with	estimated	restructuring	savings	of	$119	million,	partially	offset	by	higher	compensation	and	benefits	costs.

								The	effective	tax	rate	on	income	from	continuing	operations	was	32.6%	in	2006	and	27.9%	in	2005.	Differences	between	the	overall	effective	tax	rate	and	the	U.S. federal	statutory	rate	are	typically	due	to	U.S.	state	income	taxes	and	differences	between	U.S.	and	international	tax	rates.	Changes	in	the	mix	between	our	U.S.	and international	pretax	income	directly	affect	our	effective	tax	rates.	In	2006	and	2005,	our	effective	tax	rate	also	reflects	the	favorable	resolution	of	tax	examination	issues, adjustments,	and	tax	credits.

•Income	from	continuing	operations	rose	to	$447	million	($1.33	dilutive	net	income	per	share)	from	$416	million	($1.24	dilutive	net	income	per	share). For	2006,	income	from	continuing	operations	included	currency	translation	losses	of	$0.04	per	share,	compared	to	currency	translation	gains	of	$0.05	per share	in	2005.

								To	compute	income	per	share	in	2005,	we	deducted	dividends	paid	on	the	redeemable	preferred	stock	from	net	income.	The	redeemable	preferred	stock	was redeemed	and	retired	in	September	2005.

•$272	million	in	2006	($0.86	and	$0.80	per	basic	and	dilutive	net	income	per	share,	respectively).	2006	discontinued	operations	include	full	year	results for	CICA	and	Sterling	($0.56	and	$0.52	per	basic	and	dilutive	net	income	per	share,	respectively)	and	eleven	months	of	operations	and	gain	on	sale	of AWG	and	CPG	($0.27	and	$0.25	per	basic	and	dilutive	net	income	per	share,	respectively.)

•$319	million	in	2005	($0.99	and	$0.93	per	basic	and	dilutive	net	income	per	share,	respectively).	Results	in	2005	include	full	year	results	for	CICA, Sterling,	AWG	and	CPG	($0.69	and	$0.65	per	basic	and	dilutive	net	income	per	share,	respectively),	along	with	nine	months	of	operations	and	the	gain on	sale	of	our	Swett	&	Crawford	operation	($0.33	and	$0.31	per	basic	and	dilutive	net	income	per	share,	respectively).

# REVIEW	BY	SEGMENT

								Aon	classifies	its	businesses	into	two	operating	segments:	Risk	and	Insurance	Brokerage	Services	and	Consulting	(see	Note	16	to	the	consolidated	financial statements	for	further	information).

								Aon's	operating	segments	are	identified	as	those	that	report	separate	financial	information	and	are	evaluated	regularly	when	we	are	deciding	how	to	allocate resources	and	assess	performance.

								Segment	revenue	includes	investment	income	generated	by	invested	assets	of	that	segment,	as	well	as	the	impact	of	related	derivatives.	Our	Risk	and	Insurance Brokerage	Services	and	Consulting	businesses	invest	funds	held	on	behalf	of	clients	and	operating	funds	in	short-term	obligations.

								The	following	tables	and	commentary	provide	selected	financial	information	on	the	operating	segments.

| (millions)												Years	ended	December	31, | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Operating\tsegment\trevenue:\t(1) |  |  |  |
| Risk\tand\tInsurance\tBrokerage\tServices | $6,059 | $5,628 | $5,367 |
| Consulting | 1,352 | 1,282 | 1,255 |
| Income\tbefore\tincome\ttax: |  |  |  |
| Risk\tand\tInsurance\tBrokerage\tServices | $1,037 | $841 | $702 |
| Consulting | 189 | 120 | 110 |
| Pretax\tMargins: |  |  |  |
| Risk\tand\tInsurance\tBrokerage\tServices | 17.1% | 14.9% | 13.1% |
| Consulting | 14.0% | 9.4% | 8.8% |

(1) Intersegment	revenues	of	$29	million,	$59	million	and	$46	million	were	included	in	2007,	2006	and	2005,	respectively.	See	Note	16	to	the	consolidated	financial statements	for	further	information.

								Aon	is	a	leader	in	many	sectors	of	the	insurance	industry.	Aon	was	ranked	by	A.M.	Best	as	the	number	one	global	insurance	brokerage	in	2007	based	on	brokerage revenues,	and	voted	the	best	insurance	intermediary	and	best	reinsurance	intermediary	in	2007	by	the	readers	of	Business	Insurance.

								Changes	in	premiums	have	a	direct	and	potentially	material	impact	on	the	insurance	brokerage	industry,	as	commission	revenues	are	generally	based	on	a percentage	of	the	premiums	paid	by	insureds.	Insurance	premiums	are	cyclical,	and	may	vary	widely	based	on	market	conditions.	Premium	rates	usually	increase	when the	industry	has	heavier	than	expected	losses	or	capital	shortages;	this	situation	is	referred	to	as	a	"hard	market."	A	hard	market	tends	to	increase	commission	revenues. Conversely,	a	"soft	market,"	characterized	by	flat	or	reduced	premium	rates,	results	from	increased	competition	for	market	share	among	insurance	carriers	or	increased underwriting	capacity.	A	soft	market	tends	to	reduce	commission	revenues.	Hard	and	soft	markets	may	be	broad-based	or	more	narrowly	focused	across	certain	product lines	or	geographic	areas.	Markets	began	softening	in	2004.	We	experienced	a	soft	market	in	many	business	lines/segments	and	in	many	geographic	areas	in	2007.	Prices fell	throughout	the	year,	with	the	greatest	declines	seen	in	large	and	middle-market	accounts.	We	expect	the	soft	market	to	continue	into	2008.

								Risk	and	Insurance	Brokerage	Services	generated	approximately	82%	of	Aon's	total	operating	segment	revenues	in	2007.	Revenues	are	generated	primarily through:

# •fees	paid	by	clients,

•commissions	and	fees	paid	by	insurance	and	reinsurance	companies,	and

•interest	income	on	funds	held	on	behalf	of	clients.

								Our	revenues	vary	from	quarter	to	quarter	throughout	the	year	as	a	result	of:

•the	timing	of	our	clients'	policy	renewals,

•the	net	effect	of	new	and	lost	business,

•the	timing	of	services	provided	to	our	clients,	and

•the	income	we	earn	on	investments,	which	is	heavily	influenced	by	short-term	interest	rates.

								Our	risk	brokerage	companies	operate	in	a	highly	competitive	industry	and	compete	with	many	retail	insurance	brokerage	and	agency	firms,	as	well	as	with individual	brokers,	agents,	and	direct	writers	of	insurance	coverage.	Specifically,	this	segment:

•addresses	the	highly	specialized	product	development	and	risk	management	needs	of	commercial	enterprises,	professional	groups,	insurance	companies, governments,	healthcare	providers,	and	non-profit	groups,	among	others;

•provides	affinity	products	for	professional	liability,	life,	disability	income,	and	personal	lines	for	individuals,	associations,	and	businesses;

•provides	reinsurance	services	to	insurance	and	reinsurance	companies	and	other	risk	assumption	entities	by	acting	as	brokers	or	intermediaries	on	all classes	of	reinsurance;

•provides	managing	underwriting	and	premium	finance	services	to	independent	agents	and	brokers	as	well	as	corporate	clients;

•provides	actuarial,	loss	prevention,	and	administrative	services	to	businesses	and	consumers;	and

•manages	captive	insurance	companies.

								We	review	our	revenue	results	using	the	following	subsegments:

•Risk	Management	and	Insurance	Brokerage	encompasses	our	retail	brokerage	services,	affinity	products,	managing	general	underwriting,	placement	and captive	management	services,	and	premium	finance	services	in	the	following	areas:	Americas;	United	Kingdom;	Europe,	Middle	East	&	Africa;	and	Asia Pacific.	In	February	2008,	we	announced	that	we	intend	to	combine	our	entire	local,	regional	and	national	risk	and	insurance	retail	brokerage	operations into	a	single,	unified	business	to	be	called	Aon	Risk	Services.

•Reinsurance	Brokerage	and	Related	Services	(Reinsurance)	offers	sophisticated	advisory	services	in	program	design	and	claim	recoveries	that:

—				enhance	the	risk/return	characteristics	of	insurance	policy	portfolios,

—				improve	capital	utilization,	and

—				evaluate	and	mitigate	catastrophic	loss	exposures	worldwide.

								This	table	details	Risk	and	Insurance	Brokerage	Services	revenue	by	subsegment:

| (millions)												Years	ended	December	31, | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Americas | $2,405 | $2,319 | $2,139 |
| United\tKingdom | 815 | 732 | 792 |
| Europe,\tMiddle\tEast\t&amp;\tAfrica | 1,375 | 1,177 | 1,150 |
| Asia\tPacific | 506 | 478 | 441 |
| Reinsurance | 958 | 922 | 845 |
| Total\trevenue | $6,059 | $5,628 | $5,367 |

								In	2007,	revenue	increased	$431	million	or	8%	from	2006	due	to	growth	in	our	retail	and	reinsurance	operations,	as	well	as	higher	investment	income.

								This	table	reconciles	organic	revenue	growth	to	reported	revenue	growth	in	2007	versus	2006:

# 								Organic	revenue	growth	for	the	entire	segment	was	3%.

								The	4%	reported	growth	in	Americas	reflects	strong	new	business	growth	in	our	U.S.	retail,	Affinity	and	Latin	America	operations;	favorable	foreign	exchange rates;	and	increased	investment	income.	This	growth	was	net	of	a	$35	million	gain	in	2006	related	to	the	contribution	of	our	Scandent	preferred	stock	investment	to	one of	our	U.K.	pension	plans.

								United	Kingdom	revenue	increased	11%,	driven	by	favorable	foreign	currency	translation,	the	impact	of	acquisitions,	higher	investment	income	and	a	gain	on	the sale	of	a	book	of	business.

								Europe,	Middle	East	&	Africa	revenue	increased	17%,	driven	by	favorable	foreign	exchange	rates,	higher	investment	income	and	4%	organic	revenue	growth, most	notably	in	emerging	markets	and	in	Continental	Europe.

								Asia	Pacific	revenue	increased	6%,	driven	by	positive	foreign	currency	translation	and	organic	revenue	growth	in	most	markets	in	Asia.	However,	this	increase	was partially	offset	by	the	impact	of	certain	regulatory	changes	in	Japan	and	soft	market	conditions	in	Australia.

								Reinsurance	revenue	increased	4%,	due	to	favorable	foreign	currency	translation,	the	impact	of	acquisitions	and	2%	organic	revenue	growth	mainly	driven	by international	markets,	offset	by	soft	market	conditions	in	the	U.S.

								This	table	shows	Risk	and	Insurance	Brokerage	Services	revenue	by	geographic	area	and	total	pretax	income:

| (millions)								Years	ended	December	31, | 2007 | %	of<br>Total | 2006 | %	of<br>Total | 2005 | %	of<br>Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| United\tStates | $2,159 | 36% | $2,133 | 38% | $1,982 | 37% |
| Americas,\tother\tthan\tU.S. | 661 | 11 | 586 | 10 | 530 | 10 |
| United\tKingdom | 1,036 | 17 | 946 | 17 | 1,021 | 19 |
| Europe,\tMiddle\tEast\t&amp;\tAfrica | 1,636 | 27 | 1,439 | 26 | 1,344 | 25 |
| Asia\tPacific | 567 | 9 | 524 | 9 | 490 | 9 |
| Total\trevenue | $6,059 | 100% | $5,628 | 100% | $5,367 | 100% |
| Income\tbefore\tincome\ttax | $1,037 |  | $841 |  | $702 |  |

								U.S.	revenue	rose	1%	over	2006	as	strong	new	business,	effective	renewal	book	management	in	U.S.	retail	and	investment	income	gains	were	partially	offset	by last	year's	gain	on	the	contribution	of	our	Scandent	preferred	stock	and	soft	market	conditions	in	our	reinsurance	business.

								Americas	other	than	U.S.	revenue	increased	13%	due	to	strong	organic	revenue	growth	in	Latin	America	and	the	favorable	impact	of	foreign	currency	translation.

								The	10%	increase	in	United	Kingdom	revenue	is	driven	by	the	impact	of	favorable	foreign	currency	translation,	acquisitions,	higher	investment	income,	and	the gain	on	the	sale	of	a	book	of	business.

								Europe,	Middle	East	&	Africa	revenue	increased	14%	due	to	positive	foreign	currency	translation,	higher	investment	income	and	organic	revenue	growth.

								Asia	Pacific	revenue	increased	8%	due	to	the	impact	of	favorable	foreign	currency	translation	and	organic	revenue	growth.

# Income	Before	Income	Tax

•3%	organic	revenue	growth,

•lower	pension	expense,

•lower	restructuring	expenses,

•savings	from	the	2005	restructuring	program	(primarily	workforce	reduction),

•$36	million	of	gains	on	the	sale	of	businesses,	and

•favorable	foreign	exchange	rates.

								These	increases	were	partially	offset	by	higher	salary	costs	due	to	investing	in	talent	and	a	$21	million	litigation	settlement	for	acquired	employees	in	our	U.K. reinsurance	business.	In	addition,	in	2006,	we	recognized	a	$35	million	gain	on	the	contribution	of	our	Scandent	preferred	stock	and	a	$30	million	gain	on	the	sale	of	a building	in	Spain.

								Aon	Consulting	is	one	of	the	world's	largest	integrated	human	capital	consulting	organizations.	Our	consulting	segment:

# •provides	a	broad	range	of	consulting	services,	and

•generated	18%	of	Aon's	total	operating	segment	revenues	in	2007.

•Consulting	Services,	which	provides	consulting	services	in	six	practice	areas:

1. Employee	Benefits	advises	clients	about	how	to	structure,	fund,	and	administer	employee	benefit	programs	that	attract,	retain,	and	motivate employees.	Benefits	consulting	includes	health	and	welfare,	retirement,	executive	benefits,	absence	management,	compliance,	employer commitment,	investment	advisory	and	elective	benefit	services.

2. Compensation	focuses	on	designing	salary,	bonus,	commission,	stock	option,	and	other	pay	structures,	with	special	expertise	in	the	financial services	and	technology	industries.

3. Management	Consulting	helps	clients	in	process	improvement	and	design,	leadership,	organization	and	human	capital	development,	and	change management.

6. Financial	Advisory	and	Litigation	Consulting	provide	consulting	services,	including	white	collar	and	financial	statement	investigation,	securities litigation,	financial	due	diligence,	financial	valuation	services,	and	other	related	specialties.

•Outsourcing,	which	offers	employment	processing,	performance	improvement,	benefits	administration	and	other	employment-related	services.

								This	table	details	Consulting	revenue	by	subsegment.

•Consulting	services	increased	$128	million	or	13%,	reflecting	growth	in	most	major	practice	groups	and	geographies,	favorable	foreign	currency translation,	and	the	transfer	of	certain	small	units	from	the	Risk	and	Insurance	Brokerage	Services	segment.

•Outsourcing	revenue	declined	$58	million	or	20%,	driven	by	lower	revenue	from	AT&T.	AT&T,	our	largest	outsourcing	client,	terminated	many	of	its outsourcing	services	with	us	in	2006	and	terminated	our	remaining	services	during	2007.

								This	table	shows	Consulting	revenue	by	geographic	area	and	pretax	income:

| United	States | $657 | 49% | $708 | 55% | $730 | 58% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Americas,\tother\tthan\tU.S. | 121 | 9 | 113 | 9 | 100 | 8 |
| United\tKingdom | 275 | 20 | 228 | 18 | 206 | 16 |
| Europe,\tMiddle\tEast\t&amp;\tAfrica | 240 | 18 | 197 | 15 | 186 | 15 |
| Asia\tPacific | 59 | 4 | 36 | 3 | 33 | 3 |
| Total\trevenue | $1,352 | 100% | $1,282 | 100% | $1,255 | 100% |
| Income\tbefore\tincome\ttax | $189 |  | $120 |  | $110 |  |

•U.S.		revenue	decreased	$51	million	in	2007,	primarily	due	to	reduced	outsourcing	business	triggered	by	the	loss	of	revenue	from	AT&T	(see	above), partially	offset	by	organic	revenue	growth	in	Consulting	Services	and	a	$5	million	gain	on	the	sale	of	an	investment.

•Americas	other	than	U.S.		revenue	grew	7%,	reflecting	improved	results	in	Canada	and	favorable	foreign	exchange.

•United	Kingdom	revenue	rose	21%,	due	to	favorable	foreign	exchange	and	organic	revenue	growth.

•Europe,	Middle	East	&	Africa	and	Asia	Pacific	revenue	increased	22%	and	64%,	respectively,	driven	by	favorable	foreign	currency	translation,	the transfer	in	of	certain	small	units	from	our	brokerage	segment,	and	organic	revenue	growth.

•organic	revenue	growth	in	Consulting	Services,

•the	favorable	impact	of	foreign	currency	translation,

•lower	restructuring	costs,

•benefits	related	to	the	2005	restructuring	program,

•disciplined	expense	management	in	the	U.S.,	and

•the	gain	on	the	sale	of	an	investment.

								Unallocated	income	consists	primarily	of	investment	income	(including	income	or	loss	on	investment	disposals	and	other-than-temporary	impairment	losses), which	is	not	otherwise	reflected	in	the	operating	segments.	We	include	invested	assets	and	related	investment	income	not	directly	required	to	support	the	risk	and insurance	brokerage	services	and	consulting	businesses.

								Through	March	31,	2006,	we	carried	our	investment	in	Endurance	warrants	at	fair	value	and	recorded	changes	in	the	fair	value	through	unallocated	investment income.	On	March	31,	2006,	we	contributed	the	investment	in	Endurance	warrants	to	our	U.K.	pension	plans.

								Private	equities	are	principally	carried	at	cost;	however,	where	we	have	significant	influence,	they	are	reported	using	the	equity	method	of	accounting.	These investments	usually	do	not	pay

dividends.	LPs	are	accounted	for	using	the	equity	method	and	changes	in	the	value	of	the	underlying	LP	investments	flow	through	unallocated	investment	income.

								Unallocated	income	also	includes	the	operations	of	our	Property	and	Casualty	runoff	business.	We	previously	included	results	related	to	this	business	in	our	former Insurance	Underwriting	segment.

								This	table	details	our	unallocated	income	and	expense.

| (millions)												Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Unallocated\tinvestment\tincome | $81 | $15 | $5 |
| Unallocated\texpense | (132) | (106) | (112) |
| Property\t&amp;\tCasualty\t—\trevenue | 8 | 15 | 70 |
| Property\t&amp;\tCasualty\t—\texpense | (21) | (93) | (73) |
| Interest\texpense | (138) | (129) | (125) |
|  | $(202) | $(298) | $(235) |

•an	increase	in	income	from	our	PEPS	I	investment	of	$61	million	(see	"Distributions	from	PEPS	I"	within	the	Key	Recent	Events	section),	and

•a	decrease	of	$14	million	in	2006	in	the	fair	value	of	our	investment	in	Endurance	warrants.	We	contributed	these	warrants	to	the	U.K.	pension	plans	on March	31,	2006.

								Unallocated	expenses	include	corporate	governance	costs	not	attributable	to	the	operating	segments.	These	expenses	increased	to	$132	million	in	2007	from $106	million	in	2006,	driven	by:

•higher	Corporate	executive	staff	expenses,

•resolution	of	a	$15	million	reconciliation	difference	in	the	U.K.,	and

•expenses	associated	with	a	review	of	historical	equity	compensation	practices.

								Property	and	Casualty	revenues	declined	from	$15	million	in	2006	to	$8	million	in	2007,	as	that	business	continues	to	wind	down.	Associated	expenses	were $21	million	in	2007	versus	$93	million	in	2006.	2006's	results	included	an	increase	in	our	reserves	of	$81	million,	reflecting	adverse	development,	refined	assumptions and	additional	claim	information	relating	to	programs	placed	in	runoff.

								Interest	expense,	which	represents	the	cost	of	our	worldwide	debt	obligations,	increased	$9	million	in	2007	to	$138	million,	principally	due	to	higher	interest	rates and	the	impact	of	foreign	exchange	rates.

								Our	operating	subsidiaries	obtain	liquidity	through	selling	their	products	and	services	and	collecting	their	receivables.	These	subsidiaries	use	the	funds	collected	to pay	creditors	and	employees	and	to	fund	acquisitions.	They	segregate	funds	that	Aon	is	holding	on	behalf	of	clients	to	satisfy	policyholder	liabilities,	so	they	are	not available	for	other	uses.	We	believe	that	our	operating	subsidiaries	will	have	adequate	liquidity	to	meet	their	needs	in	the	foreseeable	future	and	to	provide	funds	to	the parent	company.	Since	government	regulations	limit	payment	of	dividends	from	our	underwriting	subsidiaries,	dividends	depend	on	the	subsidiaries'	surplus	and	future earnings.

								Our	parent	company's	routine	liquidity	needs	include	paying	corporate	expenses,	servicing	debt,	and	paying	dividends	on	Aon's	outstanding	stock.	We	meet	these requirements	primarily	through

dividends	and	internal	financing	from	our	operating	subsidiaries.	We	may	also	use	available	liquidity	for	capital	expenditures	and	repurchasing	common	stock.

								Cash	in	our	consolidated	statements	of	financial	position	includes	funds	available	for	operations.

•redeemed	$250	million	of	debt	securities	in	January	2007,

•1 redeemed	all	of	our	remaining	3 /2%	Senior	Convertible	Debentures	that	were	due	in	2012.	We	converted	these	debentures	into	approximately 14	million	shares	of	Aon	common	stock,	and

•spent	$751	million	to	repurchase	19.1	million	of	our	outstanding	shares	of	common	stock.

								In	2007,	total	cash	contributions	to	our	major	defined	benefit	pension	plans	were	$211	million,	versus	cash	contributions	of	$204	million	in	2006.	Also	in	2006,	we contributed	$166	million	of	non-cash	financial	instruments	to	certain	of	our	U.K.	plans.	Under	current	rules	and	assumptions,	we	anticipate	2008	contributions	to	our major	defined	benefit	pension	plans	of	approximately	$195	million.

								In	2007,	our	principal	U.K.	subsidiary	agreed	with	the	trustees	of	the	plan	to	contribute	£9.4	million	($19	million)	per	year	to	one	of	our	U.K.	pension	plans	for	the next	six	years,	with	the	amount	payable	increasing	by	5.3%	on	each	April	1.	These	contributions	are	in	addition	to	the	normal	employer	contributions	to	the	plan.	The trustees	of	the	plan:

•have	certain	rights	to	request	that	our	U.K.	subsidiary	advance	an	amount	equal	to	an	actuarially	determined	winding-up	deficit.	As	of	December	31, 2006,	the	estimated	winding-up	deficit	was	£300	million	($595	million	at	December	31,	2007	exchange	rates).

•have	accepted	in	practice	the	agreed-upon	schedule	of	contributions	and	have	not	requested	an	advance.

# Cash	Flows	&	Financial	Condition

								Cash	flows	from	operations	represent	the	net	income	we	earned	in	the	reported	periods	adjusted	for	non-cash	charges	and	changes	in	operating	assets	and	liabilities.

								Cash	flows	provided	by	operating	activities	for	the	twelve	months	ended	December	31,	2007	and	2006	are	as	follows:

| (millions)								Twelve	months	ended	December	31 | 2007 | 2006 |
| :--- | :--- | :--- |
| Insurance\tUnderwriting\toperating\tcash\tflows\t(including\tAWG\t&amp;\tCPG\tfor\t2006) | $335 | $522 |
| All\tother\toperating\tcash\tflows | 904 | 596 |
|  | 1,239 | 1,118 |
| Change\tin\tfunds\theld\ton\tbehalf\tof\tbrokerage\tand\tconsulting\tclients | 50 | (150) |
| Cash\tprovided\tby\toperating\tactivities | $1,289 | $968 |

# Insurance	Underwriting	operating	cash	flows

								Our	2007	insurance	underwriting	operations	include	accident	&	health	and	life	and	certain	property	&	casualty	businesses	in	runoff.	These	insurance	products	have distinct	differences	in	the	timing	of	premiums	earned	and	payment	of	future	liabilities.	The	2006	cash	flows	include	the	operations	of	AWG	and	CPG,	sold	on November	30,	2006.

								The	operating	cash	flow	from	our	insurance	subsidiaries	was	$335	million	for	2007,	a	decrease	of	$187	million	compared	to	2006.	This	decrease	was	primarily related	to	the	sale	of	AWG	and	CPG.	For	2007,	operating	cash	flows,	analyzed	by	major	income	statement	component,	indicated	that	premium	and	other	fees	collected, net	of	reinsurance,	were	$2,339	million	compared	to	$3,546	million	in	2006.

Investment	and	other	miscellaneous	income	received	was	$183	million	and	$235	million	in	2007	and	2006,	respectively.

								The	insurance	underwriting	subsidiaries	used	revenues	generated	from	premiums,	investments	and	other	miscellaneous	income	to	pay	claims	and	other	cash benefits,	commissions,	general	expenses	and	taxes.	Claims	and	other	cash	benefits	paid	were	$1,321	million	in	2007	versus	$1,632	million	in	2006.	Commissions	and general	expenses	paid	were	$793	million	for	2007,	compared	to	$1,483	million	in	2006.	Tax	payments	for	2007	were	$73	million	compared	to	$144	million	last	year.

								These	subsidiaries	invest	and	use	operating	cash	flows	to	satisfy	future	benefits	to	policyholders	and	when	appropriate,	make	them	available	to	pay	dividends	to	the Aon	parent	company.

								Generally,	the	subsidiaries	invest	in	highly	liquid	and	marketable	investment	grade	securities	to	support	policy	liabilities.	These	invested	assets	are	subject	to insurance	regulations	set	forth	by	the	various	governmental	jurisdictions	in	which	they	operate,	both	domestically	and	internationally.	The	insurance	regulations	may restrict	both	the	quantity	and	quality	of	various	types	of	assets	within	the	portfolios.

								The	insurance	subsidiaries'	policy	liabilities	are	segmented	among	multiple	accident	and	health	and	property	casualty	portfolios.	Those	portfolios	have	widely varying	estimated	durations	and	interest	rate	characteristics.	Generally,	the	policy	liabilities	are	not	subject	to	interest	rate	volatility	risk.	Therefore,	in	many	of	the portfolios,	asset	and	policy	liability	duration	are	not	closely	matched.	Interest	rate	sensitive	policy	liabilities	are	generally	supported	by	floating	rate	assets.

# Funds	held	on	behalf	of	clients

								In	our	Risk	and	Insurance	Brokerage	Services	and	Consulting	segments,	we	typically	hold	funds	on	behalf	of	clients	as	a	result	of:

•premiums	received	from	clients	that	are	in	transit	to	insurers.	These	premiums	held	on	behalf	of,	or	due	from,	clients	are	reported	as	assets	with	a corresponding	liability	due	to	the	insurer.

•claims	due	to	clients	that	are	in	transit	from	insurers.	Claims	held	by,	or	due	to	us	and	which	are	due	to	clients,	are	also	shown	as	both	assets	and liabilities.

								These	funds	held	on	behalf	of	clients	are	generally	invested	in	interest	bearing	trust	accounts	and	can	fluctuate	significantly	depending	on	when	we	collect	cash from	our	clients	and	when	premiums	are	remitted	to	the	insurance	carriers.

# All	other	operating	cash	flows

								The	operating	cash	flow	from	our	Risk	and	Insurance	Brokerage	Services	and	Consulting	segments,	as	well	as	related	corporate	items,	was	$904	million	in	2007 compared	to	$596	million	in	2006.	These	amounts	exclude	the	change	in	funds	held	on	behalf	of	clients	as	described	above.	The	operating	cash	flows	depend	on	the timing	of	receipts	and	payments	related	to	revenues,	incentive	compensation,	other	operating	expenses	and	income	taxes.

								Aon	uses	the	excess	cash	generated	by	our	brokerage	and	consulting	businesses	as	well	as	dividends	received	from	the	insurance	subsidiaries	to	meet	its	liquidity needs,	which	consist	of	servicing	its	debt,	paying	dividends	to	its	stockholders	and	repurchasing	outstanding	shares.

# Investing	and	Financing	Activities

								We	used	the	consolidated	cash	flow	from	operations	(net	of	funds	held	on	behalf	of	clients)	for:

•investing	activities	of	$463	million.	The	cash	flows	used	by	investing	activities	included	purchases,	net	of	sales	of	investments,	of	$95	million;	capital expenditures,	net	of	disposals,	of	$170	million;	and	acquisition	of	subsidiaries,	net	of	divestitures	of	$198	million.

•financing	needs	of	$579	million.	Financing	uses	primarily	included	cash	dividends	paid	to	shareholders	of	$176	million	and	net	share	activity	of $495	million.	Proceeds	from	financing	activities	are	$92	million	from	the	issuance	of	debt,	net	of	repayments.

								Due	to	the	nature	of	operations,	insurance	underwriting	organizations	generally	do	not	classify	assets	and	liabilities	on	their	statements	of	financial	position	as current	and	noncurrent,	and	we	had	not	previously	reported	a	classified	statement	of	financial	position.	Due	to	the	pending	sales	of	a	majority	of	our	underwriting operations,	at	December	31,	2007	we	have	reported	our	statements	of	financial	position	on	a	classified	basis.

•Working	capital	increased	$133	million	to	$3.4	billion.

•Receivables	and	Insurance	premium	payables	declined	$253	million	and	$206	million,	respectively.	The	decrease	in	both	receivables	and	payables reflects:

•The	timing	of	receipts	and	payments,

•Client	demands	for	risk	programs,	and

•The	effect	of	foreign	exchange	rates

•Net	assets	of	our	CICA	and	Sterling	subsidiaries	increased	$223	million.

•Short-term	debt	increased	by	$210	million	as	a	result	of	considering	$250	million	of	our	borrowings	under	our	Euro	facility	as	payable	within	a	year.

•Goodwill	increased	$414	million	as	a	result	of	several	acquisitions	made	during	the	year	in	our	Risk	and	Insurance	Brokerage	segment,	which	was slightly	offset	by	the	sale	of	two	MGUs.

•Long-term	debt	decreased	by	$350	million,	reflecting	decreases	in	U.S.	borrowings,	offset	in	part	by	higher	Euro	facility	borrowings.

•Pensions,	post	employment	and	post	retirement	liabilities	declined	by	$190	million	as	a	result	of	cash	contributions	to	our	various	pension	plans.

•Other	non-current	liabilities	decreased	by	$124	million	due	primarily	to	lower	restructuring	reserves	and	a	decline	in	our	policy	and	contract	claims reserves	at	our	property	and	casualty	runoff	business.

								We	invest	in	broad	asset	categories	related	to	our	diversified	operations.	In	managing	our	investments,	our	objective	is	to	maximize	earnings	while	monitoring	asset and	liability	durations,	interest	and	credit	risks,	and	regulatory	requirements.	We	do	not	allocate	to	the	operating	segments	invested	assets	or	related	investment	income not	directly	required	to	support	the	insurance	brokerage	and	consulting	businesses.

								See	Note	6	to	our	consolidated	financial	statements	for	more	information	on	our	investments.

•redeeming	$250	million	of	debt	securities	in	January	2007,	and

•1 converting	$300	million	of	our	outstanding	3 /2%	Senior	Convertible	Debentures	that	were	due	in	2012	to	our	common	stock.

# 								These	decreases	were	partially	offset	by	higher	borrowings	in	Europe.

								We	have	disclosed	future	payments	of	our	long-term	debt	and	operating	lease	commitments	(with	initial	or	remaining	non-cancelable	lease	terms	in	excess	of	one year)	in	Note	7	to	the	consolidated	financial	statements.

								At	December	31,	2007,	we	had	a	$600	million	unused	U.S.	committed	bank	credit	facility,	which	expires	in	February	2010,	to	support	commercial	paper	and	other short-term	borrowings.	This	facility	allows	us	to	issue	up	to	$150	million	in	letters	of	credit.

								We	also	have	several	foreign	credit	facilities	available.	At	December	31,	2007,	we	had	available	to	us:

•a	five-year	€650	million	($942	million)	multi-currency	facility,	of	which	$795	million	was	outstanding	at	December	31,	2007.	See	Note	7	to	the consolidated	financial	statements	for	further	discussion	on	both	our	U.S.	and	Euro	facilities.

								This	table	shows	the	major	rating	agencies'	ratings	of	our	debt	at	February	25,	2008:

|  | Rating | Outlook | Rating | Outlook |
| :--- | :--- | :--- | :--- | :--- |
| Standard\t&amp;\tPoor's | BBB+ | Stable | A-2 | Stable |
| Moody's\tInvestor\tServices | Baa2 | Positive | P-2 | Positive |
| Fitch,\tInc. | BBB+ | Stable | F-2 | Stable |

								During	2007,	Standard	&	Poor's	changed	its	outlook	on	Aon's	commercial	paper	from	positive	to	stable.

