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Aon to Sell Two Units for $2.75 Billion, Boost Buyback
By Reuters | 17 Dec 2007 | 03:43 AM ET
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Aon, one of the world's largest insurance brokers, said on Monday it has agreed to sell two units for about $2.75 billion and will devote the proceeds of the deal to a share buyback.

The company said it sold its Combined Insurance unit to ACE [ACE  Loading...      ()   ] for $2.4 billion in cash and that Munich Re is buying its Sterling Life Insurance unit for $352 million.

The company is planning to use the $2.6 billion in proceeds from the deals to increase its stock buyback plan, it said.

The sales of the two units are part of a plan by Aon [AOC  Loading...      ()   ] to simplify its business and to do less insurance underwriting, which has lower margins and is more capital intensive.

"Our core assets will now be more strategically aligned as we expand our capabilities to better serve our risk brokerage and consulting clients," Greg Case, president and chief executive, said in a statement.

Also, Aon said it expects to extract a one-time cash dividend of $325 million from Combined Insurance before the deal closes.

ACE's deal to buy Combined Insurance, which provides individual accident coverage and supplemental health insurance to more than 4 million policyholders, is expected to be completed by the second quarter of 2008, ACE said.

ACE shares closed at $59.51 on the New York Stock Exchange on Friday, while Aon shares closed at $48.94.

Copyright 2008 Reuters. Click for restrictions.

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