Aon latest giant to come under the SEC microscope

Insurance giant Aon became the latest company to stoke the crisis in corporate America yesterday, its shares tumbling after it…

Insurance giant Aon became the latest company to stoke the crisis in corporate America yesterday, its shares tumbling after it revealed an inquiry into its accounting.

The world's second-largest insurance broker, behind Marsh & McLennan, said the Securities and Exchange Commission (SEC) had questioned several of its accounting judgments and disclosure. These included decisions that it had kept $1.3 billion (€1.34 billion) in assets and $1.3 billion in liabilities from its financial statements.

The extra assets and liabilities were contained in "special purpose entities" - the types of off-balance sheet financial vehicles now mired in controversy after their role at the heart of the Enron scandal.

Aon's revelations come as the chief executives and financial officers of almost 1,000 US companies prepare to comply with an SEC order and swear to the accuracy of their accounts. For most companies with standard reporting years, the written testimonies must be submitted by next Wednesday.

Mr Patrick Ryan, Aon's chief executive, said yesterday: "We're definitely going to certify [the accounts\]. We want to resolve the issues before August 14th and I really believe they [the SEC\] are going to help us."

Aon said it believed its filings with the SEC had been in compliance with standard accounting principles. But it recorded an extra loss of $56 million or 13 US cents a share for this quarter to cover losses that should have been recorded in 1999, 2000 and the first quarter of this year.

Aon said the SEC might ask it to restate earnings for the prior reporting periods. It said it broke even in the quarter, compared with earnings of 11 US cents a share last year. Its shares were down 27 per cent at $15.49 by lunchtime on Wall Street. - (Financial Times Service)