								A	downgrade	in	the	credit	ratings	of	our	senior	debt	and	commercial	paper	would:

•increase	our	borrowing	costs	and	reduce	our	financial	flexibility,	and

•increase	our	commercial	paper	interest	rates	or	possibly	restrict	our	access	to	the	commercial	paper	market	altogether.	Although	we	have	committed backup	lines,	we	cannot	ensure	that	our	financial	position	will	not	be	hurt	if	we	can	no	longer	access	the	commercial	paper	market.

								Stockholders'	equity	increased	$1.0	billion	during	2007	to	$6.2	billion,	driven	primarily	by:

# •$864	million	of	net	income,	and

•1 a	$495	million	increase	in	capital	stock	and	additional	paid-in-capital,	principally	due	to	the	redemption	of	our	3 /2%	senior	convertible	debentures,	as well	as	stock	issued	in	connection	with	employee	benefit	plans.

								Partially	offsetting	this	increase	was	a	$391	million	increase	in	treasury	stock,	reflecting	stock	repurchases,	net	of	reissuance	of	treasury	stock	in	connection	with employee	benefit	plans.

								Accumulated	other	comprehensive	loss	decreased	$284	million	since	December	31,	2006.	Compared	to	year-end	2006:

•net	foreign	exchange	translation	increased	by	$166	million	because	of	the	weakening	of	the	U.S.	dollar	against	foreign	currencies,

•net	derivative	gains	increased	$9	million,

•net	unrealized	investment	gains	rose	$3	million,	and

•our	net	recognized	losses	and	unrecognized	prior	service	credits	decreased	by	$106	million.

								We	record	various	contractual	obligations	as	liabilities	in	our	consolidated	financial	statements.	Other	items,	such	as	certain	purchase	commitments	and	other executory	contracts,	are	not	recognized	as	liabilities	in	our	consolidated	financial	statements,	but	we	are	required	to	disclose	them.

								Aon	and	its	subsidiaries	have	issued	letters	of	credit	to	cover	contingent	payments	of	approximately	$4	million	for	taxes	and	other	business	obligations	to	third parties.	We	accrue	amounts	in	our	consolidated	financial	statements	for	these	letters	of	credit	to	the	extent	they	are	probable	and	estimable.

								Following	the	guidance	of	FASB	Statement	No.	140,	Accounting	for	Transfers	and	Servicing	of	Financial	Assets	and	Extinguishment	of	Liabilities,	and	other relevant	accounting	guidance,	we	use	special	purpose	entities	and	qualifying	special	purpose	entities	("QSPE's"),	also	known	as	special	purpose	vehicles,	in	some	of	our operations.

# Reinsurance	Guarantee

								In	connection	with	the	AWG	transaction,	we	issued	an	indemnification	which	protects	the	purchaser	from	credit	exposure	relating	to	the	property	and	casualty reserves	that	have	been	reinsured.	These	reinsurance	recoverables	amount	to	$846	million	at	December	31,	2007.	We	recorded	a	$13	million	liability	reflecting	the	fair value	of	this	indemnification	as	of	November	30,	2006.	The	value	is	approximately	$12	million	as	of	December	31,	2007.	The	indemnification	represents	the	present value	of	the	indemnification	on	the	credit	risk	of	the	reinsurers.

# Premium	Financing

								Some	of	our	U.S.,	U.K.,	Canadian,	and	Australian	subsidiaries	originate	short-term	loans	(generally	with	terms	of	12	months	or	less)	to	businesses	to	finance	their insurance	premium	obligations,	and	then	sell	these	premium	finance	agreements	in	securitization	transactions	that	meet	the	criteria	for	sale	accounting.	These	sales involve:

•special	purpose	entities	("SPEs"),	which	are	considered	QSPEs	by	Statement	No.	140,	and	following	Statement	No.	140,	should	not	be	consolidated	in the	financial	statements	of	a	transferor	or	its	affiliates	(Aon's	subsidiaries),	and

•multi-seller,	non-qualified	bank	commercial	paper	conduit	SPEs	("Bank	SPEs"),	which	are	variable	interest	entities	according	to	FIN	46.

								We	have	analyzed	qualitative	and	quantitative	factors	related	to	our	subsidiaries'	interests	in	the	Bank	SPEs	and	have	determined	that	these	subsidiaries	are	not	the sponsors	of	the	Bank	SPEs.	Additionally,	independent	third	parties:

•have	made	substantial	equity	investments	in	the	Bank	SPEs,

•have	voting	control	of	the	Bank	SPEs,	and

•generally	bear	the	risks	and	rewards	of	ownership	of	the	assets	of	the	Bank	SPEs.

								Thus,	we	have	concluded	that	non-consolidation	of	the	Bank	SPEs	is	appropriate	given	that	our	subsidiaries	do	not	have	significant	variable	interests.

								Through	the	securitization	agreements,	we,	or	one	of	our	QSPEs,	sell	undivided	interests	in	specified	premium	finance	agreements	to	the	Bank	SPEs.	The	total amount	advanced	on	premium	finance	agreements	sold	to	the	Bank	SPEs	at	any	one	time	is	limited	by	the	securitization	agreements	to	$1.8	billion.	The	Bank	SPEs	had advanced	$1.5	billion	and	$1.7	billion	at	December	31,	2007	and	2006,	respectively.	The:

•origination	and	sale	of	eligible	premium	finance	agreements	to	the	Bank	SPEs	increase	available	advances,	and

•collections	on	previously	sold	agreements,	which	we	administer,	reduce	available	advances.

								We	record	gains	associated	with	the	sale	of	receivables.	When	we	calculate	the	gain,	we	include	all	anticipated	fees	we	incurred	for	this	facility.	The	gains,	which are	included	in	commissions,	fees	and	other	revenue	in	the	consolidated	statements	of	income,	were	$64	million,	$63	million,	and	$65	million	for	the	years	ended December	31,	2007,	2006,	and	2005,	respectively.

								We	record	at	fair	value	our	retained	interest	in	the	sold	premium	finance	agreements,	and	report	it	in	insurance	brokerage	and	consulting	services	receivables	in	the consolidated	statements	of	financial	position.	We	also	retain	servicing	rights	for	sold	agreements	and	earn	servicing	fee	income	over	the	servicing	period,	including	these servicing	fees	in	the	gain/loss	calculation.

								Because	the	fair	value	of	the	servicing	rights	approximates	the	estimated	costs	to	service	the	receivables	at	December	31,	2007	and	2006,	we	have	not	recorded	any servicing	assets	or	liabilities.

								We	estimate	fair	value	by	discounting	estimated	future	cash	flows	from	our	retained	interest	in	the	sold	receivables,	using	discount	rates	that	approximate	current market	rates	and	expected	future	prepayment	rates.

								The	Bank	SPEs	bear	the	credit	risks	on	the	receivables,	subject	to	limited	recourse	in	the	form	of	over-collateralization	required	on	the	sales	of	the	receivables.

								All	but	the	Australian	facility	require	Aon	to	maintain	the	following	covenants:

•consolidated	net	worth,	as	defined,	of	at	least	$2.5	billion,

•consolidated	EBITDA	(earnings	before	interest,	taxes,	depreciation	and	amortization)	to	consolidated	net	interest	of	at	least	4	to	1,	and

•consolidated	indebtedness	to	consolidated	EBITDA	of	no	more	than	3	to	1.

								We	intend	to	renew	these	conduit	facilities	when	they	expire.	If	there	were	adverse	bank,	regulatory,	tax,	or	accounting	rule	changes,	our	access	to	the	conduit facilities	and	special	purpose	vehicles	would	be	restricted.	Following	the	appropriate	accounting	standards,	these	special	purpose	vehicles	are	not	included	in	our consolidated	financial	statements.

# PEPS	I

								In	2001,	we	sold	the	vast	majority	of	our	LP	portfolio,	valued	at	$450	million,	to	PEPS	I,	a	QSPE.	The	common	stock	interest	in	PEPS	I	is	held	by	a	limited liability	company	owned	by	us	(49%)	and	by	a	charitable	trust,	which	we	do	not	control,	established	for	victims	of	the	September	11 th 	attacks	(51%).	We	have	not included	the	assets	and	liabilities	and	operations	of	PEPS	I	in	our	consolidated	financial	statements.

								In	2001,	PEPS	I	sold	approximately	$171	million	of	investment	grade	fixed-maturity	securities	to	unaffiliated	third	parties.	PEPS	I	then	paid	our	insurance underwriting	subsidiaries	the	$171	million	in	cash	and	issued	them	an	additional	$279	million	in	fixed-maturity	and	preferred	stock	securities.

								As	part	of	this	transaction,	Aon	is	required	to	purchase	additional	fixed-maturity	securities	from	PEPS	I	in	an	amount	equal	to	the	unfunded	LP	commitments	as they	are	requested.	These	fixed-maturity	securities	are	rated	below	investment	grade.	As	of	December	31,	2007,	the	unfunded	commitments	amounted	to	$44	million. These	commitments	have	specific	expiration	dates,	and	the	general	partners	may	decide	not	to	draw	on	these	commitments.

								We	received	income	distributions	from	our	preferred	investment	in	PEPS	I	of	$61	million	during	2007,	which	are	included	in	investment	income.	Prior	to	2007, income	distributions	received	from	PEPS	I	were	limited	to	interest	payments	on	various	PEPS	I	debt	instruments.	Beginning	in	2007,	PEPS	I	had	redeemed	or collateralized	all	of	its	debt,	and	as	a	result,	began	to	pay	preferred	income	distributions.	Whether	we	receive	additional	preferred	returns	will	depend	on	the	performance of	the	LP	interests	underlying	PEPS	I,	which	we	expect	to	vary	from	period	to	period.	We	do	not	control	the	timing	of	the	distributions.

# Contractual	Obligations

•summarizes	our	significant	contractual	obligations	at	December	31,	2007,	and	the	future	periods	during	which	we	expect	to	settle	these	obligations	in cash,	and

•reflects	the	timing	of	principal	payments	on	outstanding	borrowings.

								We	have	provided	additional	details	about	some	of	these	obligations	in	our	notes	to	the	financial	statements:

| (millions) | 2008 | 2009-<br>2010 | 2011-<br>2012 | 2013	and<br>beyond | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Short-\tand\tlong-term\tborrowings | $252 | $548 | $607 | $738 | $2,145 |
| Interest\texpense\ton\tdebt | 126 | 224 | 158 | 834 | 1,342 |
| Operating\tleases | 317 | 511 | 405 | 597 | 1,830 |
| Pension\tand\tother\tpostretirement\tbenefit\tplan\tobligations\t(3) | 207 | 428 | 566 | 1,610 | 2,811 |
| Purchase\tobligations\t(1)\t(2) | 282 | 490 | 330 | 256 | 1,358 |
| Insurance\tpremiums\tpayable | 9,468 | 27 | 3 | — | 9,498 |
| Policy\tand\tcontract\tclaims | 35 | 41 | 17 | 21 | 114 |
| Other\tlong-term\tliabilities\treflected\ton\tthe\tconsolidated\tbalance |  |  |  |  |  |
| sheet\tunder\tGAAP\t(4) | 18 | 11 | 6 | 6 | 41 |
| Total-Continuing\toperations | 10,705 | 2,280 | 2,092 | 4,062 | 19,139 |
| Discontinued\toperations(5) | 520 | 243 | 233 | 1,475 | 2,471 |
| Total\tAon | $11,225 | $2,523 | $2,325 | $5,537 | $21,610 |

(1) Included	in	purchase	obligations	are	contracts	for	information	technology	outsourcing.	As	of	December	31,	2007,	we	can	exit	these	obligations	for	termination payments	of	$81	million.	However,	given	the	nature	of	these	contracts,	we	have	included	them	in	our	contractual	obligations	table.

(2) Also	included	in	purchase	obligations	is	a	$403	million	contract	for	claims	outsourcing	in	the	U.K.	We	can	exit	this	obligation	after	2013	for	approximately $40	million.

(3) Pension	and	other	postretirement	benefit	plan	obligations	include	estimates	of	our	minimum	funding	requirements,	pursuant	to	ERISA	and	other	regulations	and agreements	with	the	Trustees	of	our	U.K.	Pension	Plans.	Nonqualified	pension	and	other	postretirement	benefit	obligations	are	based	on	estimated	future	benefit payments.	We	may	make	additional	discretionary	contributions.

(4) Excludes	$57	million	of	liabilities	for	unrecognized	tax	benefits	due	to	our	inability	to	reasonably	estimate	the	period(s)	when	cash	settlements	will	be	made.

(5) A	significant	amount	of	CICA's	total	contractual	obligations	are	for	future	policy	benefits	and	policy	and	contract	claims.

# Item	7A.				Quantitative	and	Qualitative	Disclosures	About	Market	Risk.

								We	are	exposed	to	potential	fluctuations	in	earnings,	cash	flows,	and	the	fair	value	of	certain	of	our	assets	and	liabilities	due	to	changes	in	interest	rates,	foreign exchange	rates,	and	equity	prices.	To	manage	the	risk	from	these	exposures,	we	enter	into	a	variety	of	derivative	instruments.	We	do	not	enter	into	derivatives	or financial	instruments	for	trading	purposes.

								The	following	discussion	describes	our	specific	exposures	and	the	strategies	we	use	to	manage	these	risks.	See	Notes	1	and	13	to	the	consolidated	financial statements	for	a	discussion	of	our	accounting	policies	for	financial	instruments	and	derivatives.

								We	are	subject	to	foreign	exchange	rate	risk	from	translating	the	financial	statements	of	our	foreign	subsidiaries	into	U.S.	dollars.	Our	primary	exposures	are	to	the British	pound,	the	Euro,	the	Canadian	dollar	and	the	Australian	dollar.	We	use	over-the-counter	(OTC)	options	and	forward	contracts	to	reduce	the	impact	of	foreign currency	fluctuations	on	the	translation	of	our	foreign	operations'	financial	statements.

								Additionally,	some	of	our	foreign	brokerage	subsidiaries	receive	revenues	in	currencies	that	differ	from	their	functional	currencies.	Our	U.K.	subsidiary	earns approximately	28%	of	its	revenue	in	U.S.	dollars,	but	most	of	its	expenses	are	incurred	in	pounds	sterling.	Our	policy	is	to	convert	into	pounds	sterling	sufficient	U.S. dollar	revenue	to	fund	the	subsidiary's	pound	sterling	expenses	using	OTC	options	and	forward	exchange	contracts.	At	December	31,	2007,	we	have	hedged	60%	and 48%	of	our	U.K.	subsidiaries'	expected	U.S.	dollar	transaction	exposure	for	the	years	ending	December	31,	2008	and	2009,	respectively.	We	do	not	generally	hedge exposures	beyond	three	years.

								The	potential	loss	in	future	earnings	from	market	risk	sensitive	instruments	resulting	from	a	hypothetical	10%	adverse	change	in	year-end	exchange	rates	would	not be	material	in	2008	and	2009.

								Our	businesses'	income	is	affected	by	changes	in	international	and	domestic	short-term	interest	rates.	We	monitor	our	net	exposure	to	short-term	interest	rates	and as	appropriate,	hedge	our	exposure	with	various	derivative	financial	instruments.	A	hypothetical,	instantaneous	parallel	decrease	in	the	period	end	yield	curve	of	100 basis	points	would	cause	a	decrease,	net	of	derivative	positions,	of	$31	million	to	both	2008	and	2009	pretax	income.

								The	valuation	of	our	fixed-maturity	investment	portfolio	is	subject	to	interest	rate	risk.	A	hypothetical	1%	(100	basis	point)	increase	in	long-term	interest	rates would	decrease	the	fair	value	of	the	portfolio	at	December	31,	2007,	and	2006	by	approximately	$3	million	and	$6	million,	respectively.	We	have	debt	outstanding	with a	fair	market	value	of	$2.2	billion	and	$2.6	billion	at	December	31,	2007,	and	2006,	respectively.	This	fair	value	was	greater	than	the	carrying	value	by	$27	million	and $318	million	at	December	31,	2007	and	2006,	respectively.	A	hypothetical	1%	decrease	in	interest	rates	would	increase	the	fair	value	by	approximately	4%	and	5%	at December	31,	2007	and	2006,	respectively.

								PEPS	I	—	At	December	31,	2007,	a	10%	or	20%	decrease	in	the	underlying	equity	of	the	limited	partnerships	would	have	decreased	the	value	of	the	preferred stock	securities	by	$15	million	and	$32	million,	respectively.

								We	have	selected	hypothetical	changes	in	foreign	currency	exchange	rates,	interest	rates,	and	equity	market	prices	to	illustrate	the	possible	impact	of	these	changes; we	are	not	predicting	market	events.	We	believe	these	changes	in	rates	and	prices	are	reasonably	possible	within	a	one-year	period.

# Item	8.				Financial	Statements	and	Supplementary	Data.

# Management's	Report	on	Internal	Control	over	Financial	Reporting

								Management	of	Aon	Corporation	and	its	subsidiaries	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	as	defined	in Rules	13a-15(f)	and	15d-15(f)	under	the	Securities	Exchange	Act	of	1934.	The	Company's	internal	control	over	financial	reporting	is	designed	to	provide	reasonable assurance	regarding	the	reliability	of	financial	reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	U.S.	generally	accepted accounting	principles.

								Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

								Management	assessed	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2007.	In	making	this	assessment, management	used	the	criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO)	in	Internal	Control-Integrated	Framework.

								Based	on	our	assessment,	management	believes	that	the	Company	maintained	effective	internal	control	over	financial	reporting	as	of	December	31,	2007.

								The	effectiveness	of	our	internal	control	over	financial	reporting	as	of	December	31,	2007	has	been	audited	by	Ernst	&	Young	LLP,	an	independent	registered public	accounting	firm,	as	stated	in	their	report	on	page	65.

/s/		GREGORY	C.	CASE

Gregory	C.	Case

President	&	Chief	Executive Officer

/s/		DAVID	P.	BOLGER

David	P.	Bolger Executive	Vice	President,	& Chief	Financial	Officer February	27,	2008

# Report	of	Independent	Registered	Public	Accounting	Firm	on

# Internal	Control	over	Financial	Reporting

# Board	of	Directors	and	Stockholders

								We	have	audited	Aon	Corporation's	internal	control	over	financial	reporting	as	of	December	31,	2007,	based	on	criteria	established	in	Internal	Control	— Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(the	COSO	criteria).	Aon	Corporation's	management	is responsible	for	maintaining	effective	internal	control	over	financial	reporting,	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on	the	Company's	internal control	over	financial	reporting	based	on	our	audit.

								We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	on	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe that	our	audit	provides	a	reasonable	basis	for	our	opinion.

								A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

								In	our	opinion,	Aon	Corporation	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2007,	based	on	the COSO	criteria.

								We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	statements	of financial	position	of	Aon	Corporation	as	of	December	31,	2007	and	2006,	and	the	related	consolidated	statements	of	income,	stockholders'	equity	and	cash	flows	for each	of	the	three	years	in	the	period	ended	December	31,	2007	and	our	report	dated	February	27,	2008	expressed	an	unqualified	opinion	thereon.

# Report	of	Independent	Registered	Public	Accounting	Firm	on	Financial	Statements

								We	have	audited	the	accompanying	consolidated	statements	of	financial	position	of	Aon	Corporation	as	of	December	31,	2007	and	2006,	and	the	related consolidated	statements	of	income,	stockholders'	equity	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2007.	Our	audits	also	included	the financial	statement	schedule	listed	in	the	Index	at	Item	15(a).	These	financial	statements	and	schedule	are	the	responsibility	of	the	Company's	management.	Our responsibility	is	to	express	an	opinion	on	these	financial	statements	and	schedule	based	on	our	audits.

								We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

								In	our	opinion,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated	financial	position	of	Aon	Corporation	at December	31,	2007	and	2006,	and	the	consolidated	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2007,	in conformity	with	U.S.	generally	accepted	accounting	principles.	Also,	in	our	opinion,	the	related	financial	statement	schedule,	when	considered	in	relation	to	the	basic financial	statements	taken	as	a	whole,	presents	fairly	in	all	material	respects	the	information	set	forth	therein.

								As	discussed	in	Note	1,	the	Company	changed	its	method	of	accounting	for	stock-based	compensation	and	defined	benefit	pension	and	postretirement	plans	in 2006.

								We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	Aon	Corporation's	internal	control over	financial	reporting	as	of	December	31,	2007,	based	on	criteria	established	in	Internal	Control-Integrated	Framework	issued	by	the	Committee	of	Sponsoring Organizations	of	the	Treadway	Commission	and	our	report	dated	February	27,	2008	expressed	an	unqualified	opinion	thereon.

# Consolidated	Statements	of	Income

| (millions,	except	per	share	data) | Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- | :--- |
| Revenue |  |  |  |  |
| Commissions\tand\tfees\tand\tother |  | $7,170 | $6,660 | $6,507 |
| Investment\tincome | Investment\tincome | 301 | 221 | 144 |
| Total\trevenue | Total\trevenue | 7,471 | 6,881 | 6,651 |
| Expenses |  |  |  |  |
| Compensation\tand\tbenefits | Compensation\tand\tbenefits | 4,388 | 4,225 | 4,084 |
| Other\tgeneral\texpenses | Other\tgeneral\texpenses | 1,726 | 1,637 | 1,616 |
| Depreciation\tand\tamortization | Depreciation\tand\tamortization | 194 | 224 | 244 |
| Interest\texpense | Interest\texpense | 138 | 129 | 125 |
| Provision\tfor\tNew\tYork\tand\tother\tstate\tsettlements | Provision\tfor\tNew\tYork\tand\tother\tstate\tsettlements | 1 | 3 | 5 |
| Total\texpenses | Total\texpenses | 6,447 | 6,218 | 6,074 |
| Income\tfrom\tContinuing\tOperations\tBefore\tProvision\tfor\tIncome\tTax\tand\tAccounting\tChange | Income\tfrom\tContinuing\tOperations\tBefore\tProvision\tfor\tIncome\tTax\tand\tAccounting\tChange | 1,024 | 663 | 577 |
| Provision\tfor\tincome\ttax | Provision\tfor\tincome\ttax | 352 | 216 | 161 |
| Income\tfrom\tContinuing\tOperations | Income\tfrom\tContinuing\tOperations | 672 | 447 | 416 |
| Income\tfrom\tDiscontinued\tOperations |  | 316 | 419 | 615 |
| Provision\tfor\tincome\ttax | Provision\tfor\tincome\ttax | 124 | 147 | 296 |
| Income\tfrom\tDiscontinued\tOperations,\tNet\tof\tTax | Income\tfrom\tDiscontinued\tOperations,\tNet\tof\tTax | 192 | 272 | 319 |
| Income\tBefore\tAccounting\tChange |  | 864 | 719 | 735 |
| Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple,\tnet\tof\ttax | Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple,\tnet\tof\ttax | — | 1 | — |
| Net\tIncome | Net\tIncome | $864 | $720 | $735 |
| Net\tIncome\tAvailable\tfor\tCommon\tStockholders | Net\tIncome\tAvailable\tfor\tCommon\tStockholders | $864 | $720 | $733 |
| Basic\tNet\tIncome\tper\tShare: |  |  |  |  |
| Continuing\toperations | Continuing\toperations | $2.25 | $1.41 | $1.28 |
| Discontinued\toperations | Discontinued\toperations | 0.65 | 0.86 | 0.99 |
| Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple | Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple | — | — | — |
| Net\tincome | Net\tincome | $2.90 | $2.27 | $2.27 |
| Diluted\tNet\tIncome\tper\tShare: |  |  |  |  |
| Continuing\toperations | Continuing\toperations | $2.10 | $1.33 | $1.24 |
| Discontinued\toperations | Discontinued\toperations | 0.59 | 0.80 | 0.93 |
| Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple | Cumulative\teffect\tof\tchange\tin\taccounting\tprinciple | — | — | — |
| Net\tincome | Net\tincome | $2.69 | $2.13 | $2.17 |
| Cash\tDividends\tper\tShare\tPaid\ton\tCommon\tStock | Cash\tDividends\tper\tShare\tPaid\ton\tCommon\tStock | $0.60 | $0.60 | $0.60 |
| Diluted\tAverage\tCommon\tand\tCommon\tEquivalent\tShares\tOutstanding\tShares\tOutstanding | Diluted\tAverage\tCommon\tand\tCommon\tEquivalent\tShares\tOutstanding\tShares\tOutstanding | 323.0 | 342.1 | 341.5 |

See	accompanying	notes	to	consolidated	financial	statements.

# Consolidated	Statements	of	Financial	Position

| (millions) | As	of	December	31 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| ASSETS |  |  |  |
| CURRENT\tASSETS |  |  |  |
| Cash | Cash | $584 | $281 |
| Short-term\tinvestments | Short-term\tinvestments | 4,331 | 4,335 |
| Receivables | Receivables | 8,378 | 8,631 |
| Current\tincome\ttax\treceivable | Current\tincome\ttax\treceivable | 97 | 160 |
| Current\tdeferred\ttax\tassets | Current\tdeferred\ttax\tassets | 46 | 30 |
| Other\tcurrent\tassets | Other\tcurrent\tassets | 149 | 156 |
| Assets\theld\tfor\tsale | Assets\theld\tfor\tsale | 4,388 | 4,050 |
| Total\tCurrent\tAssets | Total\tCurrent\tAssets | 17,973 | 17,643 |
| Goodwill |  | 4,935 | 4,521 |
| Other\tintangible\tassets | Other\tintangible\tassets | 204 | 145 |
| Fixed\tassets,\tnet | Fixed\tassets,\tnet | 498 | 456 |
| Long-term\tinvestments | Long-term\tinvestments | 417 | 529 |
| Deferred\ttax\tassets | Deferred\ttax\tassets | 530 | 710 |
| Other\tnon-current\tassets | Other\tnon-current\tassets | 391 | 380 |
| TOTAL\tASSETS | TOTAL\tASSETS | $24,948 | $24,384 |

# Consolidated	Statements	of	Financial	Position	(Continued)

| (millions) | As	of	December	31 | 2007 | 2006 |
| :--- | :--- | :--- | :--- |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY |  |  |  |
| CURRENT\tLIABILITIES |  |  |  |
| Insurance\tpremiums\tpayable | Insurance\tpremiums\tpayable | $9,498 | $9,704 |
| Short-term\tdebt | Short-term\tdebt | 252 | 42 |
| Accounts\tpayable\tand\taccrued\tliabilities | Accounts\tpayable\tand\taccrued\tliabilities | 1,418 | 1,480 |
| Accrued\tincome\ttaxes | Accrued\tincome\ttaxes | 71 | — |
| Current\tdeferred\ttax\tliabilities | Current\tdeferred\ttax\tliabilities | 5 | 13 |
| Other\tcurrent\tliabilities | Other\tcurrent\tliabilities | 284 | 207 |
| Liabilities\theld\tfor\tsale | Liabilities\theld\tfor\tsale | 3,025 | 2,910 |
| Total\tCurrent\tLiabiities | Total\tCurrent\tLiabiities | 14,553 | 14,356 |
| Long-term\tdebt |  | 1,893 | 2,243 |
| Deferred\ttax\tliabilities | Deferred\ttax\tliabilities | 109 | 81 |
| Pension,\tpost\temployment\tand\tpost\tretirement\tliabilities | Pension,\tpost\temployment\tand\tpost\tretirement\tliabilities | 1,251 | 1,441 |
| Other\tnon-current\tliabilities | Other\tnon-current\tliabilities | 921 | 1,045 |
| TOTAL\tLIABILITIES | TOTAL\tLIABILITIES | 18,727 | 19,166 |
| STOCKHOLDERS'\tEQUITY |  |  |  |
| Common\tstock-$1\tpar\tvalue |  |  |  |
| Authorized:\t750\tshares\t(issued:\t2007-361;\t2006-347) | Authorized:\t750\tshares\t(issued:\t2007-361;\t2006-347) | 361 | 347 |
| Additional\tpaid-in\tcapital |  | 3,064 | 2,583 |
| Retained\tearnings | Retained\tearnings | 5,607 | 4,992 |
| Accumulated\tother\tcomprehensive\tloss | Accumulated\tother\tcomprehensive\tloss | (726) | (1,010) |
|  |  | (2,085) | (1,694) |
| TOTAL\tSTOCKHOLDERS'\tEQUITY | TOTAL\tSTOCKHOLDERS'\tEQUITY | 6,221 | 5,218 |
| TOTAL\tLIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY | TOTAL\tLIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY | $24,948 | $24,384 |

# Consolidated	Statements	of	Cash	Flows

| (millions) | Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- | :--- |
| CASH\tFLOWS\tFROM\tOPERATING\tACTIVITIES |  |  |  |  |
| Net\tincome | Net\tincome | $864 | $720 | $735 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tcash\tprovided\tby\toperating\tactivities |  |  |  |  |
| Gain\tfrom\tdisposal\tof\toperations | Gain\tfrom\tdisposal\tof\toperations | (36) | (46) | (240) |
| Depreciation\tand\tamortization\tof\tproperty,\tequipment\tand\tsoftware | Depreciation\tand\tamortization\tof\tproperty,\tequipment\tand\tsoftware | 163 | 201 | 227 |
| Stock\tcompensation\texpense | Stock\tcompensation\texpense | 204 | 153 | 72 |
| Amortization\tof\tintangible\tassets | Amortization\tof\tintangible\tassets | 42 | 43 | 50 |
| Valuation\tchanges\ton\tinvestments,\tincome\tor\tloss\ton\tdisposals\tand\tnet\tbond\tamortization | Valuation\tchanges\ton\tinvestments,\tincome\tor\tloss\ton\tdisposals\tand\tnet\tbond\tamortization | (8) | (21) | 5 |
| Income\ttaxes | Income\ttaxes | 249 | (173) | 148 |
| Contributions\tto\tmajor\tdefined\tbenefit\tpension\tplans\t(in\texcess\tof)\tless\tthan\texpense | Contributions\tto\tmajor\tdefined\tbenefit\tpension\tplans\t(in\texcess\tof)\tless\tthan\texpense | (107) | 55 | (221) |
| Cash\tpaid\t(in\texcess\tof)\tless\tthan\texpense\tfor\trestructuring\tplans | Cash\tpaid\t(in\texcess\tof)\tless\tthan\texpense\tfor\trestructuring\tplans | (47) | 14 | 118 |
| Provision\tfor\tNew\tYork\tand\tother\tstate\tsettlements | Provision\tfor\tNew\tYork\tand\tother\tstate\tsettlements | (37) | (72) | (71) |
| Change\tin\tfunds\theld\ton\tbehalf\tof\tbrokerage\tand\tconsulting\tclients | Change\tin\tfunds\theld\ton\tbehalf\tof\tbrokerage\tand\tconsulting\tclients | 50 | (150) | — |
| Change\tin\tinsurance\tunderwriting\tassets\tand\tliabilities |  |  |  |  |
| Operating\treceivables | Operating\treceivables | 48 | (266) | 27 |
| Other\tassets\tincluding\tprepaid\tpremiums | Other\tassets\tincluding\tprepaid\tpremiums | 39 | (134) | (19) |
| Deferred\tpolicy\tacquisition\tcosts | Deferred\tpolicy\tacquisition\tcosts | (30) | 32 | (72) |
| Policy\tliabilities | Policy\tliabilities | (7) | 587 | 192 |
| Other\tliabilities | Other\tliabilities | (6) | 181 | 32 |
| Change\tin\tother\tassets\tand\tliabilities |  |  |  |  |
| Net\treceivables | Net\treceivables | 56 | (289) | (34) |
| Other\tassets | Other\tassets | (16) | 76 | (54) |
| Accounts\tpayable\tand\taccrued\tliabilities | Accounts\tpayable\tand\taccrued\tliabilities | (90) | 169 | 107 |
| Other\tliabilities | Other\tliabilities | (42) | (112) | (116) |
| CASH\tPROVIDED\tBY\tOPERATING\tACTIVITIES | CASH\tPROVIDED\tBY\tOPERATING\tACTIVITIES | 1,289 | 968 | 886 |
| CASH\tFLOWS\tFROM\tINVESTING\tACTIVITIES |  |  |  |  |
| Sale\tof\tinvestments |  |  |  |  |
| Fixed\tmaturities |  |  |  |  |
| Maturities | Maturities | 141 | 223 | 232 |
| Calls\tand\tprepayments | Calls\tand\tprepayments | 71 | 192 | 234 |
| Sales | Sales | 740 | 1,455 | 2,053 |
| Equity\tsecurities |  | 30 | 4 | 11 |
| Other\tinvestments | Other\tinvestments | 48 | 33 | 18 |
| Purchase\tof\tinvestments |  |  |  |  |
| Fixed\tmaturities | Fixed\tmaturities | (991) | (1,970) | (3,408) |
| Equity\tsecurities | Equity\tsecurities | — | (30) | (14) |
| Other\tinvestments | Other\tinvestments | (20) | (19) | (10) |
| Short-term\tinvestments\t—\tnet |  | (114) | (470) | (42) |
| Acquisition\tof\tsubsidiaries | Acquisition\tof\tsubsidiaries | (251) | (138) | (81) |
| Proceeds\tfrom\tsale\tof\toperations | Proceeds\tfrom\tsale\tof\toperations | 53 | 682 | 364 |
| Property\tand\tequipment\tand\tother\t—\tnet | Property\tand\tequipment\tand\tother\t—\tnet | (170) | (152) | (126) |
| CASH\tUSED\tBY\tINVESTING\tACTIVITIES | CASH\tUSED\tBY\tINVESTING\tACTIVITIES | (463) | (190) | (769) |
| CASH\tFLOWS\tFROM\tFINANCING\tACTIVITIES |  |  |  |  |
| Issuance\tof\tcommon\tstock | Issuance\tof\tcommon\tstock | 28 | 50 | 76 |
| Preferred\tstock\tredemption | Preferred\tstock\tredemption | — | — | (50) |
| Treasury\tstock\ttransactions\t—\tnet | Treasury\tstock\ttransactions\t—\tnet | (523) | (966) | (25) |
| Issuances\t(repayments)\tof\tshort-term\tborrowings\t—\tnet | Issuances\t(repayments)\tof\tshort-term\tborrowings\t—\tnet | 210 | 34 | 5 |
| Issuance\tof\tlong-term\tdebt | Issuance\tof\tlong-term\tdebt | 806 | 567 | 569 |
| Repayment\tof\tlong-term\tdebt | Repayment\tof\tlong-term\tdebt | (924) | (460) | (586) |
| Cash\tdividends\tto\tstockholders | Cash\tdividends\tto\tstockholders | (176) | (189) | (193) |
| CASH\tUSED\tBY\tFINANCING\tACTIVITIES | CASH\tUSED\tBY\tFINANCING\tACTIVITIES | (579) | (964) | (204) |
| EFFECT\tOF\tEXCHANGE\tRATE\tCHANGES\tON\tCASH | EFFECT\tOF\tEXCHANGE\tRATE\tCHANGES\tON\tCASH | 56 | (9) | (7) |
| INCREASE\t(DECREASE)\tIN\tCASH | INCREASE\t(DECREASE)\tIN\tCASH | 303 | (195) | (94) |
| CASH\tAT\tBEGINNING\tOF\tYEAR | CASH\tAT\tBEGINNING\tOF\tYEAR | 281 | 476 | 570 |
| CASH\tAT\tEND\tOF\tYEAR | CASH\tAT\tEND\tOF\tYEAR | $584 | $281 | $476 |

