Filed under: Deals, Aon Corp (AOC)
Aon (NYSE: AOC) thinks that risk brokerage and consulting has the best future, in terms of margins and growth.
To that end, the company announced Monday that it is selling off its underwriting businesses. Combined Insurance Company was sold for $2.4 billion to ACE Limited (NYSE: ACE), while Munich Re bought Aon’s Sterling Life segment for $352 million.
Yes, even in the huge insurance business, this is a good chunk of change for Aon.
So where will the cash go? Part of it will be for stock buybacks (the authorized buyback has gone from $2.6 billion to $2.78 billion) - and perhaps even dividends. However, Aon might want to make some acquisitions as well.
All in all, Aon’s divestitures make a lot of sense, and were expected on the Street. Simply put, the global insurance business requires scale and focus, which was tough for Aon to provide.
In today’s trading, Aon’s stock was up about 1% to $49.40.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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