# Consolidated	Statements	of	Stockholders'	Equity

| (millions) | Years	Ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- | :--- |
| Common\tStock\t\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 |  | $347 | $344 | $339 |
| Redemption\tof\tconvertible\tdebentures | Redemption\tof\tconvertible\tdebentures | 14 | — | — |
| Issued\tfor\temployee\tbenefit\tplans | Issued\tfor\temployee\tbenefit\tplans | — | 3 | 5 |
|  | \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tB\talance\tat\tDecember\t31 | 361 | 347 | 344 |
| Additional\tPaid-in\tCapital\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | Additional\tPaid-in\tCapital\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | 2,583 | 2,405 | 2,254 |
| Redemption\tof\tconvertible\tdebentures | Redemption\tof\tconvertible\tdebentures | 286 | — | — |
| Employee\tbenefit\tplans | Employee\tbenefit\tplans | 195 | 178 | 146 |
| Business\tcombinations | Business\tcombinations | — | — | 5 |
|  | \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tB\talance\tat\tDecember\t31 | 3,064 | 2,583 | 2,405 |
| Retained\tEarnings\t\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | Retained\tEarnings\t\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | 4,992 | 4,531 | 3,991 |
| Net\tincome | Net\tincome | 864 | 720 | 735 |
| Dividends\tto\tstockholders | Dividends\tto\tstockholders | (176) | (189) | (194) |
| Loss\ton\ttreasury\tstock\treissued | Loss\ton\ttreasury\tstock\treissued | (66) | (36) | — |
|  |  | — | (33) | — |
| Dividend\tequivalents | Dividend\tequivalents | (7) | (1) | (1) |
|  | \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tB\talance\tat\tDecember\t31 | 5,607 | 4,992 | 4,531 |
| Accumulated\tOther\tComprehensive\tIncome\t(Loss)\t\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | Accumulated\tOther\tComprehensive\tIncome\t(Loss)\t\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | (1,010) | (1,155) | (681) |
| Net\tderivative\tgains\t(losses) | Net\tderivative\tgains\t(losses) | 9 | 26 | (51) |
| Net\tunrealized\tinvestment\tgains\t(losses) | Net\tunrealized\tinvestment\tgains\t(losses) | 3 | 21 | (10) |
| Net\tforeign\texchange\ttranslation | Net\tforeign\texchange\ttranslation | 166 | 237 | (240) |
| Net\tpost-retirement\tbenefit\tobligation | Net\tpost-retirement\tbenefit\tobligation | 106 | 210 | (173) |
| Other\tcomprehensive\tincome\t(loss) | Other\tcomprehensive\tincome\t(loss) | 284 | 494 | (474) |
|  |  | — | (349) | — |
|  | \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tB\talance\tat\tDecember\t31 | (726) | (1,010) | (1,155) |
| Treasury\tStock\t\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | Treasury\tStock\t\t\t\t\t\t\t\t\t\t\t\t\tBalance\tat\tJanuary\t1 | (1,694) | (808) | (783) |
| Cost\tof\tshares\tacquired | Cost\tof\tshares\tacquired | (751) | (1,048) | (25) |
| Shares\treissued\tat\taverage\tcost | Shares\treissued\tat\taverage\tcost | 360 | 162 | — |
|  | \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tB\talance\tat\tDecember\t31 | (2,085) | (1,694) | (808) |
| Stockholders'\tEquity\tat\tDecember\t31 | Stockholders'\tEquity\tat\tDecember\t31 | $6,221 | $5,218 | $5,312 |
| Comprehensive\tIncome |  |  |  |  |
| Net\tincome | Net\tincome | $864 | $720 | $735 |
| Other\tcomprehensive\tincome\t(loss) | Other\tcomprehensive\tincome\t(loss) | 284 | 494 | (474) |
| Comprehensive\tincome | Comprehensive\tincome | $1,148 | $1,214 | $261 |

# Notes	to	Consolidated	Financial	Statements

# 1.				Summary	of	Significant	Accounting	Principles	and	Practices

# Principles	of	Consolidation

								The	accompanying	consolidated	financial	statements	have	been	prepared	in	accordance	with	U.S.	generally	accepted	accounting	principles.	The	consolidated financial	statements	include	the	accounts	of	Aon	Corporation	and	its	majority-owned	subsidiaries	("Aon"	or	the	"Company"),	excluding	special-purpose	entities ("SPEs")	considered	variable	interest	entities	("VIEs")	for	which	Aon	is	not	the	primary	beneficiary.	All	material	intercompany	accounts	and	transactions	have	been eliminated.

								The	preparation	of	financial	statements	requires	management	to	make	estimates	and	assumptions	that	affect	the	amounts	reported	in	the	consolidated	financial statements	and	accompanying	notes.	Actual	results	could	differ	from	the	amounts	reported.

								Certain	amounts	in	prior	years'	consolidated	financial	statements	and	footnotes	related	to	discontinued	operations	have	been	reclassified	to	conform	to	the	2007 presentation.	As	a	result	of	the	pending	sale	of	the	Company's	CICA	and	Sterling	subsidiaries,	the	assets	and	liabilities	of	these	subsidiaries	have	been	reclassified	to assets	held	for	sale	and	liabilities	held	for	sale,	respectively.	Due	to	the	nature	of	operations,	insurance	underwriting	organizations	generally	do	not	classify	assets	and liabilities	on	their	statements	of	financial	position	as	current	and	noncurrent,	and	Aon	had	previously	not	reported	a	classified	statement	of	financial	position.	Due	to	the pending	sales	of	a	majority	of	the	underwriting	operations	(see	Note	5),	at	December	31,	2007	Aon	has	reported	its	statements	of	financial	position	on	a	classified	basis.

# Segment	Reporting

								Aon	classifies	its	businesses	into	two	operating	segments:	Risk	and	Insurance	Brokerage	Services	and	Consulting.	Unallocated	income	and	expense,	when combined	with	the	operating	segments	and	after	the	elimination	of	intersegment	revenues,	totals	to	the	amounts	included	in	the	consolidated	financial	statements.	Results relating	to	Aon's	accident,	health	and	life	operations,	which	were	previously	reported	in	a	separate	Insurance	Underwriting	segment,	have	been	reclassified	to discontinued	operations	for	all	periods	presented.	The	remaining	operations	that	were	previously	reported	in	the	Insurance	Underwriting	segment,	which	relate	to property	and	casualty	insurance	that	is	in	runoff,	are	now	included	in	unallocated	income	and	expense	for	all	periods	presented.

# Revenue	Recognition

								Revenue	is	recognized	when	all	elements	of	revenue	recognition	exist.	Those	elements	are	(1)	persuasive	evidence	of	an	agreement	with	the	client,	(2)	a	fixed	and determinable	price	for	services,	(3)	those	services	have	been	rendered,	and	(4)	collectibility	is	reasonably	assured.

# Commissions	and	Fees

								Commission	revenue	is	primarily	recognized	at	the	later	of	the	billing	or	the	effective	date	of	the	related	insurance	policy,	net	of	an	allowance	for	estimated	policy cancellations.	The	allowance	is	based	on	an	evaluation	of	relevant	historical	data.	Where	all	of	the	elements	of	revenue	recognition	have	been	met,	but	processing	has not	yet	occurred	in	the	billing	system	due	to	timing,	an	accrual	is	recorded	based	on	an	analysis	of	the	specific	transactions.	For	policies	that	are	billed	in	installments, revenue	is	recognized	when	Aon	has	sufficient	information	to	estimate	the	amounts.	When	insurance	underwriters	directly	bill	clients,	Aon's	revenue	is	recognized	when the	cash	is	received	or	amounts	due	to	Aon	become	determinable.	Commissions	on	premium	adjustments	are	recognized	as	they	occur.

								Fees	for	claims	and	consulting	services	are	recognized	when	the	services	are	rendered.	For	some	clients,	Aon	has	outsourcing	arrangements	that	are	spread	over multiple	years.	Revenues	received	from	these	arrangements	are	recorded	on	a	gross	basis,	inclusive	of	amounts	ultimately	passed	through	to	subcontractors,	as	long	as Aon	maintains	the	performance	obligation,	and	are	recorded	ratably	over	the	life	of	the	contract.

# Reinsurance

								Reinsurance	premiums,	commissions	and	expense	reimbursements	on	reinsured	business	are	accounted	for	consistently	with	the	accounting	for	the	original	policies issued	and	the	terms	of	the	reinsurance	contracts.	Reinsurance	receivables	and	prepaid	reinsurance	premium	amounts	are	reported	as	assets.

								Deferred	income	taxes	are	provided	for	the	effect	of	temporary	differences	between	financial	reporting	and	tax	bases	of	assets	and	liabilities	and	are	measured	using the	enacted	marginal	tax	rates	and	laws	that	are	currently	in	effect.	Valuation	allowances	are	recognized	when,	based	on	available	evidence,	it	is	more	likely	than	not	that a	net	deferred	tax	asset	may	not	be	realized.

# Income	Per	Share

								Basic	net	income	per	share	is	computed	by	dividing	net	income	available	for	common	stockholders	by	the	weighted-average	number	of	common	shares outstanding.	Net	income	available	for	common	stockholders	is	net	of	all	preferred	stock	dividends.	Diluted	net	income	per	share	is	computed	by	dividing	net	income available	for	common	stockholders	by	the	weighted-average	number	of	common	shares	outstanding,	plus	the	dilutive	effect	of	stock	options	and	awards.	The	dilutive effect	of	stock	options	and	awards	is	calculated	under	the	treasury	stock	method	using	the	average	market	price	for	the	period.	Certain	common	stock	equivalents	related to	options	were	not	included	in	the	computation	of	diluted	income	per	share	because	those	options'	exercise	price	was	greater	than	the	average	market	price	of	the common	shares.	The	number	of	options	excluded	from	the	calculation	was	5	million	in	2007,	8	million	in	2006	and	18	million	in	2005.	Aon	includes	in	its	diluted	net income	per	share	computation	the	impact	of	any	contingently	convertible	instruments	regardless	of	whether	the	market	price	trigger	has	been	met.	Prior	to	their redemption	in	November	2007,	Aon's	3.5%	convertible	debt	securities,	which	were	issued	in	November	2002,	were	able	to	be	converted	into	a	maximum	of	14	million shares	of	Aon	common	stock,	and	these	shares	were	included	in	the	computation	of	diluted	net	income	per	share	(see	Note	7	for	further	information).

								Income	per	share	is	calculated	as	follows:

| (millions,	except	per	share	data) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Income\tfrom\tcontinuing\toperations | $672 | $447 | $416 |
| Income\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 192 | 272 | 319 |
| Cumulative\teffect\tof\ta\tchange\tin\taccounting |  |  |  |
| Principle,\tnet\tof\ttax | — | 1 | — |
| Net\tincome | 864 | 720 | 735 |
| Preferred\tstock\tdividends | — | — | (2) |
| Net\tincome\tfor\tbasic\tper\tshare\tcalculation | 864 | 720 | 733 |
| Interest\texpense\ton\tconvertible\tdebt\tsecurities, |  |  |  |
| net\tof\ttax | 5 | 7 | 7 |
| Net\tincome\tfor\tdiluted\tper\tshare\tcalculation | $869 | $727 | $740 |
| Basic\tshares\toutstanding | 298 | 317 | 322 |
| Effect\tof\tconvertible\tdebt\tsecurities | 11 | 14 | 14 |
| Common\tstock\tequivalents | 14 | 11 | 5 |
| Diluted\tpotential\tcommon\tshares | 323 | 342 | 341 |
| Basic\tnet\tincome\tper\tshare: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $2.25 | $1.41 | $1.28 |
| Discontinued\toperations | 0.65 | 0.86 | 0.99 |
| Cumulative\teffect\tof\ta\tchange\tin\taccounting |  |  |  |
| principle,\tnet\tof\ttax | — | — | — |
| Net\tincome | $2.90 | $2.27 | $2.27 |
| Diluted\tnet\tincome\tper\tshare: |  |  |  |
| Income\tfrom\tcontinuing\toperations | $2.10 | $1.33 | $1.24 |
| Discontinued\toperations | 0.59 | 0.80 | 0.93 |
| Cumulative\teffect\tof\ta\tchange\tin\taccounting |  |  |  |
|  | — | — | — |
| principle,\tnet\tof\ttax |  |  |  |
| Net\tincome | $2.69 | $2.13 | $2.17 |

# Changes	in	Accounting	Principles

# Stock	Compensation	Plans

								Prior	to	2006,	Aon	was	subject	to	Accounting	Principles	Board	("APB")	Opinion	No.	25,	Accounting	for	Stock	Issued	to	Employees,	in	accounting	for	its	stock- based	compensation	plans.	Under	APB	No.	25,	no	compensation	expense	was	recognized	for	stock	options	when	the	exercise	price	of	the	options	equaled	the	market price	of	the	stock	at	the	date	of	grant.	Compensation	expense	for	stock	awards	was	based	on	the	market	price	at	the	date	of	the	award	and	was	recognized	on	a	straight- line	basis	over	the	vesting	period.	Compensation	expense	for	options	with	an	exercise	price	less	than	the	market	price	at	the	date	of	grant	was	based	on	the	intrinsic	value at	the	date	of	grant.

								On	January	1,	2006,	Aon	adopted	Financial	Accounting	Standards	Board	("FASB")	Statement	No.	123	(revised	2004),	Share-Based	Payment	("Statement No.	123(R)"),	which	requires	the	measurement	and	recognition	of	compensation	expense	for	all	share-based	payments	to	employees	including	grants	of	employee	stock options	and	awards	as	well	as	employee	stock	purchases	related	to	the	Employee	Stock	Purchase	Plan,	based	on	estimated	fair	value.	Aon	adopted	Statement	No.	123 (R)	using	the	modified	prospective	transition	method.	In	accordance	with	the	modified	prospective

transition	method,	the	Company's	consolidated	financial	statements	for	prior	periods	have	not	been	restated	for	the	adoption	of	Statement	No.	123(R).

								Stock-based	compensation	expense	recognized	during	the	period	is	based	on	the	value	of	the	portion	of	stock-based	payment	awards	that	is	ultimately	expected	to vest	during	the	period.	Stock-based	compensation	expense	recognized	in	Aon's	consolidated	statements	of	income	for	the	years	ended	December	31,	2007	and	2006 includes	compensation	expense	for	stock-based	payment	awards	granted	prior	to,	but	not	yet	vested	as	of	December	31,	2005	based	on	the	grant	date	fair	value	estimated in	accordance	with	the	pro	forma	provisions	of	Statement	No.	123,	and	compensation	expense	for	stock-based	payment	awards	granted	subsequent	to	December	31,	2005 based	on	the	grant	date	fair	value	estimated	in	accordance	with	the	provisions	of	Statement	No.	123(R).	Because	stock-based	compensation	expense	recognized	is	based on	awards	ultimately	expected	to	vest,	it	has	been	reduced	for	estimated	forfeitures.	Statement	No.	123(R)	requires	forfeitures	to	be	estimated	at	the	time	of	grant	and revised,	if	necessary,	in	subsequent	periods	if	actual	forfeitures	differ	from	those	estimates.	The	adoption	of	Statement	No.	123(R)	resulted	in	recording	a	cumulative effect	of	an	accounting	change	as	of	January	1,	2006	of	$1	million,	net	of	tax,	due	to	the	requirement	to	adjust	compensation	recognized	through	that	date	on	restricted stock	units	(RSUs)	to	reflect	forfeitures	on	an	estimated	method	rather	than	the	previous	method,	as	they	occurred.	Upon	adoption	of	Statement	No.	123(R),	Aon	also changed	its	method	of	valuation	for	stock	options	granted	beginning	in	2006	to	a	lattice-binomial	option-pricing	model	from	the	Black-Scholes	option-pricing	model, which	was	previously	used	for	Aon's	pro	forma	information	required	under	Statement	No.	123.	See	Note	12	for	further	discussion	of	the	effect	of	adopting	Statement No.	123(R)	on	the	Company's	consolidated	financial	statements.

# Pensions	and	Other	Postretirement	Plans

								On	December	31,	2006,	the	Company	adopted	FASB	Statement	No.	158,	Employers'	Accounting	for	Defined	Benefit	Pension	and	Other	Postretirement	Plans,	an amendment	of	FASB	Statements	No	87,	88,	106,	and	132(R).	Statement	No.	158	requires	plan	sponsors	of	defined	benefit	pension	and	other	postretirement	benefit	plans (collectively,	"postretirement	benefit	plans")	to	recognize	the	funded	status	of	their	postretirement	benefit	plans	in	the	statement	of	financial	position,	measure	the	fair value	of	plan	assets	and	benefit	obligations	as	of	the	date	of	the	fiscal	year-end	statement	of	financial	position,	and	provide	additional	disclosures.	Adoption	of	the measurement	date	provisions	of	Statement	No.	158	resulted	in	the	Company	changing	the	measurement	date	of	its	U.S.	plans	(previously	November	30)	and	U.K.	plans (previously	September	30)	to	December	31.	The	impact	of	adopting	Statement	No.	158	was	a	decrease	to	stockholders'	equity	of	$349	million	and	$33	million	for	the funded	status	and	measurement	date	provisions,	respectively.	See	Note	11	for	further	discussion	of	the	effect	of	adopting	Statement	No.	158	on	the	Company's consolidated	financial	statements.

# Uncertain	Tax	Positions

								Aon	adopted	the	provisions	of	FASB	Interpretation	No.	48	(FIN	48),	Accounting	for	Uncertainty	in	Income	Taxes,	an	interpretation	of	FASB	Statement	No.	109,	on January	1,	2007.	FIN	48	clarified	the	accounting	for	uncertainty	in	income	taxes	which	are	recognized	in	a	company's	financial	statements	in	accordance	with	Statement No.	109.	FIN	48	prescribes	recognition	and	measurement	provisions	for	a	tax	position	taken,	or	expected	to	be	taken,	in	a	company's	tax	return.	As	a	result	of	the implementation	of	FIN	48,	Aon	did	not	recognize	any	material	adjustments	in	the	liability	for	unrecognized	tax	benefits.	See	Note	8	for	further	discussion	of	the	effect of	adopting	FIN	48	on	the	Company's	consolidated	financial	statements.

								Cash	includes	cash	balances	and	investments	with	initial	maturities	of	three	months	or	less.

# Short-term	investments

								Short-term	investments	include	certificates	of	deposit,	money	market	funds	and	highly	liquid	debt	instruments	purchased	with	maturities	in	excess	of	three	months and	up	to	one	year	and	are	carried	at	amortized	cost,	which	approximates	fair	value.	Short-term	investments	also	include	fixed	maturity	securities	that	mature	within	a year,	and	are	reported	at	fair	value	based	on	quoted	market	prices.

								Aon	maintained	premium	trust	bank	accounts	for	premiums	collected	from	insureds	but	not	yet	remitted	to	insurance	companies	of	$3.1	billion	and	$2.9	billion	at December	31,	2007	and	2006,	respectively.	These	funds	and	a	corresponding	liability	are	included	in	short-term	investments	and	insurance	premiums	payable, respectively,	in	the	accompanying	consolidated	statements	of	financial	position.

# Receivables	and	Insurance	Premiums	Payable

								In	its	capacity	as	an	insurance	agent	and	broker,	Aon	collects	premiums	from	insureds	and,	after	deducting	its	commission,	remits	the	premiums	to	the	respective insurers.	Aon	also	collects	claims	or	refunds	from	insurers	on	behalf	of	insureds.	Uncollected	premiums	from	insureds	and	uncollected	claims	or	refunds	from	insurers are	recorded	as	receivables	on	the	Company's	consolidated	statements	of	financial	position.	Unremitted	insurance	premiums	and	claims	are	held	in	a	fiduciary	capacity. The	obligation	to	remit	these	funds	is	recorded	as	insurance	premiums	payable	on	the	Company's	consolidated	statement	of	financial	position.	The	time	frame	that	the Company	holds	such	funds	is	dependent	upon	the	date	the	insured	remits	the	payment	of	the	premium	to	Aon	and	the	date	Aon	is	required	to	forward	those	payments	to the	insurer.

# Allowance	for	Doubtful	Accounts

								Aon's	policy	for	estimating	allowances	for	doubtful	accounts	with	respect	to	receivables	is	to	record	an	allowance	based	on	a	historical	evaluation	of	write-offs, aging	of	balances	and	other	qualitative	and	quantitative	analyses.	Total	receivables	included	an	allowance	for	doubtful	accounts	of	$95	million	and	$89	million	at December	31,	2007	and	2006,	respectively.

# Property	and	Equipment

								Property	and	equipment	is	stated	at	cost,	less	accumulated	depreciation.	Depreciation	is	generally	calculated	using	the	straight-line	method	over	estimated	useful lives.	Included	in	this	category	is	internal	use	software,	which	is	software	that	is	acquired,	internally	developed	or	modified	solely	to	meet	internal	needs,	with	no	plan	to market	externally.	Costs	related	to	directly	obtaining,	developing	or	upgrading	internal	use	software	are	capitalized	and	amortized	using	the	straight-line	method	over	a range	principally	between	3	to	7	years.	The	weighted-average	original	life	of	Aon's	software	at	December	31,	2007	is	4.7	years.

								The	components	of	net	property	and	equipment	are	as	follows:

| (millions)				As	of	December	31 | 2007 | 2006 |
| :--- | :--- | :--- |
| Software | $607 | $583 |
| Leasehold\timprovements | 412 | 374 |
| Furniture,\tfixtures\tand\tequipment | 263 | 267 |
| Computer\tequipment | 227 | 298 |
| Land\tand\tbuildings | 88 | 80 |
| Automobiles\tand\taircraft | 41 | 25 |
| Capital\tin\tprogress | 15 | 20 |
|  | 1,653 | 1,647 |
| Less:\tAccumulated\tdepreciation | 1,155 | 1,191 |
| Property\tand\tequipment,\tnet | $498 | $456 |

# Long-term	Investments

								Fixed-maturity	securities	are	classified	as	available	for	sale	and	are	reported	at	fair	value	based	on	quoted	market	prices.	The	amortized	cost	of	fixed	maturity securities	is	adjusted	for	amortization	of	premiums	and	the	accretion	of	discounts	to	maturity,	which	are	included	in	investment	income.

								Private	equity	investments	are	generally	carried	at	cost,	which	the	Company	believes	approximates	fair	value,	except	where	Aon	has	significant	influence,	in	which case	they	are	carried	using	the	equity	method	of	accounting.

								Unrealized	gains	and	losses	on	fixed	maturity	securities	and	marketable	equity	securities	are	excluded	from	income	and	are	recorded	directly	in	stockholders'	equity as	accumulated	other	comprehensive	income	or	loss,	net	of	deferred	income	taxes.

								Endurance	common	stock	and	warrants	—	Aon	previously	held	investments	in	common	stock	and	stock	purchase	warrants	in	Endurance	Specialty	Holdings,	Ltd. ("Endurance"),	a	Bermuda-based	insurance	and	reinsurance	company.	In	2004,	Aon	sold	virtually	all	of	its	common	stock	investment	in	Endurance.	In	conjunction	with the	initial	common	stock	investment,	Aon	also	received	4.1	million	stock	purchase	warrants,	which	allowed	Aon	to	purchase	additional	Endurance	common	stock through	December	2011.	The	warrants	were	recorded	in	the	financial	statements	at	fair	value,	with	changes	in	fair	value	included	in	investment	income.	On	March	31, 2006,	Aon	contributed	all	of	the	Endurance	warrants	to	its	U.K.	pension	plans.	The	change	in	the	fair	value	was	included	in	income	and	was	a	decrease	of	$14	million	in 2006	and	an	increase	of	$8	million	in	2005.

								Limited	partnership	investments	are	carried	using	the	equity	method	of	accounting.	Certain	of	the	limited	partnerships	in	which	Aon	invests	have	holdings	in publicly-traded	equity	securities.	Changes	in	market	value	of	these	indirectly-held	equity	securities	flow	through	the	limited	partnerships'	financial	statements.	Aon's proportionate	share	of	these	valuation	changes	is	included	in	unallocated	income.

								General	—	Income	or	loss	on	the	disposal	of	investments	is	calculated	using	the	amortized	cost	of	the	security	sold	and	is	reported	in	investment	income	in	the consolidated	statements	of	income.

								Declines	in	the	fair	value	of	investments	are	evaluated	for	other-than-temporary	impairment	on	a	quarterly	basis.	The	assessment	of	whether	impairments	have occurred	is	based	on	management's	evaluation	of	the	underlying	reasons	for	the	decline	in	fair	value.	Management	considers	a	wide	range	of	factors	and	all	relevant information	about	the	security	issuer	and	uses	its	best	judgment	in	evaluating	the	cause	of	the	decline	and	the	prospects	for	recovery	in	the	near-term.	Impairment	losses for	declines

in	the	value	of	investments	which	are	attributable	to	issuer-specific	events	are	evaluated	on	a	case-by-case	basis	and	recognized	when	the	decline	in	fair	value	is	judged	to be	other-than-temporary.	For	fixed-maturity	investments	with	unrealized	losses	due	to	market	conditions	or	industry-related	events	where	Aon	has	the	positive	intent	and ability	to	hold	the	investment	for	a	period	of	time	sufficient	to	allow	a	market	recovery	or	to	maturity,	declines	in	value	below	cost	are	considered	to	be	temporary.

								Reserves	for	certain	other	investments	are	established	based	on	an	evaluation	of	the	respective	investment	portfolio	and	current	economic	conditions.	Write-downs and	changes	in	reserves	are	included	in	investment	income	in	the	consolidated	statements	of	income.	In	general,	Aon	ceases	to	accrue	investment	income	when	interest or	dividend	payments	are	in	arrears.

								Accounting	policies	relating	to	derivative	financial	instruments	are	discussed	in	Note	13.

# Fair	Value	of	Financial	Instruments

								The	following	methods	and	assumptions	were	used	to	estimate	fair	values	of	financial	instruments:

# 								Cash	and	cash	equivalents,	including	short-term	investments:				Carrying	amounts	approximate	fair	value.

								Fixed-maturity	and	equity	securities:				Fair	value	is	based	on	quoted	market	prices	or	on	estimated	values	obtained	from	independent	pricing	services,	if	they	are not	actively	traded.

								Derivative	financial	instruments:				Fair	value	is	based	on	quoted	prices	for	exchange-traded	instruments	or	the	cost	to	terminate	or	offset	with	other	contracts.

								Other	investments	are	comprised	of	Aon's	investment	in	private	equity	investments	and	limited	partnerships.	Carrying	amounts	approximate	fair	value.

								Debt:				Fair	value	is	based	on	quoted	market	prices	or	estimates	using	discounted	cash	flow	analyses	based	on	current	borrowing	rates	for	similar	types	of borrowing	arrangements.

# Policy	and	Contract	Claims

								Policy	and	contract	claim	liabilities	represent	estimates	for	reported	claims,	as	well	as	provisions	for	losses	incurred	but	not	reported.	Claim	liabilities	are	based	on historical	experience	and	are	estimates	of	the	ultimate	amount	to	be	paid	when	the	claims	are	settled.	The	estimates	are	subject	to	the	effects	of	trends	in	claim	severity and	frequency.	The	process	of	estimating	and	establishing	policy	and	contract	liabilities	is	inherently	uncertain	and	the	actual	ultimate	cost	of	a	claim	may	vary materially	from	the	estimated	amount	reserved.	The	estimates	are	continually	reviewed	and	adjusted	as	necessary	as	experience	develops	or	new	information	becomes known;	such	adjustments	are	included	in	current	operations.

# Foreign	Currency	Translation

								Foreign	revenues	and	expenses	are	translated	at	average	exchange	rates.	Foreign	assets	and	liabilities	are	translated	at	year-end	exchange	rates.	Net	foreign exchange	gains	and	losses	on	translation	are	reported	in	stockholders'	equity,	in	accumulated	other	comprehensive	income	or	loss	("OCI"),	net	of	applicable	deferred income	taxes.

# New	Accounting	Pronouncements

								In	September	2006,	the	FASB	issued	Statement	157,	Fair	Value	Measurements,	which	provides	enhanced	guidance	for	using	fair	value	to	measure	assets	and liabilities.	Statement	No.	157	also	requires	expanded	disclosure	of	the	methods	employed	when	assets	and	liabilities	are	measured	and	the

effect	of	fair	value	measurements	on	earnings.	Statement	No.	157	applies	whenever	other	standards	require	(or	permit)	assets	or	liabilities	to	be	measured	at	fair	value. Statement	No.	157	does	not	expand	the	use	of	fair	value	in	any	new	circumstances.	Statement	No.	157	is	effective	for	Aon	in	2008.	In	February	2007,	the	FASB	issued Statement	No.	159,	The	Fair	Value	Option	for	Financial	Assets	and	Financial	Liabilities,	which	permits	entities	to	choose	to	measure	many	financial	instruments	and certain	other	items	at	fair	value.	Statement	No.	159	is	effective	for	Aon	in	2008.	The	Company	does	not	expect	a	material	impact	upon	adoption	of	these	Statements.

								In	December	2007,	the	FASB	issued	Statement	No.	141	(revised	2007),	Business	Combinations	("Statement	No.	141(R)")	and	Statement	No.	160,	Noncontrolling Interests	in	Consolidated	Financial	Statements,	an	amendment	of	ARB	No.	51.	Statement	No.	141(R)	replaces	Statement	No.	141	and	applies	to	all	transactions	or	other events	in	which	an	entity	obtains	control	over	one	or	more	businesses.	This	Statement	requires	an	acquirer	to	recognize	the	assets	acquired,	the	liabilities	assumed,	and any	noncontrolling	interest	in	the	acquiree	at	the	acquisition	date,	measured	at	their	fair	values	as	of	that	date.	Business	combinations	achieved	in	stages	require recognition	of	the	identifiable	assets	and	liabilities,	as	well	as	the	noncontroling	interest	in	the	acquiree,	at	the	full	amounts	of	their	fair	values.	Statement	No.	141(R) also	changes	the	requirements	for	recognizing	assets	acquired	and	liabilities	assumed	arising	from	contingencies,	and	requires	direct	acquisition	costs	to	be	expensed.

								Statement	No.	160	amends	ARB	No.	51	to	establish	accounting	and	reporting	standards	for	the	noncontrolling	interests	in	a	subsidiary	and	for	the	deconsolidation of	a	subsidiary.	It	clarifies	that	a	noncontrolling	interest	in	a	subsidiary	is	an	ownership	interest	in	the	consolidated	entity	that	should	be	reported	as	equity	in	the consolidated	financial	statements.	This	Statement	also	requires	consolidated	net	income	to	be	reported	at	amounts	that	include	the	amounts	attributable	to	both	the	parent and	the	noncontrolling	interest.	Statement	No.	160	requires	retrospective	adjustments,	for	all	periods	presented,	of	stockholders'	equity	and	net	income	for noncontrolling	interests.

								Both	Statements	are	effective	for	Aon	as	of	January	1,	2009.	Early	adoption	is	prohibited.	Aon	is	currently	evaluating	these	Statements	to	determine	what	impact,	if any,	they	will	have	on	its	consolidated	financial	statements.

# 2.				Other	Comprehensive	Income	(Loss)

								The	components	of	other	comprehensive	income	(loss)	and	the	related	tax	effects	are	as	follows:

| (millions)				Year	ended	December	31,	2007 | Pretax | Pretax | (Expense)<br>Benefit | Net<br>of	Tax |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tderivative\tgains\tarising\tduring\tthe\tyear | $29 | $29 | $(9) | $20 |  |
| Reclassification\tadjustment | (16) | (16) | 5 | (11) | (11) |
| Net\tchange\tin\tderivative\tgains | 13 |  | (4) | 9 | 9 |
| Unrealized\tlosses\tarising\tduring\tthe\tyear | (19 | ) | 9 | (10 | ) |
| Reclassification\tadjustment | 20 | 20 | (7) | 13 | 13 |
| Net\tchange\tin\tunrealized\tinvestment\tgains | 1 | 1 | 2 | 3 | 3 |
| Net\tforeign\texchange\ttranslation | 300 |  | )\n(134 | 166 |  |
| Net\tpost-retirement\tbenefit\tobligation | 173 |  | (67) | 106 |  |
| Total\tother\tcomprehensive\tincome | $486 | $486 | $(202) | $284 | $284 |

| (millions)				Year	ended	December	31,	2006 | Pretax | Income	Tax<br>(Expense)<br>Benefit | Net<br>of	Tax |
| :--- | :--- | :--- | :--- |
| Net\tderivative\tgains\tarising\tduring\tthe\tyear | $31 | $(12) | $19 |
| Reclassification\tadjustment | 11 | (4) | 7 |
| Net\tchange\tin\tderivative\tgains | 42 | (16) | 26 |
| Unrealized\tgains\tarising\tduring\tthe\tyear | 10 | (3) | 7 |
| Reclassification\tadjustment | 19 | (5) | 14 |
| Net\tchange\tin\tunrealized\tinvestment\tgains | 29 | (8) | 21 |
| Net\tforeign\texchange\ttranslation | 238 | (1) | 237 |
| Net\tadditional\tminimum\tpension\tliability | 321 | (111) | 210 |
| Total\tother\tcomprehensive\tincome | $630 | $(136) | $494 |

| (millions)				Year	ended	December	31,	2005 | Pretax | Income	Tax<br>(Expense)<br>Benefit | Net<br>of	Tax |
| :--- | :--- | :--- | :--- |
| Net\tderivative\tlosses\tarising\tduring\tthe\tyear | $(20) | $8 | $(12) |
| Reclassification\tadjustment | (64) | 25 | (39) |
| Net\tchange\tin\tderivative\tlosses | (84) | 33 | (51) |
| Unrealized\tlosses\tarising\tduring\tthe\tyear | (8) | 3 | (5) |
| Reclassification\tadjustment | (8) | 3 | (5) |
| Net\tchange\tin\tunrealized\tinvestment\tlosses | (16) | 6 | (10) |
| Net\tforeign\texchange\ttranslation | (248) | 8 | (240) |
| Net\tadditional\tminimum\tpension\tliability | (253) | 80 | (173) |
| Total\tother\tcomprehensive\tloss | $(601) | $127 | $(474) |

								The	components	of	accumulated	other	comprehensive	loss,	net	of	related	tax,	are	as	follows:

| (millions)				As	of	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Net\tderivative\tgains\t(losses) | $24 | $15 | $(11) |
| Net\tunrealized\tinvestment\tgains | 76 | 73 | 52 |
| Net\tforeign\texchange\ttranslation | 284 | 118 | (119) |
| Postretirement\tplans | (1,110) | (1,216) | (1,077) |
| Accumulated\tother\tcomprehensive\tloss | $(726) | $(1,010) | $(1,155) |

# 3.				Business	Combinations

								In	2007,	2006	and	2005,	Aon	completed	a	number	of	acquisitions,	primarily	related	to	its	insurance	brokerage	operations.	The	following	table	includes	the aggregate	amounts	paid	and	intangible	assets	recorded	as	a	result	of	the	acquisitions.	Amounts	paid	include	cash	paid	for	current	year's	acquisitions	as	well	as installment	payments	made	during	the	year	for	previous	years'	acquisitions.	Estimated	fair	values	of	assets	acquired	and	liabilities	assumed	are	subject	to	adjustment when	purchase	accounting	is	finalized.

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Amounts\tpaid: |  |  |  |
| Cash | $251 | $138 | $81 |
| Common\tstock | — | — | 5 |
| Total | $251 | $138 | $86 |
| Intangible\tassets: |  |  |  |
| Goodwill | $149 | $122 | $67 |
| Other\tintangible\tassets | 92 | 66 | 39 |
| Total | $241 | $188 | $106 |

								Internal	funds,	short-term	borrowings	and	common	stock	financed	the	acquisitions.

								The	results	of	operations	of	these	acquisitions	are	included	in	the	consolidated	financial	statements	from	the	dates	they	were	acquired.	These	acquisitions	would	not produce	a	materially	different	result	if	they	had	been	reported	from	the	beginning	of	the	period.

# 4.				Restructuring	Charges

								In	2007,	the	Company	announced	a	global	restructuring	plan	intended	to	create	a	more	streamlined	organization	and	reduce	future	expense	growth	to	better	serve clients	("2007	Plan").	The	2007	Plan	includes	an	estimated	2,700	job	eliminations	beginning	in	the	third	quarter	of	2007	and	continuing	into	2009.	The	Company	also expects	to	close	or	consolidate	several	offices	resulting	in	sublease	losses	or	lease	buy-outs.	The	Company	estimates	that	the	2007	Plan	will	result	in	cumulative	pretax charges	totaling	approximately	$360	million.	Expenses	will	include	workforce	reduction	and	lease	consolidation	costs,	asset	impairments,	as	well	as	other	expenses necessary	to	implement	the	restructuring	initiative.	Costs	related	to	the	restructuring	are	included	in	compensation	and	benefits,	other	general	expenses	and	depreciation and	amortization	in	the	accompanying	consolidated	statements	of	income.	The	Company	expects	the	restructuring	and	related	expenses	to	affect	continuing	operations through	the	end	of	2009.

								Below	is	a	summary	of	2007	restructuring	and	related	expenses	by	type	incurred	and	estimated	to	be	incurred	through	the	end	of	the	restructuring	initiative.

| (millions) | Actual<br>2007 | Estimated<br>Total	(1) |
| :--- | :--- | :--- |
| Workforce\treduction | $17 | $220 |
| Lease\tconsolidation | 22 | 79 |
| Asset\timpairments | 4 | 41 |
| Other\tcosts\tassociated\twith\trestructuring | 3 | 20 |
| Total\trestructuring\tand\trelated\texpenses | $46 | $360 |

(1) Actual	costs,	when	incurred,	will	vary	due	to	changes	in	the	assumptions	built	into	this	plan.	Significant	assumptions	likely	to	change	when	plans	are	finalized and	approved	include,	but	are	not	limited	to,	changes	in	severance	calculations,	changes	in	the	assumptions	underlying	sublease	loss	calculations	due	to	changing market	conditions,	and	changes	in	the	overall	analysis	that	might	cause	the	Company	to	add	or	cancel	component	initiatives.

								The	following	is	a	summary	of	actual	restructuring	and	related	expenses	incurred	and	estimated	to	be	incurred	through	the	end	of	the	restructuring	initiative,	by segment.

| (millions) | Actual<br>2007 | Estimated<br>Total |
| :--- | :--- | :--- |
| Risk\tand\tInsurance\tBrokerage\tServices | $41 | $320 |
| Consulting | 5 | 40 |
| Total\trestructuring\tand\trelated\texpenses | $46 | $360 |

| Balance	at	January	1,	2007 | $— |
| :--- | :--- |
| Expensed\tin\t2007 | 42 |
| Cash\tpayments\tin\t2007 | (17) |
| Balance\tat\tDecember\t31,\t2007 | $25 |

								In	2005,	the	Company	commenced	a	restructuring	that	resulted	in	cumulative	pretax	charges	totaling	$366	million,	including	workforce	reductions,	lease consolidation	costs,	asset	impairments	and	other	expenses	necessary	to	implement	the	restructuring	initiative.	Costs	related	to	the	restructuring	are	included	in compensation	and	benefits,	other	general	expenses	and	depreciation	and	amortization	in	the	accompanying	consolidated	statements	of	income.

								The	following	is	a	summary	of	the	restructuring	and	related	expenses	incurred	by	type.

| (millions) | 2005 | 2006 | 2007 | Total |
| :--- | :--- | :--- | :--- | :--- |
| Workforce\treduction | $116 | $116 | $21 | $253 |
| Lease\tconsolidation | 20 | 27 | 13 | 60 |
| Asset\timpairments | 17 | 12 | 3 | 32 |
| Other\trelated\texpenses | 5 | 12 | 4 | 21 |
| Total\trestructuring\tand\trelated\texpenses | $158 | $167 | $41 | $366 |

								The	following	is	a	summary	of	the	restructuring	and	related	expenses	incurred	by	segment.

| (millions) | 2005 | 2006 | 2007 | Total |
| :--- | :--- | :--- | :--- | :--- |
| Risk\tand\tInsurance\tBrokerage\tServices | $143 | $136 | $33 | $312 |
| Consulting | 8 | 20 | 6 | 34 |
| Unallocated | 4 | 3 | — | 7 |
| Total\trestructuring\tand\trelated\texpenses\t—\tcontinuing\toperations | 155 | 159 | 39 | 353 |
| Discontinued\toperations | 3 | 8 | 2 | 13 |
| Total\trestructuring\tand\trelated\texpenses | $158 | $167 | $41 | $366 |

								The	following	table	sets	forth	the	activity	related	to	the	2005	restructuring	plan	liabilities.

| Balance	at	January	1,	2005 | $— |
| :--- | :--- |
| Expensed\tin\t2005 | 141 |
| Cash\tpayments\tin\t2005 | (23) |
| Foreign\tcurrency\trevaluation | (2) |
| Balance\tat\tDecember\t31,\t2005 | 116 |
| Expensed\tin\t2006 | 155 |
| Cash\tpayments\tin\t2006 | (141) |
| Foreign\tcurrency\trevaluation | 4 |
| Balance\tat\tDecember\t31,\t2006 | 134 |
| Expensed\tin\t2007 | 38 |
| Cash\tpayments\tin\t2007 | (110) |
| Foreign\tcurrency\trevaluation | 1 |
| Balance\tat\tDecember\t31,\t2007 | $63 |

								Aon's	unpaid	restructuring	liabilities	are	included	in	both	accounts	payable	and	accrued	liabilities	and	other	non-current	liabilities	in	the	consolidated	statements	of financial	position.

# Continuing	Operations

								In	2007,	Aon	sold	Media	Professionals,	Inc.	and	two	other,	smaller	operations,	which	were	included	in	the	Risk	and	Insurance	Brokerage	Services	segment.	Total pretax	gains	of	$32	million	were	recognized	on	these	sales,	which	are	included	in	other	general	expenses	in	the	consolidated	statement	of	income.	Also	in	2007,	Aon sold	25%	of	its	Botswana	subsidiary,	which	is	included	in	the	Risk	and	Insurance	Brokerage	Services	segment.	A	pretax	gain	of	$4	million	was	recognized	on	the	sale, which	is	included	in	other	general	expenses	in	the	consolidated	statements	of	income.	These	disposals	did	not	meet	the	criteria	for	discontinued	operations	reporting.

								In	fourth	quarter	2007,	the	Company	announced	that	it	had	signed	separate	definitive	agreements	to	sell	its	CICA	and	Sterling	subsidiaries.	These	two	subsidiaries were	previously	included	in	the	Insurance	Underwriting	segment.	The	CICA	business	is	being	sold	to	ACE	Limited	for	cash	consideration	of	$2.4	billion.	Sterling	is being	sold	to	Munich	Re	Group	for	cash	consideration	of	$352	million.	Additionally,	it	is	expected	that	CICA	will	pay	a	$325	million	dividend	to	Aon	before	the	sale transaction	is	completed.	Both	transactions	are	expected	to	be	completed	in	the	second	quarter	of	2008.	The	dispositions	are	subject	to	various	closing	conditions, including	receipt	of	certain	required	regulatory	approvals.

•Aon	Warranty	Group	("AWG")	and	its	worldwide	warranty	and	credit	operations,	which	was	previously	included	in	the	Insurance	Underwriting	segment. A	pretax	gain	of	$16	million	was	recognized	on	the	sale.

•Construction	Program	Group	("CPG"),	a	managing	general	underwriter	whose	policies	were	underwritten	by	Aon's	property	and	casualty	operation. Results	of	CPG	were	previously	included	in	both	the	Risk	and	Insurance	Brokerage	Services	and	Insurance	Underwriting	segments.	A	pretax	gain	of $27	million	was	recognized	on	the	sale.

								Goodwill	was	allocated	to	these	businesses	based	on	their	estimated	fair	value	compared	to	the	fair	value	of	the	reporting	units	in	which	they	were	previously included.

								In	2005,	Aon	sold	Swett	&	Crawford	("Swett"),	its	U.S.-based	wholesale	insurance	brokerage	unit.	Previously,	Swett	was	included	in	the	Risk	and	Insurance Brokerage	Services	segment.	The	sale	resulted	in	a	pretax	gain	of	$239	million.

# A&A	Discontinued	Operations

								Prior	to	its	acquisition	by	Aon,	Alexander	&	Alexander	Services,	Inc.	("A&A")	discontinued	its	property	and	casualty	insurance	underwriting	operations	in	1985, some	of	which	were	then	placed	into	runoff,	with	the	remainder	sold	in	1987.	In	connection	with	those	sales,	A&A	provided	indemnities	to	the	purchaser	for	various estimated	and	potential	liabilities,	including	provisions	to	cover	future	losses	attributable	to	insurance	pooling	arrangements,	a	stop-loss	reinsurance	agreement	and actions	or	omissions	by	various	underwriting	agencies	previously	managed	by	an	A&A	subsidiary.

								As	of	December	31,	2007	and	2006,	the	liabilities	associated	with	the	foregoing	indemnities	were	included	in	other	non-current	liabilities	in	the	consolidated statements	of	financial	position.	Such	liabilities	amounted	to	$69	million	and	$81	million,	respectively.	Reinsurance	recoverables	and	other	assets	related	to	these liabilities	are	$87	million	and	$94	million,	respectively.	The	remaining	insurance	liabilities	represent	estimates	of	known	and	future	claims	expected	to	be	settled	over the	next	20	to	30	years,	principally	with	regards	to	asbestos,	pollution	and	other	health	exposures.	Although	these

insurance	liabilities	represent	a	best	estimate	of	the	probable	liabilities,	adverse	developments	may	occur	given	the	nature	of	the	information	available	and	the	variables inherent	in	the	estimation	processes.	In	2006,	an	agreement	was	reached	relating	to	the	settlement	of	certain	legacy	reinsurance	claims,	which	resulted	in	a	pretax	gain, net	of	expenses,	of	$13	million.	In	2005,	a	pretax	expense	of	$11	million	was	recorded	for	consulting	and	legal	costs	related	to	completed	and	contemplated	settlements and	actuarial	refinements	to	claims	reserves	and	reinsurance	recoverables.

								The	operating	results	of	all	these	businesses	are	classified	as	discontinued	operations,	and	prior	years'	operating	results	have	been	reclassified	to	discontinued operations,	as	follows.

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Revenue: |  |  |  |
| CICA\tand\tSterling | $2,502 | $2,073 | $1,874 |
| AWG | — | 1,115 | 1,103 |
| CPG | — | 242 | 209 |
| Swett | — | — | 183 |
| Other | — | — | 10 |
| Total\trevenues | $2,502 | $3,430 | $3,379 |
| Pretax\tgain\t(loss): |  |  |  |
| Operations: |  |  |  |
| CICA\tand\tSterling | $323 | $257 | $232 |
| AWG | — | 94 | 99 |
| CPG | — | 11 | 54 |
| Swett | — | — | 2 |
| Other | 3 | 11 | (8) |
|  | 326 | 373 | 379 |
| Gain\t(loss)\ton\tsale: |  |  |  |
| AWG | (12) | 16 | — |
| CPG | 2 | 27 | — |
| Swett | — | — | 239 |
| U.K.\tbrokerage\tunits | — | 2 | (3) |
| Other | — | 1 | — |
|  | (10) | 46 | 236 |
| Total\tpretax\tgain | $316 | $419 | $615 |
| After-tax\tgain: |  |  |  |
| Operations | $189 | $263 | $218 |
| Sale | 3 | 9 | 101 |
| Total | $192 | $272 | $319 |

								In	accordance	with	FASB	Statement	No.	144,	Accounting	for	the	Impairment	or	Disposal	of	Long-Lived	Assets,	Aon	has	reclassified	the	assets	and	liabilities	of both	CICA	and	Sterling	to	assets	held-for-sale	and	liabilities	held-for-sale,	respectively,	in	the	December	31,	2007	and	2006	consolidated	statements	of	financial	position.

								The	assets	and	liabilities	reclassified	are	as	follows:

| (millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Assets: |  |  |
| Investments: |  |  |
| Fixed\tmaturities | $2,826 | $2,596 |
| All\tother\tinvestments | 398 | 114 |
| Receivables | 61 | 115 |
| Reinsurance\trecoverables | 358 | 566 |
| Deferred\tpolicy\tacquisition\tcosts | 594 | 547 |
| Goodwill\tand\tother\tintangible\tassets | 11 | 13 |
| Property\tand\tequipment\tand\tother\tassets | 140 | 99 |
| Total\tassets | $4,388 | $4,050 |
| Liabilities: |  |  |
| Policy\tliabilities: |  |  |
| Future\tpolicy\tbenefits | $1,870 | $1,784 |
| Policy\tand\tcontract\tclaims | 488 | 506 |
| Unearned\tpremium\treserves\tand\tother | 291 | 399 |
| General\texpenses\tand\tother\tliabilities | 376 | 221 |
| Total\tliabilities | $3,025 | $2,910 |
| Equity: |  |  |
| Invested\tequity | $1,321 | $1,134 |
| Net\tunrealized\tinvestment\tlosses | (23) | (56) |
| Net\tforeign\texchange\ttranslation | 65 | 62 |
| Total\tequity | $1,363 | $1,140 |

								The	balances	of	investments	and	invested	equity	have	been	reduced	to	reflect	the	anticipated	dividend	that	CICA	will	remit	to	Aon	prior	to	completion	of	the	sales transaction.

								Aon's	long-term	investments	are	as	follows:

| (millions)				As	of	December	31 | 2007 | 2006 |
| :--- | :--- | :--- |
| Fixed\tmaturities | $100 | $185 |
| Equity\tsecurities | 1 | 1 |
| PEPS\tI\tpreferred\tstock | 168 | 210 |
| Other\tinvestments | 148 | 133 |
|  | $417 | $529 |

								The	amortized	cost	and	fair	value	of	investments	in	fixed	maturities	by	type	and	equity	securities	are	as	follows:

| (millions)				As	of	December	31,	2007 | Amortized<br>Cost | Gross<br>Unrealized<br>Gains | Gross<br>Unrealized<br>Losses | Fair<br>Value |
| :--- | :--- | :--- | :--- | :--- |
| Government: |  |  |  |  |
| U.S.\tgovernment\tand\tagencies | $53 | $— | $— | $53 |
| U.S.\tstate\tand\tpolitical\tsubdivisions | 1 | — | — | 1 |
| Foreign\tgovernments: |  |  |  |  |
| Canada | 60 | — | — | 60 |
| Other | 25 | — | — | 25 |
| Total\tforeign\tgovernments | 85 | — | — | 85 |
| Corporate\tsecurities | 11 | — | — | 11 |
| Total\tfixed\tmaturities | 150 | — | — | 150 |
| Total\tequity\tsecurities | 1 | — | — | 1 |
| Total | $151 | $— | $— | $151 |

| (millions)				As	of	December	31,	2006 | Amortized<br>Cost | Gross<br>Unrealized<br>Gains | Gross<br>Unrealized<br>Losses | Fair<br>Value |
| :--- | :--- | :--- | :--- | :--- |
| Government: |  |  |  |  |
| U.S.\tgovernment\tand\tagencies | $60 | $— | $(2) | $58 |
| U.S.\tstate\tand\tpolitical\tsubdivisions | 2 | — | — | 2 |
| Foreign\tgovernments: |  |  |  |  |
| Canada | 76 | — | (2) | 74 |
| Other | 29 | — | (1) | 28 |
| Total\tforeign\tgovernments | 105 | — | (3) | 102 |
| Corporate\tsecurities | 31 | — | — | 31 |
| Mortgage-\tand\tasset-backed\tsecurities | 2 | — | (1) | 1 |
| Total\tfixed\tmaturities | 200 | — | (6) | 194 |
| Total\tequity\tsecurities | 1 | — | — | 1 |
| Total | $201 | $— | $(6) | $195 |

								The	amortized	cost	and	fair	value	of	fixed	maturities	by	contractual	maturity	as	of	December	31,	2007,	are	as	follows:

| (millions) | Amortized<br>Cost | Fair<br>Value |
| :--- | :--- | :--- |
| Due\tin\tone\tyear\tor\tless | $50 | $50 |
| Due\tafter\tone\tyear\tthrough\tfive\tyears | 52 | 52 |
| Due\tafter\tfive\tyears\tthrough\tten\tyears | 47 | 47 |
| Due\tafter\tten\tyears | 1 | 1 |
| Total\tfixed\tmaturities | $150 | $150 |

								Expected	maturities	may	differ	from	contractual	maturities	because	borrowers	may	have	the	right	to	call	or	prepay	obligations	with	or	without	call	or	prepayment penalties.

								For	categorization	purposes,	Aon	considers	any	rating	of	Baa	or	higher	by	Moody's	Investor	Services	or	equivalent	rating	agency	to	be	investment	grade.	Aon's continuing	operations	have	no	fixed	maturities	with	an	unrealized	loss	at	December	31,	2007.	Aon's	fixed-maturity	portfolio	is	subject	to	interest	rate,	market	and	credit risks.	With	a	carrying	value	of	approximately	$150	million	at	December	31,	2007,	Aon's	total	fixed-maturity	portfolio	is	approximately	96%	investment	grade	based	on market	value.	Aon's	non	publicly-traded	fixed	maturity	portfolio	had	a	carrying	value	of	$9	million.	Valuations	of	these	securities	primarily	reflect	the	fundamental analysis	of	the	issuer	and	current	market	price	of	comparable	securities.

								Aon's	equity	portfolio	is	comprised	of	a	preferred	stock	not	publicly	traded.	This	portfolio	is	subject	to	interest	rate,	market,	credit,	illiquidity,	concentration	and operational	performance	risks.

								Limited	Partnership	Securitization.				In	2001,	Aon	sold	the	vast	majority	of	its	limited	partnership	(LP)	portfolio,	valued	at	$450	million,	to	PEPS	I,	a	QSPE.	The common	stock	interest	in	PEPS	I	is	held	by	a	limited	liability	company	which	is	owned	by	Aon	(49%)	and	by	a	charitable	trust,	which	is	not	controlled	by	Aon, established	for	victims	of	September	11	(51%).	Approximately	$171	million	of	investment	grade	fixed-maturity	securities	were	sold	by	PEPS	I	to	unaffiliated	third parties.	PEPS	I	then	paid	Aon's	insurance	underwriting	subsidiaries	the	$171	million	in	cash	and	issued	to	them	an	additional	$279	million	in	fixed-maturity	and preferred	stock	securities.

								As	part	of	this	transaction,	Aon	is	required	to	purchase	from	PEPS	I	additional	fixed-maturity	securities	in	an	amount	equal	to	the	unfunded	limited	partnership commitments,	as	they	are	requested.	Aon	funded	$2	million	of	commitments	in	both	2007	and	2006.	As	of	December	31,	2007,	these	unfunded	commitments	amounted to	$44	million.	These	commitments	have	specific	expiration	dates	and	the	general	partners	may	decide	not	to	draw	on	these	commitments.	The	carrying	value	of	the PEPS	I	preferred	stock	was	$168	million	and	$210	million	at	December	31,	2007	and	2006,	respectively.

								Prior	to	2007,	income	distributions	received	from	PEPS	I	were	limited	to	interest	payments	on	various	PEPS	I	debt	instruments.	Beginning	in	2007,	PEPS	I	had redeemed	or	collateralized	all	of	its	debt,	and	as	a	result,	began	to	pay	preferred	income	distributions.	In	2007,	the	Company	received	$61	million	of	income distributions	from	PEPS	I,	which	are	included	in	investment	income.

# 								The	components	of	investment	income	are	as	follows:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Short-term\tinvestments | $228 | $193 | $129 |
| Fixed\tmaturities: |  |  |  |
| Interest\tincome | 8 | 11 | 10 |
| Losses\t(1) | — | (2) | — |
| Total | 8 | 9 | 10 |
| Other\tinvestments: |  |  |  |
| Interest,\tdividend\tand\tother\tincome | 61 | — | 6 |
| Endurance\t—\twarrants | — | (14) | 8 |
| Net\tgains\t(losses)\t(1) | 12 | 38 | (3) |
| Total | 73 | 24 | 11 |
| Gross\tinvestment\tincome | 309 | 226 | 150 |
| Less:\tinvestment\texpenses | 8 | 5 | 6 |
| Investment\tincome | $301 | $221 | $144 |

(1) Includes	other-than-temporary	impairment	write-downs	of	$2	million,	$1	million	and	$3	million	in	2007,	2006	and	2005,	respectively.

								The	components	of	net	unrealized	investment	gains	(losses),	which	include	investments	reported	as	held-for-sale,	are	as	follows:

| (millions)				As	of	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Fixed\tmaturities | $(31) | $(49) | $(39) |
| Equity\tsecurities | (4) | (4) | (1) |
| Other\tinvestments | 150 | 167 | 125 |
| Deferred\ttaxes | (39) | (41) | (33) |
| Net\tunrealized\tinvestment\tgains | $76 | $73 | $52 |

								The	pretax	changes	in	net	unrealized	investment	gains	(losses),	which	include	investments	reported	as	held-for-sale,	are	as	follows:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Fixed\tmaturities | $18 | $(10) | $(51) |
| Equity\tsecurities | — | (3) | (2) |
| Other\tinvestments | (17) | 42 | 37 |
| Total | $1 | $29 | $(16) |

# Other

								Securities	on	deposit	with	insurance	regulatory	authorities	related	to	the	Company's	runoff	property	and	casualty	operations	amounted	to	$5	million	at December	31,	2007.

								At	December	31,	2007	and	2006,	Aon	had	$66	million	and	$214	million,	respectively,	of	non-income	producing	investments,	which	excludes	derivatives	that	are marked	to	market	through	the	income	statement,	as	well	as	private	equity	investments	carried	on	the	equity	method,	held	for	at	least	twelve	months,	that	have	not declared	dividends	during	2007	and	2006.

# 7.				Debt	and	Lease	Commitments

								The	following	is	a	summary	of	outstanding	debt:

| (millions)				As	of	December	31 | 2007 | 2006 |
| :--- | :--- | :--- |
| 8.205%\tjunior\tsubordinated\tdeferrable\tinterest\tdebentures,\tdue\tJanuary\t2027 | $726 | $726 |
| 5.05%\tdebt\tsecurities,\tdue\tApril\t2011 | 382 | 323 |
| 7.375%\tdebt\tsecurities,\tdue\tDecember\t2012 | 224 | 224 |
| 3.5%\tconvertible\tdebt\tsecurities,\tdue\tNovember\t2012 | — | 297 |
| 6.2%\tdebt\tsecurities,\tdue\tJanuary\t2007 | — | 250 |
| Euro\tcredit\tfacility | 795 | 403 |
| Notes\tpayable,\tdue\tin\tvarying\tinstallments,\twith\tinterest\tat |  |  |
| 1%\tto\t15.9% | 16 | 20 |
| Other | 2 | 42 |
| Total\tdebt | 2,145 | 2,285 |
| Less\tshort-term\tdebt | 252 | 42 |
| Total\tlong-term\tdebt | $1,893 | $2,243 |

								Aon	created	Aon	Capital	A,	a	wholly-owned	statutory	business	trust,	for	the	purpose	of	issuing	mandatorily	redeemable	preferred	capital	securities	("Capital Securities").	Aon	received	cash	and	an	investment	in	100%	of	the	common	equity	of	Aon	Capital	A	by	issuing	8.205%	Junior	Subordinated	Deferrable	Interest Debentures	(subordinated	debt)	to	Aon	Capital	A.	The	Capital	Securities	are	subject	to	mandatory	redemption	on	January	1,	2027	(upon	the	maturity	of	the	subordinated debt)	or	are	redeemable	in	whole,	but	not	in	part,	at	the	option	of	Aon	(through	its	prepayment	of	the	subordinated	debt)	upon	the	occurrence	of	certain	events.	Interest	is payable	semi-annually	on	the	Capital	Securities.	Aon	determined	that	it	is	not	the	primary	beneficiary	of	Aon	Capital	A,	a	VIE,	and,	in	accordance	with	FASB Interpretation	No.	46(R),	Consolidation	of	Variable	Interest	Entities,	Aon	recorded	long-term	debt	for	the	subordinated	debt	of	$726	million.

								In	April	2006,	an	indirect	wholly-owned	subsidiary	of	Aon	issued	CAD	375	million	(U.S.	$382	million	at	December	31,	2007	exchange	rates)	of	5.05%	senior unsecured	debentures	due	in	April	2011.	The	principal	and	interest	on	the	debentures	is	unconditionally	and	irrevocably	guaranteed	by	Aon.	The	net	proceeds	from	the offering	were	used	to	repay	outstanding	indebtedness	under	the	Company's	€650	million	Euro	credit	facility.

								Aon	issued	$250	million	of	6.2%	debt	securities	that	were	due	in	January	2007.	The	interest	rate	on	these	debt	securities	was	subject	to	adjustment	in	the	event	that Aon's	credit	ratings	change.	Due	to	a	rating	downgrade	in	2004,	the	interest	rate	on	the	6.2%	debt	securities	was	increased	to	6.95%	effective	January	2005.	These securities	were	redeemed	in	January	2007.

								In	November	2007,	the	Company	redeemed	all	of	its	remaining	outstanding	3 /2%	Senior	Convertible	Debentures	that	were	due	in	2012.	All	of	the	holders	of	the 1 Debentures	elected	to	convert	their	debentures	into	Aon	common	stock	at	a	conversion	rate	of	46.5658	shares	of	common	stock	for	each	$1,000	principal	amount	of Debentures.	As	a	result	of	this	redemption	and	earlier	voluntary	redemptions,	approximately	14	million	shares	of	Aon	common	stock	were	issued.

								Certain	of	Aon's	European	subsidiaries	have	a	€650	million	(U.S.	$942	million)	multi-currency	revolving	loan	credit	facility.	This	facility	will	mature	in	October 2010,	unless	Aon	opts	to	extend	the	facility.	Commitment	fees	of	8.75	basis	points	are	payable	on	the	unused	portion	of	the	facility.	At	December	31,	2007,	Aon	has borrowed	€376	million	and	$250	million	($795	million)	under	this	facility.	At	December	31,	2006,	€307	million	was	borrowed.	At	December	31,	2007,	$250	million	of the	Euro

facility	is	classified	as	short-term	debt	in	the	consolidated	statements	of	financial	position.	Aon	has	guaranteed	the	obligations	of	its	subsidiaries	with	respect	to	this facility.

								Aon	maintains	a	$600	million,	5-year	U.S.	committed	bank	credit	facility	to	support	commercial	paper	and	other	short-term	borrowings,	which	expires	in	February 2010.	This	facility	permits	the	issuance	of	up	to	$150	million	in	letters	of	credit.	At	December	31,	2007	and	2006,	Aon	had	$20	million	in	letters	of	credit	outstanding. Based	on	Aon's	current	credit	ratings,	commitment	fees	of	10	basis	points	are	payable	on	the	unused	portion	of	the	facility.

								For	both	the	U.S.	and	Euro	facilities,	Aon	is	required	to	maintain	consolidated	net	worth,	as	defined,	of	at	least	$2.5	billion,	a	ratio	of	consolidated	EBITDA (earnings	before	interest,	taxes,	depreciation	and	amortization)	to	consolidated	interest	expense	of	4	to	1	and	a	ratio	of	consolidated	debt	to	EBITDA	of	not	greater	than	3 to	1.

								Aon	also	has	other	foreign	facilities	available,	which	include	a	£37.5	million	($74	million)	facility,	a	€25	million	($36	million)	facility,	and	a	€20	million ($29	million)	facility.

								Outstanding	debt	securities,	including	Aon	Capital	A's,	are	not	redeemable	by	Aon	prior	to	maturity.	There	are	no	sinking	fund	provisions.	Interest	is	payable	semi- annually	on	most	debt	securities.	Repayments	of	long-term	debt	are	$548	million,	$382	million	and	$225	million	in	2010,	2011	and	2012,	respectively.

								Other	information	related	to	Aon's	debt	is	as	follows:

| Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Interest\tpaid\t(millions) | $147 | $130 | $130 |
| Weighted-average\tinterest\trates\t—\tshort-term\tborrowings | 5.1% | 4.4% | 3.5% |

# Lease	Commitments

								Aon	has	noncancelable	operating	leases	for	certain	office	space,	equipment	and	automobiles.	These	leases	expire	at	various	dates	and	may	contain	renewal	and expansion	options.	In	addition	to	base	rental	costs,	occupancy	lease	agreements	generally	provide	for	rent	escalations	resulting	from	increased	assessments	for	real	estate taxes	and	other	charges.	Approximately	81%	of	Aon's	lease	obligations	are	for	the	use	of	office	space.	Rental	expense	for	operating	leases	amounted	to	$368	million, $350	million	and	$337	million	for	2007,	2006	and	2005,	respectively,	after	deducting	rentals	from	subleases	($40	million,	$33	million	and	$29	million	for	2007,	2006 and	2005,	respectively).

								At	December	31,	2007,	future	minimum	rental	payments	required	under	operating	leases	for	continuing	operations	that	have	initial	or	remaining	noncancelable lease	terms	in	excess	of	one	year,	net	of	sublease	rental	income,	most	of	which	pertain	to	real	estate	leases,	are	as	follows:

# (millions)

| 2008 | $317 |
| :--- | :--- |
| 2009 | 275 |
| 2010 | 236 |
| 2011 | 214 |
| 2012 | 191 |
| Later\tyears | 597 |
| Total\tminimum\tpayments\trequired | $1,830 |

								Aon	and	its	principal	domestic	subsidiaries	are	included	in	a	consolidated	life-nonlife	federal	income	tax	return.	Aon's	international	subsidiaries	file	various	income tax	returns	in	their	jurisdictions.

								Income	from	continuing	operations	before	provision	for	income	tax	and	the	provision	for	income	tax	consist	of	the	following:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Income\tfrom\tcontinuing\toperations\tbefore\tprovision\tfor\tincome\ttax: |  |  |  |
| U.S. | $229 | $6 | $68 |
| International | 795 | 657 | 509 |
| Total | $1,024 | $663 | $577 |
| Provision\tfor\tincome\ttax: |  |  |  |
| Current\t(credit): |  |  |  |
| Federal | $62 | $85 | $(61) |
| International | 207 | 197 | 127 |
| State | 16 | 33 | 9 |
| Total\tcurrent | 285 | 315 | 75 |
| Deferred\t(credit): |  |  |  |
| Federal | 1 | (94) | 36 |
| International | 65 | 16 | 36 |
| State | 1 | (21) | 14 |
| Total\tdeferred | 67 | (99) | 86 |
| Provision\tfor\tincome\ttax | $352 | $216 | $161 |

								Income	from	continuing	operations	before	provision	for	income	tax	shown	above	is	based	on	the	location	of	the	corporate	unit	to	which	such	earnings	are attributable.	However,	because	such	earnings	in	some	cases	may	be	subject	to	taxation	in	more	than	one	country,	the	income	tax	provision	shown	above	as	U.S.	or International	may	not	correspond	to	the	geographic	attribution	of	the	earnings.

								A	reconciliation	of	the	income	tax	provisions	based	on	the	U.S.	statutory	corporate	tax	rate	to	the	provisions	reflected	in	the	consolidated	financial	statements	is	as follows:

| Statutory	tax	rate | 35.0% | 35.0% | 35.0% |
| :--- | :--- | :--- | :--- |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 1.1 | 1.2 | 2.6 |
| Taxes\ton\tinternational\toperations | (3.3) | (3.7) | (0.6) |
| Nondeductible\texpenses | 2.3 | 2.8 | 3.6 |
| Adjustments\tto\tprior\tyear\ttax\trequirements | (0.9) | 0.3 | (9.0) |
| Deferred\ttax\tadjustments,\tincluding\tstatutory\trate\tchanges | 1.3 | (0.6) | (2.4) |
| Other\t—\tnet | (1.1) | (2.4) | (1.3) |
| Effective\ttax\trate | 34.4% | 32.6% | 27.9% |

								Significant	components	of	Aon's	deferred	tax	assets	and	liabilities	are	as	follows:

| (millions)				As	of	December	31 | 2007 | 2006 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Employee\tbenefit\tplans | $579 | $661 |
| Net\toperating\tloss\tand\ttax\tcredit\tcarryforwards | 174 | 128 |
| Other\taccrued\texpenses | 110 | 140 |
| Investment\tbasis\tdifferences | 76 | 46 |
| Life\tand\tother\tinsurance\treserves | 8 | 14 |
| Other | 30 | 14 |
|  | 977 | 1,003 |
| Valuation\tallowance\ton\tdeferred\ttax\tassets | (46) | (44) |
| Total | 931 | 959 |
| Deferred\ttax\tliabilities: |  |  |
| Intangibles | (184) | (161) |
| Unrealized\tforeign\texchange\tgains | (105) | (14) |
| Unrealized\tinvestment\tgains | (67) | (62) |
| Deferred\trevenue | (50) | (22) |
| Other\taccrued\texpenses | (35) | (40) |
| Other | (27) | (14) |
| Total | (468) | (313) |
| Net\tdeferred\ttax\tasset | $463 | $646 |

								Valuation	allowances	have	been	established	primarily	with	regard	to	the	tax	benefits	of	certain	net	operating	loss	and	tax	credit	carryforwards.	Valuation	allowances were	increased	to	$46	million	in	2007	from	$44	million	in	2006,	attributable	largely	to	the	periodic	reconciliation	of	previous	provisions	to	filed	or	audited	and	agreed tax	returns.	Although	future	earnings	cannot	be	predicted	with	certainty,	management	believes	that	the	realization	of	the	net	deferred	tax	asset	is	more	likely	than	not.

								Aon	recognized,	as	an	adjustment	to	additional	paid-in-capital,	income	tax	benefits	attributable	to	employee	stock	compensation	as	follows:	2007	—	$34	million; 2006	—	$21	million;	and	2005	—	$5	million.

								U.S.	deferred	income	taxes	are	not	provided	on	unremitted	foreign	earnings	that	are	considered	permanently	reinvested,	which	at	December	31,	2007	amounted	to approximately	$1.7	billion.	It	is	not	practicable	to	determine	the	income	tax	liability	that	might	be	incurred	if	all	such	earnings	were	remitted	to	the	U.S.	due	to	foreign tax	credits	and	exclusions	that	may	become	available	at	the	time	of	remittance.

								At	December	31,	2007,	Aon	had	domestic	federal	operating	loss	carryforwards	of	$13	million	that	will	expire	at	various	dates	from	2008	to	2022,	state	operating loss	carryforwards	of	$526	million	that	will	expire	at	various	dates	from	2008	to	2026,	and	foreign	operating	and	capital	loss	carryforwards	of	$395	million	and $76	million,	respectively,	nearly	all	of	which	are	subject	to	indefinite	carryforward.

# Uncertain	Tax	Provisions

								As	described	in	Note	1,	the	Company	adopted	FIN	48	on	January	1,	2007.	The	effect	of	adopting	FIN	48	was	not	material	to	the	Company's	financial	statements.

| The	following	is	a	reconciliation	of	the	Company's	beginning	and	ending	amount	of	unrecognized	tax	benefits	(in	millions). |  |
| :--- | :--- |
| Balance\tat\tJanuary\t1,\t2007 | $53 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 4 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 24 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (6) |
| Settlements | (5) |
| Balance\tat\tDecember\t31,\t2007 | $70 |

								Of	the	amount	included	in	the	previous	table,	$57	million	of	unrecognized	tax	benefits	would	impact	the	effective	tax	rate	if	recognized.	Aon	does	not	expect	the unrecognized	tax	positions	to	change	significantly	over	the	next	twelve	months.

								The	Company	recognizes	interest	and	penalties	related	to	unrecognized	income	tax	benefits	in	its	provision	for	income	taxes.	Aon	accrued	potential	penalties	and interest	of	less	than	$1	million	related	to	unrecognized	tax	positions	during	2007.	In	total,	as	of	December	31,	2007,	Aon	has	recorded	a	liability	for	penalties	and interest	of	$1	million	and	$7	million,	respectively.

								Aon	and	its	subsidiaries	file	income	tax	returns	in	the	U.S.	federal	jurisdiction	as	well	as	various	state	and	international	jurisdictions.	Aon	has	substantially concluded	all	U.S.	federal	income	tax	matters	for	years	through	2004.	The	Internal	Revenue	Service	commenced	an	examination	of	Aon's	federal	U.S.	income	tax returns	for	2005	and	2006	in	the	fourth	quarter	of	2007.	Material	U.S.	state	and	local	income	tax	jurisdiction	examinations	have	been	concluded	for	years	through	2002. Aon	has	concluded	income	tax	examinations	in	its	primary	international	jurisdictions	through	2000.

# 9.				Reinsurance	and	Claim	Reserves

								Aon's	insurance	subsidiaries	both	cede	and	assume	reinsurance	under	reinsurance	agreements.	Aon's	reinsurance	consists	primarily	of	certain	property	and	casualty lines	that	are	in	runoff.	Aon's	insurance	subsidiaries	remain	liable	to	the	extent	that	the	reinsurers	are	unable	to	meet	their	obligations.	As	of	November	30,	2006,	in connection	with	the	sale	of	AWG,	Aon	sold	Virginia	Surety	Company	("VSC").	VSC	will	continue	to	remain	liable	to	policyholders	to	the	extent	reinsurers	of	the property	and	casualty	business	do	not	meet	their	obligations.	Aon	has	issued	an	indemnification	which	protects	the	purchaser	from	credit	exposure	related	to	the property	and	casualty	reserves	that	have	been	reinsured.	Aon	has	provided	a	corporate	guarantee	with	respect	to	these	reinsurance	recoverables.	These	reinsurance recoverables	amount	to	$846	million	at	December	31,	2007.

								A	summary	of	reinsurance	activity	in	continuing	operations	is	as	follows:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Ceded\tpremiums\tearned | $1 | $1 | $1 |
| Ceded\tpremiums\twritten | — | 12 | 2 |
| Assumed\tpremiums\tearned | 3 | 28 | 57 |
| Assumed\tpremiums\twritten | 3 | 25 | 49 |
| Ceded\tbenefits\tto\tpolicyholders | 1 | — | — |

								Activity	in	the	liability	for	policy	and	contract	claims	is	summarized	as	follows:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Liabilities\tat\tbeginning\tof\tyear | $149 | $222 | $275 |
| Incurred\tlosses: |  |  |  |
| Current\tyear | 1 | 16 | 20 |
| Prior\tyears | 7 | 81 | 30 |
| Total | 8 | 97 | 50 |
| Payment\tof\tclaims: |  |  |  |
| Current\tyear | — | 15 | 7 |
| Prior\tyears | 43 | 155 | 96 |
| Total | 43 | 170 | 103 |
| Liabilities\tat\tend\tof\tyear | $114 | $149 | $222 |

								In	2006,	in	connection	with	the	sales	of	AWG	and	CPG,	Aon	completed	a	detailed	review	of	all	its	property	and	casualty	reserves.	Based	on	the	results	of	this review,	the	Company	increased	its	property	and	casualty	reserves	by	approximately	$102	million,	reflecting	adverse	development,	refined	assumptions	and	additional claim	information	relating	to	programs	to	be	disposed	of	through	sale	or	runoff.	Aon	recorded	$81	million	of	this	adjustment	in	continuing	operations	in	other	general expenses	in	the	consolidated	statement	of	income.	The	remaining	$21	million	is	not	included	in	the	preceding	table	because	it	relates	to	CPG	and	is	recorded	in discontinued	operations.	Of	the	$81	million	recorded	in	continuing	operations,	the	majority	related	to	National	Program	Services,	an	independent	managing	general underwriter	that	wrote	habitational	risk	on	behalf	of	Aon.

# 10.		Stockholders'	Equity

# Common	Stock

								In	November	2005,	Aon's	Board	of	Directors	authorized	the	repurchase	of	up	to	$1	billion	of	Aon's	common	stock.	In	November	2006,	the	Board	increased	that amount	to	$2	billion.	In	December	2007,	the	Board	increased	the	authorization	amount	to	$4.6	billion.	Shares	may	be	repurchased	through	the	open	market	or	in privately	negotiated	transactions	from	time	to	time,	based	on	prevailing	market	conditions,	and	will	be	funded	from	available	capital.	Any	repurchased	shares	will	be available	for	employee	stock	plans	and	for	other	corporate	purposes.	In	2007,	the	Company	repurchased	19.1	million	shares	at	a	cost	of	$751	million.	In	2006,	the Company	repurchased	28.4	million	shares	at	a	cost	of	$1,048	million.	Aon	repurchased	0.7	million	shares	at	a	cost	of	$25	million	in	2005.	In	2008	through	February	27, the	Company	has	repurchased	6.7	million	shares	at	a	cost	of	$286	million.

								In	connection	with	the	acquisition	of	two	entities	controlled	by	Aon's	then-Chairman	and	Chief	Executive	Officer	in	2001,	Aon	obtained	approximately 22.4	million	shares	of	its	common	stock.	These	treasury	shares	are	restricted	as	to	their	reissuance.

								In	2007,	Aon	issued	0.4	million	new	shares	of	common	stock	for	employee	benefit	plans	and	0.1	million	shares	in	connection	with	employee	stock	purchase	plans. In	addition,	Aon	reissued	9.3	million	shares	of	treasury	stock	for	employee	benefit	programs	and	0.3	million	shares	in	connection	with	employee	stock	purchase	plans.

								In	November	2007,	the	Company	redeemed	all	of	its	remaining	outstanding	3 /2%	Senior	Convertible	Debentures	that	were	due	in	2012.	All	of	the	holders	of	the 1 Debentures	elected	to	convert	their	debentures	into	Aon	common	stock	at	a	conversion	rate	of	46.5658	shares	of	common	stock	for	each	$1,000	principal	amount	of Debentures.	As	a	result	of	this	redemption	and	earlier	voluntary	redemptions,	approximately	14	million	shares	of	Aon	common	stock	were	issued	in	2007.

# Dividends

								A	summary	of	dividends	paid	is	as	follows:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Redeemable\tpreferred\tstock | $— | $— | $2 |
| Common\tstock | 176 | 189 | 191 |
| Total\tdividends\tpaid | $176 | $189 | $193 |

# Statutory	Capital	and	Dividend	Restrictions

								State	insurance	laws	and	regulations	prescribe	accounting	practices	for	determining	statutory	capital	and	surplus	and	net	income	for	insurance	companies	and require,	among	other	matters,	the	filing	of	financial	statements	prepared	in	accordance	with	statutory	accounting	practices	prescribed	or	permitted	for	insurance companies.	State	insurance	laws	and	regulations	in	the	U.S.	also	require	the	maintenance	of	a	minimum	capital	and	surplus	based	on	various	factors.	At	December	31, 2007,	the	Company's	insurance	subsidiaries	were	in	compliance	with	these	minimum	requirements.	Statutory	capital	and	surplus	of	the	insurance	subsidiaries	were $971	million	and	$870	million	at	December	31,	2007	and	2006,	respectively.	Statutory	net	income	of	the	insurance	subsidiaries	were	$259	million,	$206	million	and $159	million	for	the	years	ended	December	31,	2007,	2006	and	2005,	respectively.

								Dividends	paid	by	the	Company's	insurance	subsidiaries	are	limited	by	state	insurance	regulations.	The	insurance	regulator	in	each	state	of	domicile	may	disapprove any	dividend	that,	together	with	other	dividends	paid	by	a	subsidiary	in	the	prior	twelve	months,	exceeds	the	regulatory	maximum	as	computed	for	the	subsidiary	based on	its	statutory	capital	and	surplus	and	net	income.	As	a	result,	the	capital	and	surplus	of	the	subsidiaries	available	for	transfer	to	the	parent	company	are	limited.	As	of December	31,	2007,	payments	of	dividend	amounts	in	excess	of	$273	million	may	be	subject	to	approval	by	regulatory	authorities.

								In	addition	to	compliance	requirements	of	state	insurance	laws	and	regulations	in	the	U.S.,	the	Company	has	foreign	subsidiaries	and	branches	that	are	required	to meet	various	regulatory	requirements	in	their	respective	jurisdictions.

# 11.		Employee	Benefits

# Defined	Contribution	Savings	Plans

								Aon	subsidiaries	maintain	defined	contribution	savings	plans	for	the	benefit	of	its	U.S.	and	U.K.	employees.	The	expense	recognized	for	these	plans,	which	is included	in	compensation	and	benefits	and	discontinued	operations	in	the	accompanying	consolidated	statements	of	income,	is	as	follows	(in	millions):

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| U.S. | $49 | $49 | $47 |
| U.K. | 37 | 19 | 20 |
|  | $86 | $68 | $67 |

# Pension	and	Other	Post-retirement	Benefits

								Aon	sponsors	defined	benefit	pension	and	post-retirement	health	and	welfare	plans	that	provide	retirement,	medical	and	life	insurance	benefits.	The	post-retirement healthcare	plans	are	contributory,	with	retiree	contributions	adjusted	annually;	the	life	insurance	and	pension	plans	are	noncontributory.

								Effective	January	1,	2007,	future	benefits	in	the	Company's	U.S.	defined	benefit	pension	plan	are	calculated	based	on	a	"career	average	pay"	formula	instead	of	a "final	average	pay"	formula.	The	change	affected	approximately	11,000	active	employees	covered	by	the	U.S.	plan.	Effective	March	31,	2007,	the	Company	ceased crediting	future	benefits	relating	to	salary	and	service	in	its	U.K.	defined	benefit	pension	plans.	The	change	affected	approximately	1,700	active	employees	covered	by the	U.K.	plans.

# Adoption	of	Statement	No.	158

								On	December	31,	2006,	Aon	adopted	the	recognition,	disclosure	and	measurement	date	provisions	of	Statement	No.	158.	This	Statement	required	Aon	to	recognize the	funded	status	of	its	post-retirement	benefit	plans	in	the	December	31,	2006	statement	of	financial	position,	with	a	corresponding	adjustment	to	accumulated	other comprehensive	loss,	net	of	tax.	The	adjustment	to	accumulated	other	comprehensive	loss	at	adoption	represents	net	unrecognized	actuarial	losses	and	unrecognized	prior service	costs	which	were	previously	netted	against	the	plan's	funded	status	in	Aon's	statement	of	financial	position	pursuant	to	the	provisions	of	Statement	No.	87.	These amounts	will	be	subsequently	recognized	as	net	periodic	benefit	cost	pursuant	to	Aon's	historical	accounting	policy	for	amortizing	such	amounts.	Further,	actuarial	gains and	losses	that	arise	in	subsequent	periods	and	are	not	recognized	as	net	periodic	benefit	cost	in	the	same	periods	will	be	recognized	as	a	component	of	other comprehensive	income.	Those	amounts	will	be	subsequently	recognized	as	a	component	of	net	periodic	pension	cost	on	the	same	basis	as	the	amounts	recognized	in accumulated	other	comprehensive	loss	at	adoption	of	Statement	No.	158.

								The	incremental	effects	of	adopting	the	provisions	of	Statement	No.	158	on	Aon's	statement	of	financial	position	at	December	31,	2006	are	presented	in	the following	table.	Had	Aon	not	been	required	to	adopt	Statement	No.	158	at	December	31,	2006,	it	would	have	recognized	an	additional	minimum	liability	pursuant	to	the provisions	of	Statement	No.	87.	The	effect	of	recognizing	the	additional	minimum	liability	is	included	in	the	table	below	in	the	column	labeled	"Prior	to	Adopting	of Statement	No.	158."

| (millions) | Prior	to<br>Adopting<br>Statement<br>No.	158 | Effect	of<br>Adopting<br>Statement<br>No.	158 | As	Reported	at<br>December	31,<br>2006 |
| :--- | :--- | :--- | :--- |
| Intangible\tpension\tasset\tand\tprepaid\tpension\tasset\t(included\tin\tother\tnon- |  |  |  |
| current\tassets) | $1,009 | $(146) | $863 |
| Accrued\tpension\tand\tother\tbenefit\tliabilities\t(included\tin\tpension,\tpost-employment |  |  |  |
| and\tpost-retirement\tliabilities) | (1,108) | (357) | (1,465) |
| Deferred\tincome\ttaxes | 473 | 154 | 627 |
| Accumulated\tother\tcomprehensive\tloss | 661 | 349 | 1,010 |

# Pension	Plans

								The	following	tables	provide	a	reconciliation	of	the	changes	in	the	benefit	obligations	and	fair	value	of	assets	for	the	years	ended	December	31,	2007	and	2006	and a	statement	of	the	funded	status	as	of	December	31,	2007	and	2006,	for	the	U.S.	plans	and	material	international	plans,	which	are	located	in	the	U.K.,	the	Netherlands and	Canada.	These	plans	represent	approximately	95%	of	the	Company's	pension	obligations.	The	Company	will	retain	the	obligations	and	assets	related	to	the participation	of	CICA	and	Sterling	employees	in	the	Company's	U.S.	and	Canadian	pension	plans.

| (millions) | 2007 | 2006 | 2007 | 2006 |
| :--- | :--- | :--- | :--- | :--- |
| Change\tin\tprojected\tbenefit\tobligation |  |  |  |  |
| Beginning\tof\tperiod | $1,706 | $1,758 | $5,239 | $4,499 |
| Service\tcost | 50 | 66 | 35 | 88 |
| Interest\tcost | 99 | 109 | 273 | 288 |
| Participant\tcontributions | — | — | 3 | 5 |
| Plan\tamendment | — | (145) | — | — |
| Curtailment | — | — | (45) | — |
| Plan\ttransfer | — | — | 14 | — |
| Actuarial\tloss | 16 | 33 | 346 | 89 |
| Benefit\tpayments | (76) | (84) | (166) | (173) |
| Change\tin\tdiscount\trate | (118) | (31) | (540) | (124) |
| Foreign\texchange\ttranslation | — | — | 139 | 567 |
| End\tof\tperiod | $1,677 | $1,706 | $5,298 | $5,239 |
| Accumulated\tbenefit\tobligation\tat\tend\tof\tperiod | $1,672 | $1,706 | $5,225 | $4,837 |
| Change\tin\tfair\tvalue\tof\tplan\tassets |  |  |  |  |
| Beginning\tof\tperiod | $1,457 | $1,326 | $4,286 | $3,121 |
| Actual\treturn\ton\tplan\tassets | 111 | 210 | 40 | 476 |
| Participant\tcontributions | — | — | 3 | 5 |
| Employer\tcontributions | 22 | 5 | 189 | 424 |
| Plan\ttransfer | — | — | 10 | — |
| Benefit\tpayments | (76) | (84) | (166) | (173) |
| Foreign\texchange\ttranslation | — | — | 116 | 433 |
| End\tof\tperiod | $1,514 | $1,457 | $4,478 | $4,286 |
| Market\trelated\tvalue\tat\tend\tof\tperiod | $1,508 | $1,421 | $4,478 | $4,286 |
| Funded\tstatus\tat\tend\tof\tperiod | $(163) | $(249) | $(820) | $(953) |
| Unrecognized\tprior-service\tcost\t(credit) | (104) | (119) | 5 | 6 |
| Unrecognized\tloss | 347 | 485 | 1,733 | 1,708 |
| Net\tamount\trecognized | $80 | $117 | $918 | $761 |

| Prepaid	benefit	cost	(included	in	other	non-current	assets) | $35 | $— | $68 | $42 |
| :--- | :--- | :--- | :--- | :--- |
| Accrued\tbenefit\tliability\t(included\tin\tpension,\tpost-employment\tand\tpost-retirement |  |  |  |  |
| liabilities) | (198) | (249) | (888) | (995) |
| Accumulated\tother\tcomprehensive\tloss | 243 | 366 | 1,738 | 1,714 |
| Net\tamount\trecognized | $80 | $117 | $918 | $761 |

								Amounts	recognized	in	accumulated	other	comprehensive	loss	that	have	not	yet	been	recognized	as	components	of	net	periodic	benefit	cost	at	December	31,	2007 and	2006	consist	of:

| (millions) | 2007 | 2006 | 2007 | 2006 |
| :--- | :--- | :--- | :--- | :--- |
| Net\tloss | $347 | $485 | $1,733 | $1,708 |
| Prior\tservice\tcost\t(credit) | (104) | (119) | 5 | 6 |
|  | $243 | $366 | $1,738 | $1,714 |

								In	2007,	U.S.	plans	with	a	projected	benefit	obligation	("PBO")	and	an	accumulated	benefit	obligation	("ABO")	in	excess	of	the	fair	value	of	plan	assets	had	a	PBO of	$198	million,	an	ABO	of	$198	million	and	no	plan	assets.	International	plans	with	a	PBO	in	excess	of	the	fair	value	of	plan	assets	had	a	PBO	of	$4.8	billion	and	plan assets	with	a	fair	value	of	$4.0	billion,	and	plans	with	an	ABO	in	excess	of	the	fair	value	of	plan	assets	had	an	ABO	of	$4.8	billion	and	plan	assets	with	a	fair	value	of $4.0	billion.

								In	2006,	U.S.	plans	with	a	PBO	and	ABO	in	excess	of	the	fair	value	of	plan	assets	had	a	PBO	of	$1.7	billion,	an	ABO	of	$1.7	billion	and	plan	assets	with	a	fair value	of	$1.5	billion.	International	plans	with	a	PBO	in	excess	of	the	fair	value	of	plan	assets	had	a	PBO	of	$4.8	billion	and	plan	assets	with	a	fair	value	of	$3.8	billion, and	plans	with	an	ABO	in	excess	of	the	fair	value	of	plan	assets	had	an	ABO	of	$4.3	billion	and	plan	assets	with	a	fair	value	of	$3.7	billion.

								The	following	table	provides	the	components	of	net	periodic	benefit	cost	for	the	plans:

| (millions) | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Service\tcost | $50 | $61 | $62 | $35 | $74 | $68 |
| Interest\tcost | 99 | 101 | 93 | 273 | 237 | 211 |
| Expected\treturn\ton\tplan\tassets | (120) | (114) | (93) | (314) | (243) | (195) |
| Amortization\tof\tprior-service\tcost | (15) | (2) | (2) | 1 | 2 | 2 |
| Amortization\tof\tnet\tloss | 45 | 50 | 39 | 50 | 99 | 76 |
| Net\tperiodic\tbenefit\tcost | $59 | $96 | $99 | $45 | $169 | $162 |

								The	weighted-average	assumptions	used	to	determine	future	benefit	obligations	are	as	follows:

								The	weighted-average	assumptions	used	to	determine	the	net	periodic	benefit	cost	are	as	follows:

| (millions) | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Discount\trate | 5.88% | 5.75% | 6.00% | 4.65\t–\t5.25% | 4.00\t–\t5.25% | 4.50\t–\t6.00% |
| Expected\treturn\ton\tplan\tassets | 8.60 | 8.35 | 8.50 | 6.00\t–\t7.20 | 6.00\t–\t7.10 | 6.00\t–\t7.25 |
| Rate\tof\tcompensation\tincrease | 3.50 | 3.50 | 3.50 | 3.25\t–\t3.50 | 3.25\t–\t3.50 | 3.25\t–\t3.50 |

								The	amounts	in	accumulated	other	comprehensive	loss	expected	to	be	recognized	as	components	of	net	periodic	benefit	cost	during	2008	are	as	follows:

|  | U.S. | International |
| :--- | :--- | :--- |
| Net\tloss | $23 | $42 |
| Prior\tservice\tcost\t(credit) | (15) | 1 |
|  | $8 | $43 |

# Expected	Return	on	Plan	Assets

								To	determine	the	expected	long-term	rate	of	return	on	plan	assets,	the	historical	performance,	investment	community	forecasts	and	current	market	conditions	are analyzed	to	develop	expected	returns	for	each	asset	class	used	by	the	plans.	The	expected	returns	for	each	asset	class	are	weighted	by	the	target	allocations	of	the	plans.

# Plan	Assets

| Equities | 80% | 76% | 80% | 63% | 63% | 65% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Domestic\tequities | 45 | 41 | 41 |  |  |  |
| International\tequities | 15 | 20 | 19 |  | 58 | 60 |
| Total\tequities | 60 | 61 | 60 |  | 58 | 60 |
| Limited\tpartnerships\tand\tother | 15 | 11 | 13 |  | — | — |
| Real\testate\tand\tREITs | 5 | 4 | 7 |  | 5 | 5 |
| Debt\tsecurities | 20 | 24 | 20 | 37% | 37 | 35 |
| Fixed\tmaturities | 20 | 21 | 17 |  | 34 | 32 |
| Invested\tcash | No\ttarget | 3 | 3 |  | 3 | 3 |
| Total |  | 100% | 100% |  | 100% | 100% |

								No	plan	assets	are	expected	to	be	returned	to	the	Company	during	2008.

# Investment	Policy	and	Strategy

								The	U.S.	investment	policy,	as	established	by	the	Aon	Pension	Plan	Investment	Committee,	seeks	reasonable	asset	growth	at	prudent	risk	levels	within	target allocations.	Aon	believes	that	plan	assets	are	well-diversified	and	are	of	appropriate	quality.	The	investment	portfolio	asset	allocation	is	reviewed	quarterly	and	re- balanced	to	within	policy	target	allocations.	The	investment	policy	is	reviewed	at	least	annually	and	revised,	as	deemed	appropriate	by	the	Aon	Pension	Plan	Investment Committee.	The	investment	policies	for	international	plans	are	established	by	the	local	pension	plan	trustees	and	seek	to	maintain	the	plans'	ability	to	meet	liabilities	and to	comply	with	local	minimum	funding	requirements.	Plan	assets	are	invested,	within	asset	allocation	ranges	as	shown	above,	in	diversified	portfolios	that	provide adequate	levels	of	return	at	an	acceptable	level	of	risk.	The	investment	policies	are	reviewed	at	least	annually	and	revised,	as	deemed	appropriate	to	ensure	that	the objectives	are	being	met.

# Contributions

								Based	on	current	assumptions,	Aon	expects	to	contribute	$8	million	and	$187	million,	respectively,	to	its	U.S.	and	international	pension	plans	during	2008	to	satisfy minimum	funding	requirements.

# Estimated	Future	Benefit	Payments

								Estimated	future	benefit	payments	for	plans	are	as	follows	at	December	31,	2007:

| (millions) | U.S. | International |
| :--- | :--- | :--- |
| 2008 | $74 | $157 |
| 2009 | 77 | 166 |
| 2010 | 82 | 175 |
| 2011 | 86 | 184 |
| 2012 | 90 | 197 |
| 2013\t–\t2017 | 536 | 1,153 |

# U.S.	Other	Post-Retirement	Benefits

								The	following	table	provides	an	overview	of	the	accumulated	projected	benefit	obligation,	fair	value	of	plan	assets,	funded	status	and	net	amount	recognized	as	of December	31,	2007	and	2006	for	the	Company's	other	post-retirement	benefit	plan	(in	millions).

| December	31,	2007	and	2006	for	the	Company's	other	post-retirement	benefit	plan	(in	millions). |  |  |
| :--- | :--- | :--- |
|  | 2007 | 2006 |
| Accumulated\tprojected\tbenefit\tobligation | $(56) | $(76) |
| Fair\tvalue\tof\tplan\tassets | 8 | 8 |
| Funded\tstatus | (48) | (68) |
| Net\tamount\trecognized | (78) | (82) |

								The	net	periodic	benefit	cost	recognized	for	the	Company's	other	post-retirement	benefit	plans	was	$1	million,	$5	million,	and	$6	million	in	2007,	2006,	and	2005, respectively.	Amounts	recognized	in	accumulated	other	comprehensive	income	that	have	not	yet	been	recognized	as	components	of	net	periodic	benefit	cost	at December	31,	2007	are	$5	million	and	$25	million	of	net	gain	and	prior	service	credit,	respectively.	The	amount	in	accumulated	other	comprehensive	income	expected to	be	recognized	as	a	component	of	net	periodic	benefit	cost	during	2008	is	$4	million	of	prior	service	credit.

# 								Based	on	current	assumptions,	Aon	expects:

•To	contribute	$6	million	to	fund	other	post-retirement	benefit	plans	during	2008.

•Estimated	future	pension	benefit	payments	will	be	approximately	$5	million	each	year	for	the	years	2008-2012	and	$20	million	in	aggregate	for	2013- 2017.

								Aon's	liability	for	future	plan	cost	increases	for	pre-65	and	Medical	Supplement	plan	coverage	is	limited	to	5%	per	annum.	Because	of	this	cap,	net	employer	trend rates	for	these	plans	are	effectively	limited	to	5%	per	year	in	the	future.	During	2007,	Aon	recognized	a	plan	amendment	which	phases	out	post-65	retiree	coverage	over the	next	three	years.	As	a	result,	a	1%	change	in	assumed	healthcare	cost	trend	rates	has	no	effect	on	the	service	and	interest	cost	components	of	net	periodic	post- retirement	healthcare	benefit	cost	or	on	the	accumulated	post-retirement	benefit	obligation	for	the	measurement	period	ended	in	2007.

								Aon's	Stock	Incentive	Plan	(as	amended	and	restated)	(the	"Plan")	provides	for	the	grant	of	non-qualified	and	incentive	stock	options,	stock	appreciation	rights, restricted	stock	and	restricted	stock	units	("RSUs").	The	annual	rate	at	which	awards	are	granted	each	year	is	based	upon	financial	and	competitive	business	conditions. The	number	of	shares	authorized	to	be	issued	under	the	plan	is	equal	to	18%	of	the	number	of	common	shares	outstanding.

# Compensation	expense

								Stock	based	compensation	expense	recognized	during	2007	and	2006,	which	includes	RSUs,	stock	options,	performance	plan	awards	and	stock	purchases	related	to the	Employee	Stock	Purchase	Plan,	are	based	on	the	value	of	the	portion	of	stock-based	payment	awards	that	is	ultimately	expected	to	vest	during	the	period.	Stock- based	compensation	expense	recognized	in	Aon's	consolidated	statements	of	income	for	2007	and	2006	includes	compensation	expense	for	stock-based	payment	awards granted	prior	to,	but	not	yet	vested	as	of	December	31,	2005	based	on	the	grant	date	fair	value	estimated	in	accordance	with	the	pro	forma	provisions	of	Statement No.	123,	and	compensation	expense	for	the	stock-based	payment	awards	granted	subsequent	to	December	31,	2005	based	on	the	grant	date	fair	value	estimated	in accordance	with	the	provisions	of	Statement	No.	123(R).	Because	stock-based	compensation	expense	recognized	is	based	on	awards	ultimately	expected	to	vest,	it	has been	reduced	for	estimated	forfeitures.	Forfeitures	are	estimated	at	the	time	of	grant	and	revised,	if	necessary,	in	subsequent	periods	if	actual	forfeitures	differ	from	those estimates.

								The	following	table	summarizes	stock-based	compensation	expense	related	to	all	stock-based	payments	recognized	in	continuing	operations	in	the	consolidated statements	of	income	in	compensation	and	benefits.

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| RSUs | $109 | $94 | $66 |
| Performance\tplans | 55 | 24 | — |
| Stock\toptions | 22 | 22 | 2 |
| Employee\tstock\tpurchase\tplan | 3 | 4 | — |
| Total\tstock-based\tcompensation\texpense | 189 | 144 | 68 |
| Tax\tbenefit | 64 | 49 | 25 |
| Stock-based\tcompensation\texpense,\tnet\tof\ttax | $125 | $95 | $43 |

								The	following	table	illustrates	pro	forma	net	income	and	pro	forma	earnings	per	share	as	if	Aon	had	applied	the	fair	value	recognition	provisions	of	FASB Statement	No.	123,	Accounting	for	Stock-Based	Compensation,	to	stock-based	employee	compensation	in	2005.

# Stock	Awards

								Stock	awards,	in	the	form	of	RSUs,	are	granted	to	certain	executives	and	key	employees	of	Aon.	Prior	to	2006,	RSUs	granted	to	employees	were	service-based. Beginning	with	awards	granted	in	2006,	awards	to	employees	may	consist	of	performance-based	RSUs	and	service-based	RSUs.	Service-based	awards	generally	vest between	five	and	ten	years	from	the	date	of	grant.	For	most	employees,	individual	incentive	compensation	over	$50,000	is	partially	paid	in	RSUs,	which	vest	ratably over	three	years.	Stock	awards	are	issued	as	they	vest.	In	years	prior	to	2006,	in	certain	circumstances,	an	employee	was	able	to	elect	to	defer	the	receipt	of	vested	shares to	a	later	date.	With	certain	limited	exceptions,	any	break	in	continuous	employment	will	cause	forfeiture	of	all	unvested	awards.	The	compensation	cost	associated	with each	stock	award	is	amortized	over	the	service	period	using	the	straight-line	method.	Dividend	equivalents	are	paid	on	certain	service-based	RSUs,	based	on	the	initial grant	amount.	At	December	31,	2007,	2006	and	2005,	the	number	of	shares	available	for	stock	awards	is	included	with	options	available	for	grant.

								In	2007	and	2006,	performance-based	RSUs	were	granted	to	certain	executives	and	key	employees,	whose	vesting	is	contingent	upon	meeting	various	individual, divisional	or	company-wide	performance	conditions,	including	revenue	generation	or	growth	in	revenue,	pretax	income	or	earnings	per	share	over	a	one-	to	five-year period.	The	performance	condition	is	not	considered	in	the	determination	of	grant	date	fair	value	of	these	awards.	Compensation	cost	is	recognized	over	the	performance period,	and	in	certain	cases	an	additional	vesting	period,	based	on	management's	estimate	of	the	number	of	units	expected	to	vest.	Compensation	cost	will	be	adjusted	to reflect	the	actual	number	of	shares	paid	out	at	the	end	of	the	programs.	The	payout	of	shares	under	these	performance-based	plans	may	range

from	0-200%	of	the	number	of	units	granted,	based	on	the	plan.	Dividend	equivalents	are	generally	not	paid	on	the	performance-based	RSUs.

								Information	regarding	Aon's	performance-based	plans	as	of	December	31,	2007	and	2006	follows:

| (shares	in	thousands,	dollars	in	millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| Potential\tRSUs\tto\tbe\tissued\tbased\ton\tcurrent\tperformance\tlevels | 4,860 | 2,560 |
| Shares\tforfeited\tduring\tthe\tyear | 109 | 49 |
| RSUs\tawarded\tduring\tthe\tyear | 9 | 30 |
| Unamortized\texpense,\tbased\ton\tcurrent\tperformance\tlevels | $92 | $71 |

								A	summary	of	the	status	of	Aon's	non-vested	stock	awards	is	as	follows:

| (shares	in	thousands) | Shares | Fair<br>Value | Shares | Fair<br>Value | Shares | Intrinsic<br>Value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Non-vested\tat\tbeginning\tof\tyear | 12,870 | $28 | 11,641 | $25 | 8,738 | $28 |
| Granted | 4,270 | 39 | 3,646 | 37 | 4,727 | 24 |
| Vested | (2,158) | 28 | (1,809) | 25 | (1,145) | 28 |
| Forfeited | (832) | 34 | (608) | 27 | (679) | 29 |
| Non-vested\tat\tend\tof\tyear | 14,150 | $31 | 12,870 | $28 | 11,641 | $26 |

# Stock	Options

								Options	to	purchase	common	stock	are	granted	to	certain	executives	and	key	employees	of	Aon	and	its	subsidiaries	generally	at	100%	of	market	value	on	the	date of	grant.	Generally,	employees	are	required	to	complete	two	continuous	years	of	service	before	the	options	begin	to	vest	in	increments	until	the	completion	of	a	4-year period	of	continuous	employment,	although	a	number	of	options	were	granted	that	require	five	continuous	years	of	service	before	all	options	would	vest.	The	maximum contractual	term	on	stock	options	is	generally	ten	years	from	the	date	of	grant.

								Upon	adoption	of	Statement	No.	123(R),	Aon	changed	its	method	of	valuation	for	stock	options	granted	beginning	in	2006	to	a	lattice-binomial	option-pricing model	from	the	Black-Scholes	option-pricing	model,	which	was	previously	used	for	Aon's	pro	forma	information	required	under	Statement	No.	123.	Lattice-based option	valuation	models	utilize	a	range	of	assumptions	over	the	expected	term	of	the	options.	Expected	volatilities	are	based	on	the	average	of	the	historical	volatility	of Aon's	stock	price	and	the	implied	volatility	of	traded	options	and	Aon's	stock.	Aon	uses	historical	data	to	estimate	option	exercise	and	employee	terminations	within	the valuation	model,	stratifying	between	executives	and	key	employees.	The	expected	dividend	yield	assumption	is	based	on	the	Company's	historical	and	expected	future dividend	rate.	The	risk-free	rate	for	periods	within	the	contractual	life	of	the	option	is	based	on	the	U.S.	Treasury	yield	curve	in	effect	at	the	time	of	grant.

# 								The	following	weighted	average	assumptions	were	used	to	estimate	fair	value.

|  | Executives | Key<br>Employees | Executives | Key<br>Employees |
| :--- | :--- | :--- | :--- | :--- |
| Weighted\taverage\tvolatility | 26.4% | 26.8% | 30.5% | 29.6% |
| Expected\tdividend\tyield | 1.6% | 1.6% | 2.3% | 2.3% |
| Risk-free\trate | 4.6% | 4.6% | 4.4% | 4.6% |
| Weighted\taverage\testimated\tfair\tvalue | $10.36 | $11.69 | $11.08 | $10.75 |

								The	expected	life	of	employee	stock	options	represents	the	weighted-average	period	stock	options	are	expected	to	remain	outstanding	and	is	a	derived	output	of	the lattice-binomial	model.	The	expected	life	of	option	grants	made	during	both	2007	and	2006	were	5	years	for	executives	and	6	years	for	key	employees.

								A	summary	of	the	status	of	Aon's	stock	options	and	related	information	are	as	follows:

| (shares	in	thousands) | Shares | Weighted-<br>Average<br>Exercise<br>Price | Shares | Weighted-<br>Average<br>Exercise<br>Price | Shares | Weighted-<br>Average<br>Exercise<br>Price |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Beginning\toutstanding | 32,889 | $30 | 34,851 | $29 | 33,400 | $29 |
| Granted | 2,012 | 40 | 2,905 | 39 | 6,223 | 24 |
| Exercised | (7,903) | 29 | (4,007) | 27 | (2,396) | 24 |
| Forfeited\tand\texpired | (519) | 32 | (860) | 29 | (2,376) | 28 |
| Ending\toutstanding | 26,479 | 31 | 32,889 | 30 | 34,851 | 29 |
| Exercisable\tat\tend\tof\tyear | 14,880 | 31 | 18,411 | 32 | 18,371 | 32 |
| Shares\tavailable\tfor\tgrant | 9,795 |  | 6,359 |  | 10,322 |  |

								A	summary	of	options	outstanding	and	exercisable	as	of	December	31,	2007	is	as	follows	(shares	in	thousands):

| Range	of<br>Exercise<br>Prices | Shares<br>Outstanding | Weighted-<br>Average<br>Remaining<br>Contractual<br>Life	(years) | Weighted<br>Average<br>Exercise<br>Price | Shares<br>Exercisable | Weighted-<br>Average<br>Remaining<br>Contractual<br>Life	(years) | Weighted<br>Average<br>Exercise<br>Price |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| $14.92\t–\t$22.86 | 4,525 | 5.62 | $20.99 | 3,660 |  | $20.65 |
| \t\t22.94\t–\t\t\t25.51 | 5,538 | 5.78 | 24.60 | 1,984 |  | 23.96 |
| \t\t25.70\t–\t\t\t30.78 | 4,147 | 5.98 | 27.33 | 1,172 |  | 28.11 |
| \t\t31.19\t–\t\t\t35.73 | 4,304 | 4.19 | 34.41 | 3,115 |  | 34.04 |
| \t\t35.76\t–\t\t\t41.20 | 4,678 | 4.63 | 38.08 | 2,688 |  | 37.50 |
| \t\t41.37\t–\t\t\t47.88 | 3,287 | 2.86 | 43.38 | 2,261 |  | 43.40 |
| $14.92\t–\t$47.88 | 26,479 | 4.96 | $30.71 | 14,880 | 3.60 | $30.98 |

								The	aggregate	intrinsic	value	represents	the	total	pretax	intrinsic	value,	based	on	options	with	an	exercise	price	less	than	the	Company's	closing	stock	price	of $47.69	as	of	December	31,	2007,	which	would	have	been	received	by	the	option	holders	had	those	option	holders	exercised	their	options	as	of	that	date.	At December	31,	2007,	the	aggregate	intrinsic	value	of	options	outstanding	was	$449	million,	of	which	$249	million	was	exercisable.

								Unamortized	deferred	compensation	expense,	which	includes	both	options	and	awards,	amounted	to	$321	million	as	of	December	31,	2007,	with	a	remaining weighted-average	amortization	period	of	approximately	2.2	years.

								During	2007,	a	majority	of	option	exercises	and	award	vestings	were	satisfied	through	the	reissuance	of	treasury	shares.

# Employee	Stock	Purchase	Plan

								Aon	has	an	employee	stock	purchase	plan	that	provides	for	the	purchase	of	a	maximum	of	7.5	million	shares	of	Aon's	common	stock	by	eligible	U.S.	employees. Under	the	plan,	shares	of	Aon's	common	stock	may	be	purchased	at	3-month	intervals	at	85%	of	the	lower	of	the	fair	market	value	of	the	common	stock	on	the	first	or the	last	day	of	each	3-month	period.	In	2007,	2006,	and	2005,	405,000	shares,	457,000	shares	and	697,000	shares,	respectively,	were	issued	to	employees	under	the	plan. Compensation	expense	recognized	was	approximately	$3	million	in	both	2007	and	2006.	There	was	no	compensation	expense	associated	with	this	plan	in	2005.

# United	Kingdom

								Aon	also	has	an	employee	stock	purchase	plan	that	for	2006,	provided	for	the	purchase	of	a	maximum	of	525,000	shares	of	Aon	common	stock	by	eligible	U.K. employees	after	a	3-year	period	and	which	is	similar	to	the	U.S.	plan	described	above.	The	number	of	shares	eligible	for	purchase	is	approved	by	Aon's	Board	of Directors	on	a	yearly	basis	and	for	2007	no	opportunity	for	purchase	occurred.	In	2007,	less	than	1,000	shares	were	issued	under	the	plan.	No	shares	were	issued	under the	plan	in	2006	or	2005.	In	2007	and	2006,	compensation	expense	recognized	was	less	than	$1	million	each	year.	There	was	no	compensation	expense	associated	with this	plan	in	2005.

# 13.		Financial	Instruments

# Financial	Risk	Management

								Aon	is	exposed	to	market	risk	from	changes	in	foreign	currency	exchange	rates,	interest	rates	and	equity	security	prices.	To	manage	the	risk	related	to	these exposures,	Aon	enters	into	various	derivative	transactions.	The	derivatives	have	the	effect	of	reducing	Aon's	market	risks	by	creating	offsetting	market	exposures.	Aon does	not	enter	into	derivative	transactions	for	trading	purposes.

								Derivative	transactions	are	governed	by	a	uniform	set	of	policies	and	procedures	covering	areas	such	as	authorization,	counterparty	exposure	and	hedging	practices. Positions	are	monitored	using	techniques	such	as	market	value	and	sensitivity	analyses.

								Certain	derivatives	also	give	rise	to	credit	risks	from	the	possible	non-performance	by	counterparties.	The	credit	risk	is	generally	limited	to	the	fair	value	of	those contracts	that	are	favorable	to	Aon.	Aon	has	limited	its	credit	risk	by	using	master	netting	agreements,	entering	into	non-exchange-traded	derivatives	with	highly	rated major	financial	institutions	and	by	using	exchange-traded	instruments.	Aon	closely	monitors	the	credit-worthiness	of,	and	exposure	to,	its	counterparties.	At December	31,	2007	and	2006,	Aon	placed	cash	and	securities	relating	to	these	derivative	contracts	in	escrow	amounting	to	$5	million	and	$9	million,	respectively.

# Accounting	Policy	for	Derivative	Instruments

								All	derivative	instruments	are	recognized	in	the	consolidated	statements	of	financial	position	at	fair	value.	Unless	otherwise	noted,	derivative	instruments	with	a positive	fair	value	are	reported	in	receivables	and	derivative	instruments	with	a	negative	fair	value	are	reported	in	other	current	liabilities	in	the	consolidated	statements of	financial	position.	Where	Aon	has	entered	into	master	netting	agreements	with	counterparties,	the	derivative	positions	are	netted	by	program	and	are	reported accordingly	in	receivables	or	other	current	liabilities.	Changes	in	the	fair	value	of	derivative	instruments	are	recognized	immediately	in	earnings,	unless	the	derivative	is designated	as	a	hedge	and	qualifies	for	hedge	accounting.

								FASB	Statement	No.	133,	Accounting	for	Derivative	Instruments	and	Hedging	Activities,	identifies	three	hedging	relationships	where	a	derivative	(hedging instrument)	may	qualify	for	hedge	accounting:	(i)	a	hedge	of	the	change	in	fair	value	of	a	recognized	asset	or	liability	or	firm	commitment	("fair	value	hedge"),	(ii)	a hedge	of	the	variability	in	cash	flows	from	a	recognized	variable-rate	asset	or	liability	or	forecasted	transaction	("cash	flow	hedge"),	and	(iii)	a	hedge	of	the	net investment	in	a	foreign	subsidiary	("net	investment	hedge").	Under	hedge	accounting,	recognition	of	derivative	gains	and	losses	can	be	matched	in	the	same	period	with that	of	the	hedged	exposure	and	thereby	minimize	earnings	volatility.

								In	order	for	a	derivative	to	qualify	for	hedge	accounting,	the	derivative	must	be	formally	designated	as	a	fair	value,	cash	flow,	or	a	net	investment	hedge	by documenting	the	relationship	between	the	derivative	and	the	hedged	item.	The	documentation	will	include	a	description	of	the	hedging	instrument,	the	hedge	item,	the risk	being	hedged,	Aon's	risk	management	objective	and	strategy	for	undertaking	the	hedge,	the	method	for	assessing	the	effectiveness	of	the	hedge,	and	the	method	for measuring	hedge	ineffectiveness.	Additionally,	the	hedge	relationship	must	be	expected	to	be	highly	effective	at	offsetting	changes	in	either	the	fair	value	or	cash	flows of	the	hedged	item	at	both	inception	of	the	hedge	and	on	an	ongoing	basis.	Aon	assesses	the	ongoing	effectiveness	of	its	hedges	and	measures	and	records	hedge ineffectiveness	at	the	end	of	each	quarter.

								For	a	fair	value	hedge,	the	change	in	fair	value	of	the	hedging	instrument	and	the	change	in	fair	value	of	the	hedged	item	attributable	to	the	risk	being	hedged	are both	recognized	currently	in	earnings.	Aon	did	not	enter	into	any	fair	value	hedges	in	2007.	For	a	cash	flow	hedge,	the	effective	portion	of	the	change	in	fair	value	of	a hedging	instrument	is	recognized	in	OCI	and	subsequently

reclassified	to	income	when	the	hedged	item	affects	earnings.	The	ineffective	portion	of	the	change	in	fair	value	of	a	cash	flow	hedge	is	recognized	immediately	in earnings.	For	a	net	investment	hedge,	the	effective	portion	of	the	change	in	fair	value	of	the	hedging	instrument	is	reported	in	OCI	as	part	of	the	cumulative	translation adjustment,	while	the	ineffective	portion	is	recognized	immediately	in	earnings.

								Changes	in	the	fair	value	of	a	derivative	that	is	not	designated	as	an	accounting	hedge	(known	as	an	"economic	hedge")	are	recorded	in	either	investment	income	or other	general	expenses	(depending	on	the	hedged	exposure)	in	the	current	period's	consolidated	statement	of	income.

								Aon	discontinues	hedge	accounting	prospectively	when	(1)	the	derivative	expires	or	is	sold,	terminated,	or	exercised,	(2)	it	determines	that	the	derivative	is	no longer	effective	in	offsetting	changes	in	the	hedged	item's	fair	value	or	cash	flows,	(3)	a	hedged	forecasted	transaction	is	no	longer	probable	of	occurring	in	the	time period	described	in	the	hedge	documentation,	(4)	the	hedged	item	matures	or	is	sold,	or	(5)	management	elects	to	discontinue	hedge	accounting	voluntarily.

								When	hedge	accounting	is	discontinued	because	the	derivative	no	longer	qualifies	as	a	fair	value	hedge,	Aon	will	continue	to	carry	the	derivative	in	the	consolidated statements	of	financial	position	at	its	fair	value,	recognize	subsequent	changes	in	the	fair	value	of	the	derivative	in	current-period	earnings,	cease	to	adjust	the	hedged asset	or	liability	for	changes	in	its	fair	value,	and	begin	to	amortize	the	hedged	item's	cumulative	basis	adjustment	into	earnings	over	the	remaining	life	of	the	hedged item	using	a	method	that	approximates	the	level-yield	method.

								When	hedge	accounting	is	discontinued	because	the	derivative	no	longer	qualifies	as	a	cash	flow	hedge,	Aon	will	continue	to	carry	the	derivative	in	the	consolidated statements	of	financial	position	at	its	fair	value,	recognize	subsequent	changes	in	the	fair	value	of	the	derivative	in	current-period	earnings,	and	continue	to	defer	the derivative	gain	or	loss	in	accumulated	OCI	until	the	hedged	forecasted	transaction	affects	earnings.	If	the	hedged	forecasted	transaction	is	probable	of	not	occurring	in the	time	period	described	in	the	hedge	documentation	or	within	a	two	month	period	of	time	thereafter,	the	deferred	derivative	gain	or	loss	would	be	reclassified immediately	to	earnings.

# Foreign	Exchange	Risk	Management

								Certain	of	Aon's	foreign	brokerage	subsidiaries,	primarily	in	the	U.K.,	receive	revenues	in	currencies	(primarily	in	U.S.	dollars)	that	differ	from	their	functional currencies.	The	foreign	subsidiary's	functional	currency	revenue	will	fluctuate	as	the	currency	exchange	rates	change.	To	reduce	this	variability,	Aon	uses	foreign exchange	forwards	and	over-the-counter	options	to	hedge	the	foreign	exchange	risk	of	the	forecasted	revenue	for	up	to	a	maximum	of	three	years	in	the	future.	Aon	has designated	these	derivatives	as	cash	flow	hedges	of	its	forecasted	foreign	currency	denominated	revenue.	As	of	December	31,	2007,	a	$9	million	pretax	gain	has	been deferred	to	OCI,	$10	million	of	which	is	expected	to	be	reclassified	to	earnings	as	an	adjustment	to	other	general	expenses	in	2008.	Deferred	gains	or	losses	will	be reclassified	from	OCI	to	other	general	expenses	when	the	hedged	revenue	is	recognized.	The	hedge	had	no	material	ineffectiveness	in	either	2007	or	2006.	For	the	year ended	December	31,	2007,	the	Company	recognized	immaterial	losses	on	cash	flow	hedges	that	were	discontinued	due	to	forecast	revisions.	Aon	also	uses	forward contracts,	which	have	not	been	designated	as	hedges	for	accounting	purposes,	to	hedge	economic	risks	that	arise	from	fluctuations	in	the	currency	exchange	rates. Changes	in	the	fair	value	of	these	derivatives	are	recorded	in	other	general	expenses	in	the	consolidated	statements	of	income.

								Aon	uses	over-the-counter	basket	options	to	reduce	the	impact	of	foreign	currency	fluctuations	on	the	translation	of	the	financial	statements	of	Aon's	foreign operations.	These	derivatives	are	not	eligible	for	hedge	accounting	treatment	and	changes	in	the	fair	value	of	these	derivatives	are	recorded	in	other	general	expenses	in the	consolidated	statements	of	income.

								Aon	also	uses	foreign	currency	forward	contracts	to	offset	foreign	exchange	risk	associated	with	foreign	denominated	(primarily	British	pounds)	intercompany notes.	These	derivatives	were	not	designated	as	a	hedge	because	changes	in	their	fair	value	were	largely	offset	in	earnings	by	remeasuring	the	notes	for	changes	in	spot exchange	rates.	Changes	in	the	fair	value	of	these	derivatives	were	recorded	in	other	general	expenses	in	the	consolidated	statements	of	income.

								Aon	also	uses	foreign	currency	forward	contracts	to	hedge	certain	of	its	net	investments	in	foreign	underwriting	operations	(primarily	Canadian	dollar,	Euro	and British	pound).	During	2007	and	2006,	this	hedge	had	no	ineffectiveness,	and	a	$26	million	and	$24	million	cumulative	pretax	loss	has	been	included	in	OCI	at December	31,	2007	and	2006,	respectively.

								In	2005,	Aon	subsidiaries	entered	into	cross-currency	swaps	to	hedge	the	foreign	currency	risks	associated	with	foreign	denominated	fixed-rate	term	intercompany borrowings.	These	swaps	have	been	designated	as	cash	flow	hedges.	As	of	December	31,	2007,	an	$8	million	pretax	gain	had	been	deferred	to	OCI,	of	which	a $2	million	pretax	loss	is	expected	to	be	reclassified	to	earnings	in	2008	as	an	adjustment	to	interest	expense.	The	reclassification	from	OCI	will	offset	the	related transaction	gain	or	loss	arising	from	the	remeasurement	of	the	borrowing	due	to	changes	in	spot	exchange	rates	and	to	record	interest	income	at	the	interest	rate	implicit in	the	derivative.	This	hedge	had	no	material	ineffectiveness	in	2007	or	2006.

								Several	of	Aon's	subsidiaries	have	negotiated	outsourcing	service	agreements	in	currencies	that	differ	from	their	functional	currencies;	primarily	the	Philippine Peso	and	the	Indian	Rupee.	The	subsidiary's	functional	currency	expense	will	fluctuate	as	the	currency	exchange	rates	change.	To	reduce	this	variability,	Aon	uses foreign	exchange	forwards	to	hedge	the	foreign	exchange	risk	of	the	forecasted	expense	for	the	life	of	the	contract	or	up	to	six	years.	Aon	has	designated	these derivatives	as	cash	flow	hedges	of	its	forecasted	foreign	currency	denominated	expense.	As	of	December	31,	2007,	a	$3	million	pretax	gain	has	been	deferred	to	OCI, $1	million	of	which	is	expected	to	be	reclassified	to	earnings	as	an	adjustment	to	other	general	expenses	in	2008.	Deferred	gains	or	losses	will	be	reclassified	from	OCI to	other	general	expenses	when	the	hedged	revenue	is	recognized.	The	hedge	did	not	have	any	ineffectiveness	in	2007.

# Interest	Rate	Risk	Management

								Aon	enters	into	receive-fixed-pay-floating	interest	rate	swaps	which	are	designated	as	cash	flow	hedges	of	the	interest	rate	risk	of	a	portion	of	Aon's	U.S.	dollar	and Euro	denominated	brokerage	funds	held	on	behalf	of	U.S.,	European,	and	U.K.	clients	and	other	U.S.,	European,	and	U.K.	operating	funds.	Forecasted	deposit	balances are	hedged	up	to	a	maximum	of	three	years	into	the	future.	Changes	in	the	fair	value	of	the	swaps	are	recorded	in	OCI	and	will	be	reclassified	to	earnings	as	an adjustment	to	investment	income	over	the	term	of	the	swap.	As	of	December	31,	2007,	a	$16	million	pretax	gain	related	to	this	hedge	was	recorded	in	OCI,	$2	million	of which	is	expected	to	be	reclassified	to	investment	income	in	2008.	This	hedge	had	no	material	ineffectiveness	in	2007	or	2006.

# Premium	Financing	Operations

								Certain	of	Aon's	U.S.,	U.K.,	Canadian	and	Australian	subsidiaries	originate	short-term	loans	(generally	with	terms	of	12	months	or	less)	to	businesses	to	finance their	insurance	premium	obligations,	and	then	sell	these	premium	finance	agreements	in	securitization	transactions	that	meet	the	criteria	for	sale	accounting	under	FASB Statement	No.	140,	Accounting	for	Transfers	and	Servicing	of	Financial	Assets	and	Extinguishment	of	Liabilities.	These	sales	involve	SPEs,	which	are	considered qualified	special	purpose	entities	("QSPEs")	according	to	Statement	No.	140	and	multi-seller,	non-qualified	bank	commercial	paper	conduit	SPEs	("Bank	SPEs")	that	are variable	interest	entities

according	to	FIN	46.	Statement	No.	140	provides	that	a	QSPE	should	not	be	consolidated	in	the	financial	statements	of	a	transferor	or	its	affiliates	(Aon's	subsidiaries).

								The	Company	has	analyzed	qualitative	and	quantitative	factors	related	to	Aon	subsidiaries'	interests	in	the	Bank	SPEs	and	has	determined	that	these	subsidiaries are	not	the	sponsors	of	the	Bank	SPEs.	Additionally,	independent	third	parties	(i)	have	made	substantial	equity	investments	in	the	Bank	SPEs,	(ii)	have	voting	control	of the	Bank	SPEs,	and	(iii)	generally	bear	the	risks	and	rewards	of	ownership	of	the	assets	of	the	Bank	SPEs.	Aon	has	concluded	that	non-consolidation	of	the	Bank	SPEs is	appropriate	in	accordance	with	FIN	46	given	that	the	subsidiaries	do	not	have	significant	variable	interests.

								Through	the	securitization	agreements,	Aon,	or	one	of	its	QSPEs,	sells	undivided	interests	in	specified	premium	finance	agreements	to	the	Bank	SPEs.	The aggregate	amount	advanced	on	premium	finance	agreements	sold	to	the	Bank	SPEs	at	any	one	time	is	limited	by	the	securitization	agreements	to	a	maximum	of $1.8	billion	at	both	December	31,	2007	and	2006.	The	Bank	SPEs	had	advanced	$1.5	billion	and	$1.7	billion	at	December	31,	2007	and	2006,	respectively.	The origination	and	sale	of	eligible	premium	finance	agreements	that	are	sold	to	the	Bank	SPEs	increase	available	advances,	and	collections	(administered	by	Aon)	on previously	sold	agreements	reduce	available	advances.

								Aon	records	gains	associated	with	the	sale	of	receivables.	When	Aon	calculates	the	gains,	all	anticipated	fees	related	to	this	facility	are	included.	The	gains	included in	commissions,	fees	and	other	in	the	consolidated	statements	of	income	were	$64	million,	$63	million	and	$65	million	for	the	years	ended	December	31,	2007,	2006 and	2005,	respectively.

								Aon	records	at	fair	value	its	retained	interest	in	the	sold	premium	finance	agreements,	and	reports	it	in	receivables	in	the	consolidated	statements	of	financial position.	Aon	also	retains	servicing	rights	for	sold	agreements	and	earns	servicing	fee	income	over	the	servicing	period.	The	servicing	fees	are	included	in	the	gain/loss calculation.	At	December	31,	2007	and	2006,	the	fair	value	of	the	servicing	rights	approximates	the	estimated	costs	to	service	the	receivables	and	accordingly,	Aon	has not	recorded	any	servicing	assets	or	liabilities	related	to	this	servicing	activity.

								Aon	estimates	fair	value	by	discounting	estimated	future	cash	flows	from	its	retained	interest	in	the	sold	receivables	using	discount	rates	that	approximate	current market	rates	and	expected	future	prepayment	rates.

								The	Bank	SPEs	bear	the	credit	risks	on	the	receivables,	subject	to	limited	recourse	in	the	form	of	over-collateralization	required	on	the	sale	of	the	receivables.

								All	but	the	Australian	facility	require	Aon	to	maintain	consolidated	net	worth,	as	defined,	of	at	least	$2.5	billion,	consolidated	EBITDA	to	consolidated	net	interest of	at	least	4	to	1	and	consolidated	indebtedness	to	consolidated	EBITDA	of	no	more	than	3	to	1.

								Aon	intends	to	renew	the	conduit	facilities	when	they	expire.	If	there	were	adverse	bank,	regulatory,	tax	or	accounting	rule	changes,	Aon's	access	to	the	conduit facilities	and	special	purpose	vehicles	would	be	restricted.	Following	the	appropriate	accounting	standards,	these	special	purpose	vehicles	are	not	included	in	Aon's consolidated	financial	statements.

								Accounting	standards	require	the	disclosure	of	fair	values	for	certain	financial	instruments.	The	fair	value	disclosures	are	not	intended	to	encompass	various	other non-financial	instruments	or	other	intangible	assets	related	to	Aon's	business.	Accordingly,	care	should	be	exercised	in	deriving	conclusions	about	Aon's	business	or financial	condition	based	on	the	fair	value	disclosures.	The	basis	for	determining	the	fair	value	of	financial	instruments	is	discussed	in	Note	1.	The	carrying	value approximates	or	equals	fair	value	for	the	following	instruments:	cash,	receivables,	short-term

investments,	fixed	maturity	investments,	equity	securities,	other	investments,	derivative	assets	and	liabilities,	insurance	premiums	payable,	short-term	debt	and	accounts payable	and	accrued	liabilities.	The	following	table	discloses	the	Company's	financial	instruments	where	the	carrying	amounts	and	fair	values	differ:

|  | Carrying<br>Value | Fair<br>Value | Carrying<br>Value | Fair<br>Value |
| :--- | :--- | :--- | :--- | :--- |
| Long-term\tdebt | $1,893 | $1,920 | $2,243 | $2,561 |

# Guarantees	and	Indemnifications

								Aon	provides	a	variety	of	guarantees	and	indemnifications	to	its	customers	and	others.	The	maximum	potential	amount	of	future	payments	represents	the	notional amounts	that	could	become	payable	under	the	guarantees	and	indemnifications	if	there	were	a	total	default	by	the	guaranteed	parties,	without	consideration	of	possible recoveries	under	recourse	provisions	or	other	methods.	These	amounts	may	bear	no	relationship	to	the	expected	future	payments,	if	any,	for	these	guarantees	and indemnifications.	Any	anticipated	amounts	payable	which	are	deemed	to	be	probable	and	estimable	are	accrued	in	Aon's	consolidated	financial	statements.

								Guarantees	associated	with	Aon's	limited	partnership	securitization	are	disclosed	in	Note	6.	Indemnities	related	to	discontinued	operations	are	disclosed	in	Note	5. Guarantees	with	respect	to	reinsurance	recoverables	associated	with	the	sale	of	AWG	are	disclosed	in	Note	9.

								Aon	and	its	subsidiaries	have	issued	letters	of	credit	to	cover	contingent	payments	of	approximately	$4	million	for	taxes	and	other	business	obligations	to	third parties.	Amounts	are	accrued	in	the	consolidated	financial	statements	for	these	letters	of	credit	to	the	extent	they	are	probable	and	estimable.

								Aon	has	certain	contractual	contingent	guarantees	for	premium	payments	owed	by	clients	to	certain	insurance	companies.	Costs	associated	with	these	guarantees,	to the	extent	estimable	and	probable,	are	provided	in	Aon's	allowance	for	doubtful	accounts.	The	maximum	exposure	with	respect	to	such	contractual	contingent	guarantees was	approximately	$15	million	at	December	31,	2007.

								Aon	expects	that	as	prudent	business	interests	dictate,	additional	guarantees	and	indemnifications	may	be	issued	from	time	to	time.

# 14.		Goodwill	and	Other	Intangible	Assets

								Goodwill	represents	the	excess	of	cost	over	the	fair	market	value	of	the	net	assets	acquired.	Goodwill	is	allocated	to	various	reporting	units,	which	are	one	reporting level	below	the	operating	segment.	Goodwill	is	not	amortized	but	is	instead	subject	to	impairment	testing	at	least	annually.	The	impairment	testing	requires	Aon	to compare	the	fair	value	of	its	reporting	units	to	their	carrying	value	to	determine	if	there	is	potential	impairment	of	goodwill.	If	the	fair	value	of	a	reporting	unit	is	less than	its	carrying	value	at	the	valuation	date,	an	impairment	loss	would	be	recorded	to	the	extent	that	the	implied	fair	value	of	the	goodwill	within	the	reporting	unit	is less	than	the	recorded	amount	of	goodwill.	Fair	value	is	estimated	based	on	various	valuation	approaches.	In	the	fourth	quarter	2007	and	2006,	Aon	completed	its	annual impairment	review	that	affirmed	there	was	no	impairment	as	of	October	1	(the	annual	evaluation	date).

								When	a	business	entity	is	sold,	goodwill	is	allocated	to	the	disposed	entity	based	on	the	fair	value	of	that	entity	compared	to	the	fair	value	of	the	reporting	unit	in which	it	is	included.

								The	changes	in	the	net	carrying	amount	of	goodwill	by	operating	segment	for	the	years	ended	December	31,	2007	and	2006,	respectively,	are	as	follows:

| (millions) | Brokerage<br>Services | Consulting | Total |
| :--- | :--- | :--- | :--- |
| Balance\tas\tof\tJanuary\t1,\t2007 | $4,142 | $379 | $4,521 |
| Goodwill\tacquired | 155 | 1 | 156 |
| Goodwill\trelated\tto\tdisposals | (11) | — | (11) |
| Foreign\tcurrency\trevaluation | 261 | 8 | 269 |
| Balance\tas\tof\tDecember\t31,\t2007 | $4,547 | $388 | $4,935 |
| Balance\tas\tof\tJanuary\t1,\t2006 | $3,753 | $378 | $4,131 |
| Goodwill\tacquired | 124 | 1 | 125 |
| Goodwill\trelated\tto\tdisposals | (11) | — | (11) |
| Foreign\tcurrency\trevaluation | 276 | — | 276 |
| Balance\tas\tof\tDecember\t31,\t2006 | $4,142 | $379 | $4,521 |

								Other	intangible	assets	are	classified	into	two	categories:

•"Customer	Related	and	Contract	Based"	include	client	lists	as	well	as	non-compete	covenants,	and

•"Marketing,	Technology	and	Other"	are	all	other	purchased	intangibles	not	included	in	the	preceding	categories.

								Other	intangible	assets	by	asset	class	are	as	follows:

| (millions) | Customer<br>Related	and<br>Contract	Based | Marketing,<br>Technology<br>and	Other | Total |
| :--- | :--- | :--- | :--- |
| As\tof\tDecember\t31,\t2007 |  |  |  |
| Gross\tcarrying\tamount | $206 | $332 | $538 |
| Accumulated\tamortization | 168 | 166 | 334 |
| Net\tcarrying\tamount | $38 | $166 | $204 |
| As\tof\tDecember\t31,\t2006 |  |  |  |
| Gross\tcarrying\tamount | $232 | $245 | $477 |
| Accumulated\tamortization | 203 | 129 | 332 |
| Net\tcarrying\tamount | $29 | $116 | $145 |

								The	cost	of	other	intangible	assets	is	being	amortized	over	a	range	of	2	to	10	years,	with	a	weighted	average	original	life	of	8	years.	Amortization	expense	for intangible	assets	for	the	years	ending	December	31,	2008,	2009,	2010,	2011	and	2012	is	estimated	to	be	$37	million,	$35	million,	$32	million,	$28	million	and $20	million,	respectively.

								When	impairment	indicators	arise,	Aon	assesses	the	recoverability	of	its	intangible	assets	through	an	analysis	of	expected	future	cash	flows.

								Aon	and	its	subsidiaries	are	subject	to	numerous	claims,	tax	assessments,	lawsuits	and	proceedings	that	arise	in	the	ordinary	course	of	business.	The	damages claimed	in	these	matters	are	or	may	be	substantial,	including,	in	many	instances,	claims	for	punitive,	treble	or	extraordinary	damages.	Aon	has	purchased	errors	and omissions	("E&O")	insurance	and	other	appropriate	insurance	to	provide	protection	against	losses	that	arise	in	such	matters.	Accruals	for	these	items,	and	related insurance	receivables,	when	applicable,	have	been	provided	to	the	extent	that	losses	are	deemed	probable	and	are	reasonably	estimable.	These	accruals	and	receivables are	adjusted	from	time	to	time	as	developments	warrant.	Amounts	related	to	settlement	provisions	are	recorded	in	other	general	expenses	in	the	consolidated	statements of	income.

								In	2004,	Aon,	other	insurance	brokers,	insurers	and	numerous	other	industry	participants	received	subpoenas	and	other	requests	for	information	from	the	office	of the	Attorney	General	of	the	State	of	New	York	and	from	other	states	relating	to	certain	practices	in	the	insurance	industry.	On	March	4,	2005,	Aon	entered	into	an agreement	(the	"Settlement	Agreement")	with	the	Attorney	General	of	the	State	of	New	York,	the	Superintendent	of	Insurance	of	the	State	of	New	York,	the	Attorney General	of	the	State	of	Connecticut,	the	Illinois	Attorney	General	and	the	Director	of	the	Division	of	Insurance,	Illinois	Department	of	Financial	and	Professional Regulation	(collectively,	the	"State	Agencies")	to	resolve	all	the	issues	related	to	investigations	conducted	by	the	State	Agencies.	The	2005	Settlement	Agreement,	under which	Aon	distributed	funds	to	certain	clients	and	implemented	business	reforms,	has	been	described	in	detail	in	Aon's	previous	financial	filings.	Aon	has	also	entered into	a	comprehensive	settlement	agreement,	under	the	auspices	of	the	NAIC,	with	numerous	other	states	that	incorporate	these	same	business	reforms.

								Following	inquiries	from	regulators,	the	Company	commenced	an	internal	review	of	its	compliance	with	certain	U.S.	and	non-U.S.	anti-bribery	laws,	including	the U.S.	Foreign	Corrupt	Practices	Act	("FCPA").	An	outside	law	firm	with	significant	experience	in	the	area	is	overseeing	the	review.	Certain	governmental	agencies, including	the	U.K.	Financial	Services	Authority,	the	City	of	London	police,	the	U.S.	Securities	and	Exchange	Commission,	and	the	U.S.	Department	of	Justice,	are	also investigating	these	matters.	Aon	is	fully	cooperating	with	these	investigations,	and	has	agreed	with	the	U.S.	agencies	to	toll	any	applicable	statute	of	limitations	pending completion	of	the	investigations.	Based	on	current	information,	the	Company	is	unable	to	predict	at	this	time	when	these	matters	will	be	concluded,	or	what	regulatory	or other	outcomes	may	result.

# 16.		Segment	Information

								Aon	classifies	its	businesses	into	two	operating	segments:	Risk	and	Insurance	Brokerage	Services	and	Consulting.	Unallocated	income	and	expenses,	when combined	with	the	operating	segments	and	after	the	elimination	of	intersegment	revenues,	totals	to	the	amounts	in	the	accompanying	consolidated	financial	statements. Results	relating	to	Aon's	accident,	health	and	life	operations,	which	were	previously	reported	in	a	separate	Insurance	Underwriting	segment,	have	been	reclassified	to discontinued	operations	for	all	periods	presented.	The	remaining	operations	that	were	previously	reported	in	the	Insurance	Underwriting	segment,	which	relate	to property	and	casualty	insurance	that	is	in	runoff,	are	now	included	in	unallocated	income	and	expense	for	all	periods	presented.

								The	accounting	policies	of	the	operating	segments	are	the	same	as	those	described	in	Note	1,	except	that	the	disaggregated	financial	results	have	been	prepared using	a	management	approach,	which	is	consistent	with	the	basis	and	manner	in	which	Aon	senior	management	internally	disaggregates	financial	information	for	the purposes	of	assisting	in	making	internal	operating	decisions.	Aon	evaluates	performance	based	on	stand-alone	operating	segment	income	before	income	taxes	and generally	accounts	for	intersegment	revenue	as	if	the	revenue	were	from	third	parties,	that	is,	considered	by	management	to	be	at	current	market	prices.

								Revenues	are	generally	attributed	to	geographic	areas	based	on	the	location	of	the	resources	producing	the	revenues.	Intercompany	revenues	and	expenses	are eliminated	in	computing	consolidated	revenues	and	other	general	expenses.

								Consolidated	revenue	by	geographic	area	is	as	follows:

| (millions) | Total | United	States | Americas	other<br>than	U.S. | United	Kingdom | Middle	East,<br>&amp;	Africa | Asia<br>Pacific |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31 |  |  |  |  |  |  |
| 2007 | $7,471 | $2,855 | $809 | $1,305 | $1,876 | $626 |
| 2006 | 6,881 | 2,789 | 723 | 1,172 | 1,636 | 561 |
| 2005 | 6,651 | 2,726 | 646 | 1,226 | 1,530 | 523 |

								The	Risk	and	Insurance	Brokerage	Services	segment	consists	principally	of	Aon's	retail	and	reinsurance	brokerage	operations,	as	well	as	related	insurance	services, including	underwriting	management,	captive	insurance	company	management	services,	and	premium	financing.

								The	Consulting	segment	provides	a	broad	range	of	consulting	services.	These	services	are	delivered	predominantly	to	corporate	clientele	utilizing	two	subsegments (Consulting	Services	and	Outsourcing)	that	operate	in	the	following	practice	areas:	Consulting	Services—employee	benefits,	compensation,	management	consulting, communications,	strategic	human	resource	consulting	and	financial	advisory	and	litigation	consulting,	and	Outsourcing—human	resource	outsourcing.

# 								Revenue	by	subsegment	is	as	follows:

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Risk\tmanagement\tand\tinsurance\tbrokerage: |  |  |  |
| Americas | $2,405 | $2,319 | $2,139 |
| United\tKingdom | 815 | 732 | 792 |
| Europe,\tMiddle\tEast\t&amp;\tAfrica | 1,375 | 1,177 | 1,150 |
| Asia\tPacific | 506 | 478 | 441 |
| Reinsurance\tbrokerage\tand\trelated\tservices | 958 | 922 | 845 |
| Total\tRisk\tand\tInsurance\tBrokerage\tServices | 6,059 | 5,628 | 5,367 |
| Consulting\tservices | 1,117 | 989 | 981 |
| Outsourcing | 235 | 293 | 274 |
| Total\tConsulting | 1,352 | 1,282 | 1,255 |
| Intersegment\trevenues | (29) | (59) | (46) |
| Total\toperating\tsegments | 7,382 | 6,851 | 6,576 |
| Unallocated\tincome | 89 | 30 | 75 |
| Total\trevenue | $7,471 | $6,881 | $6,651 |

								Selected	information	for	Aon's	operating	segments	is	as	follows:

# Risk	and	Insurance

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Revenue\tby\tgeographic\tarea: |  |  |  |  |  |  |
| United\tStates | $2,159 | $2,133 | $1,982 | $657 | $708 | $730 |
| Americas,\tother\tthan\tU.S. | 661 | 586 | 530 | 121 | 113 | 100 |
| United\tKingdom | 1,036 | 946 | 1,021 | 275 | 228 | 206 |
| Europe,\tMiddle\tEast\t&amp;\tAfrica | 1,636 | 1,439 | 1,344 | 240 | 197 | 186 |
| Asia\tPacific | 567 | 524 | 490 | 59 | 36 | 33 |
| Total\trevenues\t(1) | 6,059 | 5,628 | 5,367 | 1,352 | 1,282 | 1,255 |
| Compensation\tand\tbenefits | 3,498 | 3,362 | 3,253 | 823 | 811 | 780 |
| Other\tgeneral\texpenses\t(2) | 1,524 | 1,425 | 1,412 | 340 | 351 | 365 |
| Total\texpenses | 5,022 | 4,787 | 4,665 | 1,163 | 1,162 | 1,145 |
| Income\tbefore\tincome\ttax | $1,037 | $841 | $702 | $189 | $120 | $110 |
| Identifiable\tassets\tat\tDecember\t31 | $12,783 | $12,869 | $12,500 | $305 | $348 | $319 |

(1) Excludes	the	elimination	of	intersegment	revenues	and	expenses	of	$29	million,	$59	million	and	$46	million	for	2007,	2006	and	2005,	respectively.

(2) Includes	depreciation	and	amortization	expense.

								Unallocated	income	consists	of	investment	income	from	equity,	fixed-maturity	and	short-term	investments.	These	investments	may	also	include	non-income producing	equities.

								Unallocated	expenses	include	administrative	costs	not	attributable	to	the	operating	segments,	such	as	corporate	governance	costs.	Interest	expense	represents	the cost	of	worldwide	debt	obligations.

								Aon	has	ceased	writing	property	and	casualty	insurance.	Property	&	Casualty	represents	revenue	and	related	expenses	of	the	remaining	runoff	operations.

								A	reconciliation	of	segment	income	before	tax	to	income	from	continuing	operations	before	provision	for	income	tax	is	as	follows:

# (millions)				Years	ended	December	31

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Risk\tand\tInsurance\tBrokerage\tServices | $1,037 | $841 | $702 |
| Consulting | 189 | 120 | 110 |
| Segment\tincome\tbefore\tincome\ttax | 1,226 | 961 | 812 |
| Unallocated\tinvestment\tincome | 81 | 15 | 5 |
| Unallocated\texpenses | (132) | (106) | (112) |
| Property\t&amp;\tCasualty\t—\trevenue | 8 | 15 | 70 |
| Property\t&amp;\tCasualty\t—\texpenses | (21) | (93) | (73) |
| Interest\texpense | (138) | (129) | (125) |
| Income\tfrom\tcontinuing\toperations\tbefore\tprovision\tfor\tincome\ttax | $1,024 | $663 | $577 |

| (millions)				Years	ended	December	31 | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| Risk\tand\tInsurance\tBrokerage\tServices\t(primarily\tshort-term\tinvestments) | $206 | $196 | $129 |
| Consulting\t(primarily\tshort-term\tinvestments) | 9 | 5 | 4 |
| Unallocated\t(primarily\tequity,\tother\tinvestments\tand\tlimited\tpartnerships) | 86 | 20 | 11 |
| Total\tinvestment\tincome | $301 | $221 | $144 |

# 17.		Quarterly	Financial	Data	(Unaudited)

								Selected	quarterly	financial	data	for	the	years	ended	December	31,	2007	and	2006	are	as	follows	(in	millions,	except	per	share	data):

# SCHEDULE	I

# (Parent	Company)

# CONDENSED	STATEMENTS	OF	FINANCIAL	POSITION

| (millions) | 2007 | 2006 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Investments\tin\tsubsidiaries | $6,590 | $5,925 |
| Other\tinvestments | 242 | 317 |
| Notes\treceivable\t—\tsubsidiaries | 235 | 40 |
| Cash\tand\tcash\tequivalents | 817 | 994 |
| Other\tassets | 236 | 199 |
| Total\tAssets | $8,120 | $7,475 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY |  |  |
| LIABILITIES |  |  |
| Subordinated\tdebt | $726 | $726 |
| Notes\tpayable\t—\tsubsidiaries | 642 | 390 |
| 7.375%\tlong-term\tdebt\tsecurities | 224 | 224 |
| 3.5%\tlong-term\tdebt\tsecurities | — | 297 |
| 6.2%\tlong-term\tdebt\tsecurities | — | 250 |
| Accrued\texpenses\tand\tother\tliabilities | 307 | 370 |
| Total\tLiabilities | 1,899 | 2,257 |
| STOCKHOLDERS'\tEQUITY |  |  |
| Common\tstock | 361 | 347 |
| Additional\tpaid-in\tcapital | 3,064 | 2,583 |
| Accumulated\tother\tcomprehensive\tloss | (726) | (1,010) |
| Retained\tearnings | 5,607 | 4,992 |
| Less\ttreasury\tstock\tat\tcost | (2,085) | (1,694) |
| Total\tStockholders'\tEquity | 6,221 | 5,218 |
| Total\tLiabilities\tand\tStockholders'\tEquity | $8,120 | $7,475 |

See	notes	to	condensed	financial	statements.

# (Continued)

# CONDENSED	STATEMENTS	OF	INCOME

| (millions) | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| REVENUE |  |  |  |
| Dividends\tfrom\tsubsidiaries | $520 | $1,139 | $915 |
| Other\tinvestment\tincome | 105 | 31 | 21 |
| Total\tRevenue | 625 | 1,170 | 936 |
| EXPENSES |  |  |  |
| Operating\tand\tadministrative | 12 | 4 | 12 |
| Interest\t—\tsubsidiaries | 36 | 31 | 26 |
| Interest\t—\tother | 86 | 104 | 111 |
| Total\tExpenses | 134 | 139 | 149 |
| INCOME\tBEFORE\tINCOME\tTAXES\tAND\tEQUITY\tIN\tUNDISTRIBUTED\tINCOME\tOF\tSUBSIDIARIES | 491 | 1,031 | 787 |
| Income\ttax\tbenefit | 12 | 43 | 51 |
|  | 503 | 1,074 | 838 |
| EQUITY\tIN\tUNDISTRIBUTED\tINCOME\tOF\tSUBSIDIARIES | 361 | (354) | (103) |
| NET\tINCOME | $864 | $720 | $735 |

# CONDENSED	STATEMENTS	OF	CASH	FLOWS

|  | 2007 | 2006 | 2005 |
| :--- | :--- | :--- | :--- |
| (millions) |  |  |  |
| Cash\tFlows\tFrom\tOperating\tActivities | $507 | $855 | $929 |
| Cash\tFlows\tFrom\tInvesting\tActivities: |  |  |  |
| Investments\tin\tsubsidiaries | 144 | 701 | 93 |
| Other\tinvestments | 60 | (41) | (5) |
| Notes\treceivables\tfrom\tsubsidiaries | (186) | (14) | 39 |
| Cash\tProvided\tby\tInvesting\tActivities | 18 | 646 | 127 |
| Cash\tFlows\tFrom\tFinancing\tActivities: |  |  |  |
| Treasury\tstock\ttransactions\t—\tnet | (523) | (966) | (25) |
| Issuance\tof\tcommon\tstock | 28 | 50 | 76 |
| Redemption\tof\tpreferred\tstock | — | — | (50) |
| Issuance\tof\tnotes\tpayable\tand\tlong-term\tdebt | — | 1 | — |
| Repayment\tof\tnotes\tpayable\tand\tlong-term\tdebt | (250) | — | (250) |
| Notes\tpayable\tto\tsubsidiaries | 219 | (240) | (25) |
| Cash\tdividends\tto\tstockholders | (176) | (189) | (193) |
| Cash\tUsed\tby\tFinancing\tActivities | (702) | (1,344) | (467) |
| Increase\t(Decrease)\tin\tCash\tand\tCash\tEquivalents | (177) | 157 | 589 |
| Cash\tand\tCash\tEquivalents\tat\tBeginning\tof\tYear | 994 | 837 | 248 |
| Cash\tand\tCash\tEquivalents\tat\tEnd\tof\tYear | $817 | $994 | $837 |

# NOTES	TO	CONDENSED	FINANCIAL	STATEMENTS

(1) See	notes	to	consolidated	financial	statements	included	in	Item	15(a).

(2) Investments	in	subsidiaries	include	approximately	$3.3	billion	invested	in	countries	outside	of	the	U.S.,	primarily	denominated	in	the	British	Pound,	the	Euro, the	Canadian	dollar	and	the	Australian	dollar.

Aon	provides	a	variety	of	guarantees	and	indemnifications	to	its	customers	and	others	to	allow	Aon	or	others	to	complete	a	wide	variety	of	business	transactions. The	maximum	potential	amount	of	future	payments	represents	the	notional	amounts	that	could	become	payable	under	the	guarantees	and	indemnifications	if there	were	a	total	default	by	the	guaranteed	parties,	without	consideration	of	possible	recoveries	under	recourse	provisions	or	other	methods.	These	amounts	may bear	no	relationship	to	the	expected	future	payments,	if	any,	for	these	guarantees	and	indemnifications.	Aon	does	not	currently	anticipate	making	future	payments to	any	of	its	subsidiaries,	or	third	parties	on	behalf	of	its	subsidiaries,	for	these	guarantees	and	indemnifications.

A	bank	provides	overdraft	facilities	for	certain	of	Aon's	foreign	subsidiaries.	Aon	has	guaranteed	repayment	of	these	facilities	in	the	unlikely	event	that	the foreign	subsidiaries	are	unable	to	repay.	Aon	has	also	issued	guarantees	and/or	other	letters	of	support	for	various	bank	lines	and	various	other	credit	facilities for	certain	of	its	foreign	operations	(including	the	Euro	credit	facility	discussed	in	Note	7	to	the	consolidated	financial	statements).	Aon's	maximum	potential liability	with	regard	to	these	exposures	was	$795	million	at	December	31,	2007.

As	of	November	30,	2006	in	connection	with	the	sale	of	AWG,	Aon	sold	VSC.	VSC	will	continue	to	remain	liable	to	policyholders	to	the	extent	reinsurers	of	the property	and	casualty	business	do	not	meet	their	obligations.	As	a	result,	at	both	December	31,	2007	and	December	31,	2006,	Aon	no	longer	reports	reinsurance recoverables	related	to	its	property	and	casualty	business,	which	was	not	part	of	the	sale	of	AWG.	Aon	has	provided	a	corporate	guarantee	with	respect	to	these reinsurance	recoverables,	which	amounts	to	$846	million	at	December	31,	2007.

Aon	has	a	liability	for	its	commitment	to	contribute	$6	million	to	the	Aon	Memorial	Education	Fund	to	support	the	educational	needs	of	the	children	of	Aon employees	who	were	victims	of	the	September	11,	2001	attacks.

Aon	has	guaranteed	the	obligations	of	one	of	its	major	Netherlands'	subsidiaries	through	2007.	Management	believes	there	is	sufficient	operating	cash	flow, liquidity	and	equity	at	this	subsidiary	to	cover	current	obligations	and	future	obligations	as	they	come	due.

Aon	has	issued	various	other	guarantees	for	miscellaneous	purposes	at	its	international	subsidiaries	for	$19	million.

# Item	9.				Changes	in	and	Disagreements	with	Accountants	on	Accounting	and	Financial	Disclosure.

# Item	9A.				Controls	and	Procedures.

# Disclosure	Controls	and	Procedures

								The	Registrant	has	established	disclosure	controls	and	procedures	to	ensure	that	material	information	relating	to	the	Registrant,	including	its	consolidated subsidiaries,	is	made	known	to	the	officers	who	certify	the	Registrant's	financial	reports	and	to	other	members	of	senior	management	and	the	Board	of	Directors.

								Based	on	their	evaluation	as	of	December	31,	2007,	the	principal	executive	officer	and	principal	financial	officer	of	the	Registrant	concluded	that	the	Registrant's disclosure	controls	and	procedures	(as	defined	in	Rules	13a-15(e)	and	15d-15(e)	under	the	Securities	Exchange	Act	of	1934,	as	amended	(the	"Exchange	Act"))	were effective	as	of	the	end	of	the	period	covered	by	this	report	to	ensure	that	the	information	required	to	be	disclosed	by	the	Registrant	in	reports	that	it	files	or	submits	under the	Exchange	Act	is	recorded,	processed,	summarized	and	reported	within	the	time	periods	specified	by	the	SEC	rules	and	forms.

								During	the	quarter	ended	December	31,	2007,	there	were	no	significant	changes	in	the	Registrant's	internal	control	over	financial	reporting	(as	defined	in	Rule	13a- 15(f)	of	the	Exchange	Act)	that	have	materially	affected,	or	are	reasonably	likely	to	materially	affect,	the	Registrant's	internal	control	over	financial	reporting.

								Information	regarding	management's	report	on	the	Registrant's	Internal	Control	Over	Financial	Reporting	is	set	forth	in	Part	II,	Item	8	of	this	Report	and	is incorporated	by	reference	herein.

# Item	9B.				Other	Information.

# PART	III

# Item	10.				Directors,	Executive	Officers	and	Corporate	Governance.

								Information	relating	to	Aon's	Directors	is	set	forth	under	the	heading	"Proposal	1	—	Election	of	Directors"	in	our	Proxy	Statement	for	the	2008	Annual	Meeting	of Stockholders	to	be	held	on	May	16,	2008	(the	"Proxy	Statement")	and	is	incorporated	herein	by	reference	from	the	Proxy	Statement.	Information	relating	to	the executive	officers	of	Aon	is	set	forth	following	Item	4	of	Part	I	of	this	Form	10-K	and	is	incorporated	herein	by	reference.	The	remaining	information	called	for	by	this item	is	incorporated	herein	by	reference	to	the	information	under	the	heading	"Corporate	Governance"	and	the	information	under	the	heading	"Board	of	Directors	and Committees"	in	the	Proxy	Statement.	Information	relating	to	compliance	with	Section	16(a)	of	the	Securities	Exchange	Act	of	1934,	as	amended,	is	incorporated	by reference	from	the	discussion	under	the	heading	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance"	in	the	Proxy	Statement.

# Item	11.				Executive	Compensation.

								Information	relating	to	director	and	executive	officer	compensation	is	set	forth	under	the	headings	"Director	Compensation,"	"Compensation	Discussion	and Analysis,"	"Compensation	Committee	Report,"	"Executive	Compensation,"	and	"Potential	Payments	on	Termination	or	Change-in-Control"	of	the	Proxy	Statement,	and all	such	information	is	incorporated	herein	by	reference	from	the	Proxy	Statement.

								The	material	incorporated	herein	by	reference	to	the	information	set	forth	under	the	heading	"Compensation	Committee	Report"	in	the	Proxy	Statement	shall	be deemed	furnished,	and	not	filed,	in	this	Form	10-K	and	shall	not	be	deemed	incorporated	by	reference	into	any	filing	under	the	Securities	Act	of	1933,	as	amended,	or the	Securities	Exchange	Act	of	1934,	as	amended,	as	a	result	of	this	furnishing,	except	to	the	extent	that	it	is	specifically	incorporated	by	reference	by	Aon.

								Information	relating	to	compensation	committee	interlocks	and	insider	participation	is	incorporated	by	reference	to	the	information	under	the	heading	"Board	of Directors	and	Committees"	in	the	Proxy	Statement.

# Item	12.				Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters.

								The	following	table	summarizes	the	number	of	shares	of	our	common	stock	that	may	be	issued	under	our	equity	compensation	plans	as	of	December	31,	2007.

# (1) This	amount	includes	the	following:

•26,150,848	shares	that	may	be	issued	in	connection	with	outstanding	stock	options;

•14,025,631	shares	that	may	be	issued	in	connection	with	stock	awards;

•447,048	shares	that	may	be	issued	in	connection	with	directors'	compensation;

•1,148,468	shares	that	may	be	issued	in	connection	with	deferred	stock	awards;

•27,570	shares	that	may	be	issued	in	connection	with	deferred	stock	options;

•869,974	shares	that	may	be	issued	to	satisfy	obligations	under	the	Aon	Deferred	Compensation	Plan;	and

•4,860,013	shares	(assuming	a	maximum	payout)	that	may	be	issued	in	connection	with	the	settlement	of	performance	share	units.

(2) On	November	1,	2002,	the	Aon	Deferred	Compensation	Plan	was	amended	to	discontinue	the	distribution	of	shares	with	respect	to	deferrals	after	November	1, 2002	from	the	Plan.	As	of	December	31,	2007,	based	on	a	stock	price	of	$47.69,	the	maximum	number	of	shares	that	could	be	issued	under	the	Aon	Deferred Compensation	Plan	was	869,974.

(3) Indicates	weighted	average	exercise	price	for	26,150,848	outstanding	options	under	the	Aon	Stock	Incentive	Plan.

(4) The	total	number	of	shares	of	stock	authorized	for	issuance	in	connection	with	awards	under	the	Aon	Stock	Incentive	Plan	and	any	pre-existing	plans	is	18%	of total	outstanding	common	shares.	As	of	December	31,	2007,	9,795,354	shares	remained	according	to	such	calculation.	The	amount	shown	in	column	(c)	also includes	1,686,554	shares	available	for	future	issuance	under	the	Aon	Employee	Stock	Purchase	Plan,	including	79,079	shares	subject	to	outstanding	options	for which	the	purchase	period	has	not	expired.	Permissible	awards	under	the	Aon	Stock	Incentive	Plan	include	stock	options,	stock	appreciation	rights,	restricted stock,	restricted	stock	units	and	other	stock-based	awards,	including	awards	the	vesting,	granting	or	settlement	of	which	is	contingent	upon	the	achievement	of specified	performance	goals,	called	"performance	awards."

(5) Below	are	the	material	features	of	our	equity	compensation	plans	that	have	not	been	approved	by	stockholders:

# Aon	U.K.	Sharesave	Scheme

The	Aon	U.K.	Sharesave	Scheme	(the	"U.K.	Scheme")	is	available	solely	to	employees	in	the	United	Kingdom.	Under	the	U.K.	Scheme,	employees	authorize Aon	to	deduct	a	specified	amount	from	compensation	each	pay	period	for	deposit	into	a	savings	account	for	a	three-year	term.	If	a	participant's	deductions continue	through	the	last	day	of	the	term,	the	participant	is	credited	with	a	tax-free	cash	bonus	equal	to	1.4	times	the	monthly	payroll	deduction.	Participants	may cease	participation	in	the	U.K.	Scheme	at	any	time	and	receive	their	deductions	back,	plus	accrued	interest.	Participants	are	also	granted	options	at	the	beginning of	each	savings	period	and	may	direct	Aon	to	purchase	or	issue	shares	of	Aon	common	stock	at	a	price	equal	to	85%	of	the	market	value	at	the	beginning	of	the period,	utilizing	the	accumulated	amounts	in	their	account.	Options	may	be	exercised	generally	within	six	months	after	the	last	day	of	the	term,	or	after	death, injury,	disability,	redundancy	or	retirement.	If	a	participant	ceases	to	be	employed	by	Aon	for	other	reasons,	or	declines	to	purchase	Aon	common	stock	during any	of	the	available	purchase	periods,	the	participant's	right	to	purchase	shares	of	Aon	common	stock	or	accumulate	additional	payroll	deductions	lapses.	The U.K.	Scheme	was	approved	by	the	Board	of	Directors	in	1999.	No	specific	authorization	of	shares	of	Aon	common	stock	for	the	U.K.	Scheme	has	been	made. As	of	December	31,	2007,	the	number	of	shares	that	could	be	issued	under	the	plan	was	271,233.

# Employee	Stock	Purchase	Plan	(The	Netherlands)

The	Netherlands	Employee	Stock	Purchase	Plan	provides	employees	of	Aon	and	participating	subsidiaries	in	the	Netherlands	the	opportunity	to	purchase	Aon common	stock	at	a	15%	discount.	Contributions	to	this	plan	are	made	through	payroll	deductions.	The	maximum	amount	is	not	more	than	15%	of	gross	annual income	with	a	maximum	of	U.S.	$10,000.	As	of	December	31,	2007,	the	number	of	shares	that	could	be	issued	under	the	plan	was	686	shares.

# Aon	Supplemental	Savings	Plan

The	Aon	Supplemental	Savings	Plan	(the	"Supplemental	Plan")	was	adopted	by	the	Board	of	Directors	(the	"Board")	in	1998.	It	is	a	nonqualified	supplemental retirement	plan	that	provides	benefits	to	participants	in	the	Aon	Savings	Plan	(the	"ASP")	whose	employer	matching	contributions	are	limited	because	of	IRS- imposed	restrictions.	Prior	to	January	1,	2004,	participants	covered	under	the	Supplemental	Plan	were	credited	with	an	additional	matching	allocation	they	would have	received	under	the	former	ASP	provisions	—	100%	of	the	first	1%	to	3%	of	compensation	("Tier	I")	and	75%	of	the	next	4%	to	6%	of	compensation ("Tier	2")	—	had	compensation	up	to	$500,000	been	considered.	Between	January	1,	2004	and	December	31,	2005,	only	participants	defined	as	employees	of Aon	Consulting's	Human	Resource	Outsourcing	Group	maintained	the	matching	provision	in	the	Supplemental	Plan.	Participants	may	elect	to	have	Tier	I allocations	credited	to	their	accounts	as	if	invested	in	a	money	market	account	or	as	if	invested	in	Aon	common	stock.	Tier	I	allocations	directed	to	an	Aon common	stock	account	may	not	be	moved	to	the	money	market	account,	regardless	of	the	participant's	age.	As	of	January	1,	2006,	no	participants	are	eligible	for Tier	I	or	Tier	II	matching	allocations.	Before	the	beginning	of	each	plan	year,	an	election	may	be	made	by	any	participant	to	transfer	some	or	all	of	a	participant's money	market	account	to	the	Aon	common	stock	account.	All	amounts	credited	to	the	Aon	common	stock	account	are	credited	with	dividends	and	other investment	returns	as	under	the	ASP	fund.

Effective	January	1,	2004,	a	new	Supplemental	Plan	provision	went	into	effect	whereby	employees	hired	January	1,	2004	and	later	are	immediately	eligible	for benefits	on	plan	compensation	above	the	IRS	limits	(and	up	to	$500,000)	under	the	Aon	Retirement	Account	(the	"ARA")	provision	of	the	ASP.	The	ARA replaces	benefits	that	would	have	been	instead	provided	under	the	Aon	Pension	Plan	had	it	not	been	frozen	to	new	entrants	(those	generally	hired	after December	31,

2003).	Benefits	are	in	the	form	of	a	discretionary	non-contributory	company	contribution	made	to	eligible	employees	active	at	the	end	of	the	plan	year	with 1,000	or	more	hours	of	paid	service.	The	Supplemental	Plan	ARA	allocation	is	calculated	using	the	same	formula	that	the	Board	determines	for	the	ASP	ARA. The	Supplemental	Plan	ARA	allocation	and	account	balances	will	track	the	same	investment	options	as	selected	by	the	participant	under	the	ASP	including	the Aon	common	stock	option.	However,	like	the	ASP	provision,	there	are	no	transfer	restrictions.

# Aon	Supplemental	Employee	Stock	Ownership	Plan

The	Aon	Supplemental	Employee	Stock	Ownership	Plan	was	a	plan	established	in	1989	as	a	nonqualified	supplemental	retirement	plan	that	provided	benefits	to participants	in	the	Aon	Employee	Stock	Ownership	Plan	whose	employer	contributions	were	limited	because	of	IRS-imposed	restrictions.	As	of	1998,	no additional	amounts	have	been	credited	to	participant	accounts,	although	account	balances	are	maintained	for	participants,	and	credited	with	dividends,	until distribution	is	required	under	the	plan.	Distributions	are	made	solely	in	Aon	common	stock.	No	specific	authorization	of	shares	of	Aon	common	stock	for	the plan	has	been	made.

# Awards	to	Gregory	C.	Case	Pursuant	to	Employment	Agreement

Pursuant	to	the	Employment	Agreement	between	Gregory	C.	Case	and	Aon,	dated	April	4,	2005,	the	terms	of	which	are	described	in	the	Proxy	Statement	under the	heading	"Executive	Compensation"	and	are	incorporated	herein	by	reference,	Mr.	Case	was	granted	certain	equity	compensation	awards	outside	of	the	Stock Incentive	Plan	as	inducement	for	his	employment	with	Aon.	Those	awards	consisted	of	125,000	restricted	stock	units	and	an	option	to	purchase	325,000	shares of	Aon	common	stock,	for	a	total	of	450,000	shares.

(6) The	weighted-average	exercise	price	of	such	shares	is	uncertain	and	is	not	included	in	this	column.

(7) None	of	these	equity	compensation	plans	contain	a	limit	on	the	number	of	shares	that	may	be	issued	under	such	plans;	however,	these	plans	are	subject	to	the limitations	set	forth	in	the	descriptions	of	these	plans	contained	in	footnote	5	above.

								Information	relating	to	the	security	owner	ownership	of	certain	beneficial	owners	of	Aon's	common	stock	is	set	forth	under	the	headings	"Principal	Holders	of Voting	Securities"	and	"Security	Ownership	of	Certain	Beneficial	Owners	and	Management"	in	the	Proxy	Statement	and	all	such	information	is	incorporated	herein	by reference.

# Item	13.				Certain	Relationships	and	Related	Transactions,	and	Director	Independence.

								Aon	hereby	incorporates	by	reference	the	information	under	the	headings	"Corporate	Governance	—	Director	Independence"	and	"Certain	Relationships	and Related	Transactions"	in	the	Proxy	Statement.

# Item	14.				Principal	Accountant	Fees	and	Services.

								Information	required	by	this	Item	is	included	under	the	caption	"Proposal	2	—	Ratification	of	Appointment	of	Independent	Registered	Public	Accounting	Firm"	in the	Proxy	Statement	and	is	hereby	incorporated	by	reference.

# PART	IV

# Item	15.				Exhibits	and	Financial	Statement	Schedules.

(a) (1)	and	(2).	The	following	documents	have	been	included	in	Part	II,	Item	8.

								Financial	statement	schedule	of	the	Registrant	and	consolidated	subsidiaries	filed	herewith:

# Consolidated	Financial	Statement	Schedule	—

Schedule

								All	other	schedules	for	the	Registrant	and	consolidated	subsidiaries	have	been	omitted	because	the	required	information	is	not	present	in	amounts	sufficient	to require	submission	of	the	schedules	or	because	the	information	required	is	included	in	the	respective	financial	statements	or	notes	thereto.

# (a)(3).				List	of	Exhibits	(numbered	in	accordance	with	Item	601	of	Regulation	S-K)

# 				Plan	of	Acquisition,	Reorganization,	Arrangement,	Liquidation	or	Succession.

2.1.* Purchase	Agreement	dated	as	of	June	30,	2006	between	Aon	Corporation	("Aon")	and	Warrior	Acquisition	Corp.	—	incorporated	by reference	to	Exhibit	10.1	to	the	Current	Report	on	Form	8-K	filed	on	July	3,	2006.

2.2.* Limited	Guarantee	of	Onex	Partners	II,	L.P.	dated	June	30,	2006	with	respect	to	the	Purchase	Agreement	dated	June	30,	2006	between Aon	and	Warrior	Acquisition	Corp.	—	incorporated	by	reference	to	Exhibit	2.2	to	Aon's	Quarterly	Report	on	Form	10-Q	for	the	quarter ended	June	30,	2006.

2.3.* Agreement	and	Plan	of	Merger	dated	as	of	July	16,	2001	among	Aon,	Ryan	Holding	Corporation	of	Illinois,	Ryan	Enterprises Corporation	of	Illinois,	Holdco	#1,	Inc.,	Holdco	#2,	Inc.,	Patrick	G.	Ryan,	Shirley	W.	Ryan	and	the	stockholders	of	Ryan	Holding Corporation	of	Illinois	and	of	Ryan	Enterprises	Corporation	of	Illinois	set	forth	on	the	signature	pages	thereto	—	incorporated	by reference	to	Exhibit	99.2	(Exhibit	II)	of	Schedule	13D	(File	Number	005-32053)	filed	on	July	17,	2001.

2.4. Stock	Purchase	Agreement	dated	as	of	December	14,	2007	between	Aon	and	ACE	Limited.

2.5. Stock	Purchase	Agreement	dated	as	of	December	14,	2007	between	Aon	and	Munich-American	Holding	Corporation.

# 				Articles	of	Incorporation	and	By-Laws.

3.1.* Second	Restated	Certificate	of	Incorporation	of	Aon	Corporation	—	incorporated	by	reference	to	Exhibit	3(a)	to	Aon's	Annual	Report	on Form	10-K	for	the	year	ended	December	31,	1991.

3.2.* Certificate	of	Amendment	of	Aon's	Second	Restated	Certificate	of	Incorporation	—	incorporated	by	reference	to	Exhibit	3	to	Aon's Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	March	31,	1994.

3.3.* Certificate	of	Amendment	of	Aon's	Second	Restated	Certificate	of	Incorporation	—	incorporated	by	reference	to	Exhibit	3	to	Aon's Current	Report	on	Form	8-K	filed	on	May	9,	2000.

3.4.* Bylaws	of	Aon	Corporation,	as	amended	on	November	18,	2005	—	incorporated	by	reference	to	Exhibit	3.2	to	Aon's	Current	Report	on Form	8-K	filed	on	November	23,	2005.

# 				Instruments	Defining	the	Rights	of	Security	Holders,	Including	Indentures.

4.1.* Indenture	dated	as	of	September	15,	1992	between	Aon	and	Continental	Bank	Corporation	(now	known	as	Bank	of	America	Illinois),	as Trustee	—	incorporated	by	reference	to	Exhibit	4(a)	to	Aon's	Current	Report	on	Form	8-K	filed	on	September	23,	1992.

4.2.* Junior	Subordinated	Indenture	dated	as	of	January	13,	1997	between	Aon	and	The	Bank	of	New	York,	as	Trustee	—	incorporated	by reference	to	Exhibit	4.1	to	Aon's	Registration	Statement	on	Form	S-4	(File	No.	333-21237)	filed	on	February	6,	1997	(the	"Capital Securities	Registration").

4.3.* First	Supplemental	Indenture	dated	as	of	January	13,	1997	between	Aon	and	The	Bank	of	New	York,	as	Trustee	—	incorporated	by reference	to	Exhibit	4.2	to	the	Capital	Securities	Registration.

4.4.* Certificate	of	Trust	of	Aon	Capital	A	—	incorporated	by	reference	to	Exhibit	4.3	to	the	Capital	Securities	Registration.

4.5.* Amended	and	Restated	Trust	Agreement	of	Aon	Capital	A	dated	as	of	January	13,	1997	among	Aon,	as	Depositor,	The	Bank	of	New York,	as	Property	Trustee,	The	Bank	of	New	York	(Delaware),	as	Delaware	Trustee,	the	Administrative	Trustees	named	therein	and	the holders,	from	time	to	time,	of	the	Capital	Securities	—	incorporated	by	reference	to	Exhibit	4.5	to	the	Capital	Securities	Registration.

4.6.* Capital	Securities	Guarantee	Agreement	dated	as	of	January	13,	1997	between	Aon	and	The	Bank	of	New	York,	as	Guarantee	Trustee	— incorporated	by	reference	to	Exhibit	4.8	to	the	Capital	Securities	Registration.

4.7.* Capital	Securities	Exchange	and	Registration	Rights	Agreement	dated	as	of	January	13,	1997	among	Aon,	Aon	Capital	A,	Morgan Stanley	&	Co.	Incorporated	and	Goldman,	Sachs	&	Co.	—	incorporated	by	reference	to	Exhibit	4.10	to	the	Capital	Securities Registration.

4.8.* Debenture	Exchange	and	Registration	Rights	Agreement	dated	as	of	January	13,	1997	among	Aon,	Aon	Capital	A,	Morgan	Stanley	&	Co. Incorporated	and	Goldman,	Sachs	&	Co.	—	incorporated	by	reference	to	Exhibit	4.11	to	the	Capital	Securities	Registration.

4.9.* Guarantee	Exchange	and	Registration	Rights	Agreement	dated	as	of	January	13,	1997	among	Aon,	Aon	Capital	A,	Morgan	Stanley	&	Co. Incorporated	and	Goldman,	Sachs	&	Co.	—	incorporated	by	reference	to	Exhibit	4.12	to	the	Capital	Securities	Registration.

4.10.* Indenture	dated	as	of	December	31,	2001	between	Private	Equity	Partnership	Structures	I,	LLC,	as	issuer,	and	The	Bank	of	New	York,	as Trustee,	Custodian,	Calculation	Agent,	Note	Registrar,	Transfer	Agent	and	Paying	Agent	—	incorporated	by	reference	to	Exhibit	4(i)	to Aon's	Annual	Report	on	From	10-K	for	the	year	ended	December	31,	2001.

4.11.* Indenture	dated	as	of	December	16,	2002	between	Aon	and	The	Bank	of	New	York,	as	Trustee	(including	form	of	note)	—	incorporated by	reference	to	Exhibit	4(a)	to	Aon's	Registration	Statement	on	Form	S-4	(File	No.	333-103704)	filed	on	March	10,	2003.

4.12.* Registration	Rights	Agreement	dated	as	of	December	16,	2002	between	Aon	and	Salomon	Smith	Barney	Inc.,	Credit	Suisse	First	Boston Corporation,	BNY	Capital	Markets,	Inc.	and	Wachovia	Securities,	Inc.	—	incorporated	by	reference	to	Exhibit	4(b)	to	Aon's	Registration Statement	on	Form	S-4	(File	No.	333-103704)	filed	on	March	10,	2003.

4.13.* Indenture	dated	as	of	April	12,	2006	among	Aon	Finance	N.S.1,	ULC,	Aon	and	Computershare	Trust	Company	of	Canada,	as	Trustee	— incorporated	by	reference	to	Exhibit	4.1	to	the	Current	Report	on	Form	8-K	filed	on	April	18,	2006.

# 		Material	Contracts.

10.2.* Escrow	Agreement	dated	as	of	July	16,	2001	among	Aon,	Patrick	G.	Ryan,	Shirley	W.	Ryan,	Patrick	G.	Ryan,	Jr.,	Robert	J.W.	Ryan,	the Corbett	M.	W.	Ryan	Living	Trust	dated	July	13,	2001,	the	Patrick	G.	Ryan	Living	Trust	dated	July	10,	2001,	the	Shirley	W.	Ryan	Living Trust	dated	July	10,	2001,	the	2001	Ryan	Annuity	Trust	dated	April	20,	2001	and	the	Family	GST	Trust	under	the	PGR	2000	Trust	dated November	22,	2000	and	American	National	Bank	and	Trust	Company	of	Chicago,	as	Escrow	Agent	—	incorporated	by	reference	to Exhibit	99.4	(Exhibit	IV)	of	Schedule	13D	(File	Number	005-32053)	filed	on	July	17,	2001.

10.3.* Agreement	among	the	Attorney	General	of	the	State	of	New	York,	the	Superintendent	of	Insurance	of	the	State	of	New	York,	the Attorney	General	of	the	State	of	Connecticut,	the	Illinois	Attorney	General,	the	Director	of	the	Division	of	Insurance,	Illinois	Department of	Financial	and	Professional	Regulation	and	Aon	and	its	subsidiaries	and	affiliates	dated	March	4,	2005	—	incorporated	by	reference	to Exhibit	10.1	to	Aon's	Current	Report	on	Form	8-K	filed	March	7,	2005.

10.4.* $600	million	Three-Year	Credit	Agreement	dated	as	of	February	3,	2005	among	Aon,	Citibank,	N.A.,	as	Administrative	Agent,	and	the lenders	and	other	parties	listed	therein	—	incorporated	by	reference	to	Exhibit	10.1	to	Aon's	Current	Report	on	Form	8-K	filed	on February	8,	2005.

10.5.* Amendment	No.	1	dated	as	of	September	30,	2005	to	$600	million	Three-Year	Credit	Agreement,	dated	as	of	February	3,	2005,	among Aon,	Citibank,	N.A.,	as	Administrative	Agent,	and	the	lenders	and	other	parties	listed	therein	—	incorporated	by	reference	to Exhibit	10.1	to	Aon's	Current	Report	on	Form	8-K	filed	October	5,	2005.

10.6.* €650	million	Facility	Agreement	dated	February	7,	2005	among	Aon,	Citibank	International	plc,	as	Agent,	and	the	lenders	and	other parties	listed	therein	—	incorporated	by	reference	to	Exhibit	10.2	to	Aon's	Current	Report	on	Form	8-K	filed	on	February	8,	2005.

10.7.* Transfer	and	Amendment	Agreement	dated	October	24,	2005	to	€650	million	Facility	Agreement	dated	February	7,	2005	among	Aon, Citibank	International	plc,	as	Agent,	and	the	lenders	and	other	parties	listen	therein	—	incorporated	by	reference	to	Exhibit	10.1	to	Aon's Current	Report	on	Form	8-K	filed	October	26,	2005.

10.8.*# Aon	Corporation	Outside	Director	Deferred	Compensation	Agreement	by	and	among	Aon	and	Registrant's	directors	who	are	not	salaried employees	of	Aon	or	Registrant's	affiliates	—	incorporated	by	reference	to	Exhibit	10(d)	to	Aon's	Annual	Report	on	Form	10-K	for	the year	ended	December	31,	1999.

10.9.# Aon	Corporation	Outside	Director	Deferred	Compensation	Plan.

10.10.*# Aon	Corporation	Non-Employee	Directors'	Deferred	Stock	Unit	Plan	—	incorporated	by	reference	to	Exhibit	10.2	to	Aon's	Quarterly Report	on	From	10-Q	for	the	quarter	ended	June	30,	2006.

10.11.*# Aon	Corporation	1994	Amended	and	Restated	Outside	Director	Stock	Award	Plan	—	incorporated	by	reference	to	Exhibit	10(b)	to	Aon's Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	March	31,	1995.

10.12.# Aon	Corporation	Outside	Director	Stock	Award	and	Retirement	Plan	(as	amended	and	restated	effective	January	1,	2003)	and	First Amendment	to	Aon	Corporation	Outside	Director	Stock	Award	and	Retirement	Plan	(as	amended	and	restated	effective	January	1,	2003).

10.13.*# Second	Amendment	to	the	Aon	Corporation	Outside	Directors	Stock	Award	and	Retirement	Plan	—	incorporated	by	reference	to Exhibit	10.3	to	Aon's	Quarterly	Report	on	From	10-Q	for	the	quarter	ended	June	30,	2006.

10.14.*# Senior	Officer	Incentive	Compensation	Plan,	as	amended	and	restated	—	incorporated	by	reference	to	Exhibit	10.1	to	the	Current	Report on	Form	8-K	filed	on	May	24,	2006.

10.15.*# Aon	Stock	Incentive	Plan,	as	amended	and	restated	—	incorporated	by	reference	to	Exhibit	10.2	to	the	Current	Report	on	Form	8-K	filed on	May	24,	2006.

10.16.*# First	Amendment	to	the	Amended	and	Restated	Aon	Stock	Incentive	Plan	—	incorporated	by	reference	to	Exhibit	10(au)	to	Aon's	Annual Report	on	Form	10-K	for	the	year	ended	December	31,	2006.

10.18.*# Aon	Stock	Award	Plan	(as	amended	and	restated	through	February	2000)	—	incorporated	by	reference	to	Exhibit	10(a)	to	Aon's Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	June	30,	2000.

10.19.*# First	Amendment	to	the	Aon	Stock	Award	Plan	(as	amended	and	restated	through	2000)	—	incorporated	by	reference	to	Exhibit	10(as)	to Aon's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2006.

10.20.# Form	of	Restricted	Stock	Unit	Agreement.

10.21.*# Aon	Stock	Option	Plan	as	amended	and	restated	through	1997	—	incorporated	by	reference	to	Exhibit	10(a)	to	Aon's	Quarterly	Report	on Form	10-Q	for	the	quarter	ended	March	31,	1997.

10.22.*# First	Amendment	to	the	Aon	Stock	Option	Plan	as	amended	and	restated	through	1997	—	incorporated	by	reference	to	Exhibit	10(a)	to Aon's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	March	31,	1999.

10.23.*# Second	Amendment	to	the	Aon	Stock	Option	Plan	as	amended	and	restated	through	1997	—	incorporated	by	reference	to	Exhibit	99.D(3) to	Aon's	Schedule	TO	(File	Number	005-32053)	filed	on	August	15,	2007.

10.24.*# Third	Amendment	to	the	Aon	Stock	Option	Plan	as	amended	and	restated	through	1997	—	incorporated	by	reference	to	Exhibit	10(at)	to Aon's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2006.

10.25.*# Aon	Deferred	Compensation	Plan	(as	amended	and	restated	effective	as	of	November	1,	2002)	—	incorporated	by	reference	to	Exhibit	4.6 on	Aon's	Registration	Statement	on	Form	S-8	(File	Number	333-106584)	filed	on	June	27,	2003.

10.26.# First	Amendment	to	Aon	Deferred	Compensation	Plan	(as	amended	and	restated	effective	as	of	November	1,	2002).

10.27.# Seventh	Amendment	to	the	Aon	Deferred	Compensation	Plan	(as	amended	and	restated	effective	as	of	November	1,	2002).

10.28.*# Form	of	Severance	Agreement	—	incorporated	by	reference	to	Exhibit	10(z)	to	Aon's	Annual	Report	on	Form	10-K	for	the	year	ended December	31,	2004.

10.29.*# Aon	Corporation	Executive	Special	Severance	Plan	—	incorporated	by	reference	to	Exhibit	10(aa)	to	Aon's	Annual	Report	on	Form	10-K for	the	year	ended	December	31,	2004.

10.30.# Aon	Corporation	Excess	Benefit	Plan	and	the	following	amendments	to	the	Aon	Corporation	Excess	Benefit	Plan:	First	Amendment, Second	Amendment,	Third	Amendment,	Fifth	Amendment	(repealing	4 th 	Amendment),	Sixth	Amendment	(amending	Section	4.1),	Sixth Amendment	(amending	Article	VII),	and	the	Eighth	Amendment.

10.31.# 2002	Restatement	of	Aon	Pension	Plan	and	the	following	amendments	to	the	2002	Restatement	of	Aon	Pension	Plan:	First	Amendment, Second	Amendment,	Third	Amendment,	Fourth	Amendment,	Fifth	Amendment,	Sixth	Amendment,	Seventh	Amendment,	Eighth Amendment,	Ninth	Amendment	(amending	Section	9.02),	Ninth	Amendment	(amending	multiple	Sections),	and	the	Tenth	Amendment.

10.32.*# Form	of	Amendment	to	Stock	Option	Award	Agreement	between	Aon	Corporation	and	Patrick	G.	Ryan	(2000	Award)	—	incorporated by	reference	to	Exhibit	99.1	to	the	Current	Report	on	Form	8-K	filed	on	August	15,	2007.

10.33.*# Form	of	Amendment	to	Stock	Option	Award	Agreement	between	Aon	Corporation	and	Patrick	G.	Ryan	(2002	Award)	—	incorporated by	reference	to	Exhibit	99.2	to	the	Current	Report	on	Form	8-K	filed	on	August	15,	2007.

10.34.*# Form	of	Amendment	to	Stock	Option	Award	Agreement	between	Aon	Corporation	and	Michael	D.	O'Halleran	—	incorporated	by reference	to	Exhibit	99.3	to	the	Current	Report	on	Form	8-K	filed	on	August	15,	2007.

10.35.*# Employment	Agreement	dated	April	4,	2005	between	Aon	and	Gregory	C.	Case	—	incorporated	by	reference	to	Exhibit	10.1	to	Aon's Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	March	31,	2005.

10.36.*# Employment	Agreement	dated	as	of	July	15,	2005	between	Aon	Corporation	and	Andrew	M.	Appel	—	incorporated	by	reference	to Exhibit	10.1	to	Aon's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	June	30,	2005.

10.37.*# Letter	Agreement	dated	as	of	December	9,	2005	between	Aon	Corporation	and	Patrick	G.	Ryan	—	incorporated	by	reference	to Exhibit	10.1	to	Aon's	Current	Report	on	Form	8-K	filed	December	9,	2005.

10.38.*# Employment	Agreement	dated	January	1,	2001,	as	amended	September	29,	2004,	between	Aon	and	Michael	D.	O'Halleran	— incorporated	by	reference	to	Exhibit	10(l)	to	Aon's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2004.

10.39.*# Amendment	No.	2	to	Employment	Agreement	between	Aon	Corporation	and	Michael	D.	O'Halleran	—	incorporated	by	reference	to Exhibit	10.1	to	Aon's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	June	30,	2006.

10.40.*# Amendment	No.	3	to	Employment	Agreement	dated	as	of	December	15,	2007	between	Aon	Corporation	and	Michael	D.	O'Halleran	— incorporated	by	reference	to	Exhibit	10.1	to	the	Current	Report	on	Form	8-K	filed	on	December	20,	2007.

10.41.*# Employment	Agreement	dated	as	of	October	3,	2007	between	Aon	Corporation	and	Christa	Davies	—	incorporated	by	reference	to Exhibit	10.1	to	the	Current	Report	on	Form	8-K	filed	on	October	3,	2007.

10.42.*# Transition	Agreement,	effective	as	of	October	12,	2007,	between	Aon	Corporation	and	David	P.	Bolger	—	incorporated	by	reference	to Exhibit	10.1	to	the	Current	Report	on	Form	8-K	filed	on	October	12,	2007.

10.43.# Deferred	Compensation	Agreement	dated	December	31,	1980	between	Combined	Insurance	Company	of	America	and	Richard	M.	Ravin.

10.44.# Deferred	Compensation	Agreement	dated	December	29,	1981	between	Combined	Insurance	Company	of	America	and	Richard	M.	Ravin.

10.45.# Deferred	Compensation	Agreement	dated	January	8,	1983	between	Combined	Insurance	Company	of	America	and	Richard	M.	Ravin.

10.47.# Transition	Agreement	dated	December	13,	2007	between	Aon,	Combined	Insurance	Company	of	America	and	Richard	M.	Ravin.

10.48.# Executive	Agreement	dated	April	22,	2005	between	Aon	Limited	and	Stephen	P.	McGill.

10.51.# Overseas	Assignment	Letter	dated	July	26,	2006	between	Aon	Limited	and	Stephen	P.	McGill.

# 		Statements	re:	Computation	of	Ratios

12.1. Statement	regarding	Computation	of	Ratio	of	Earnings	to	Fixed	Charges.

12.2. Statement	regarding	Computation	of	Ratio	of	Earnings	to	Combined	Fixed	Charges	and	Preferred	Stock	Dividends.

# 		Subsidiaries	of	the	Registrant.

21 List	of	Subsidiaries	of	Aon.

# 		Consents	of	Experts	and	Counsel.

23 Consent	of	Ernst	&	Young	LLP.

31.1 Rule	13a-14(a)	Certification	of	Chief	Executive	Officer	of	Aon	in	accordance	with	Section	302	of	the	Sarbanes-Oxley	Act	of	2002.

31.2 Rule	13a-14(a)	Certification	of	Chief	Financial	Officer	of	Aon	in	accordance	with	Section	302	of	the	Sarbanes-Oxley	Act	of	2002.

# 		Section	1350	Certifications.

32.1 Section	1350	Certification	of	Chief	Executive	Officer	of	Aon	in	accordance	with	Section	906	of	the	Sarbanes-Oxley	Act	of	2002.

32.2 Section	1350	Certification	of	Chief	Financial	Officer	of	Aon	in	accordance	with	Section	906	of	the	Sarbanes-Oxley	Act	of	2002.

* Document	has	been	previously	filed	with	the	Securities	and	Exchange	Commission	and	is	incorporated	herein	by	reference	herein.	Unless	otherwise	indicated, such	document	was	filed	under	Commission	File	Number	001-07933.

# Indicates	a	management	contract	or	compensatory	plan	or	arrangement.

								The	registrant	agrees	to	furnish	to	the	Securities	and	Exchange	Commission	upon	request	a	copy	of	(1)	any	long-term	debt	instruments	that	have	been	omitted pursuant	to	Item	601(b)(4)(iii)(A)	of	Regulation	S-K,	and	(2)	any	schedules	omitted	with	respect	to	any	material	plan	of	acquisition,	reorganization,	arrangement, liquidation	or	succession	set	forth	above.

# SIGNATURES

# 								Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its behalf	by	the	undersigned,	thereunto	duly	authorized.

Gregory	C.	Case,	President

and	Chief	Executive	Officer

								Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	registrant	and	in the	capacities	and	on	the	dates	indicated.

| R.	Eden	Martin | Director | February	27,	2008 |
| :--- | :--- | :--- |
| /s/\t\tANDREW\tJ.\tMCKENNA |  |  |
| Andrew\tJ.\tMcKenna | Director | February\t27,\t2008 |
| /s/\t\tROBERT\tS.\tMORRISON |  |  |
| Robert\tS.\tMorrison | Director | February\t27,\t2008 |
| /s/\t\tRICHARD\tB.\tMYERS |  |  |
| Richard\tB.\tMyers | Director | February\t27,\t2008 |
| /s/\t\tRICHARD\tC.\tNOTEBAERT |  |  |
| Richard\tC.\tNotebaert | Director | February\t27,\t2008 |
| /s/\t\tJOHN\tW.\tROGERS,\tJR. |  |  |
| John\tW.\tRogers,\tJr. | Director | February\t27,\t2008 |
| /s/\t\tGLORIA\tSANTONA |  |  |
| Gloria\tSantona | Director | February\t27,\t2008 |
| /s/\t\tCAROLYN\tY.\tWOO |  |  |
| Carolyn\tY.\tWoo | Director | February\t27,\t2008 |

# QuickLinks

Item	1B.	Unresolved	Staff	Comments. Item	2.	Properties. Item	3.	Legal	Proceedings. Item	4.	Submission	of	Matters	to	a	Vote	of	Security	Holders.

Item	5.	Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities. Item	6.	Selected	Financial	Data.

SCHEDULE	I	(Continued)

Item	9.	Changes	in	and	Disagreements	with	Accountants	on	Accounting	and	Financial	Disclosure. Item	9A.	Controls	and	Procedures. Item	9B.	Other	Information.

Item	10.	Directors,	Executive	Officers	and	Corporate	Governance. Item	11.	Executive	Compensation.

Item	12.	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters. Item	13.	Certain	Relationships	and	Related	Transactions,	and	Director	Independence.


what portion of the of unrecognized tax benefits would have an impact in the effective tax rate if recognized?
unrecognized_tax_benefits = 57
total_tax_liabilities = 70
percent_recognized = unrecognized_tax_benefits / total_tax_liabilities
answer = percent_recognized * 100