Aon withdraws earnings forecast

INSURANCE broker Aon, under investigation by New York Attorney General Eliot Spitzer for allegedly taking fees to steer business to certain insurance companies, has withdrawn its 2004 earnings guidance of $2.20 a share without an alternative estimate.

The company said third-quarter net profit rose 6.1% to $122m (£66.3m) with a 1% increase in revenue to $2.4bn. After Spitzer's action, it ditched the scheme under which commissions were paid to it by insurers, and said that was a factor in its earnings forecast downgrade but played down the issue.

'While softening market conditions are increasingly favourable to our clients, our revenue growth has not been what we anticipated,' chief executive and founder Patrick Ryan said.

'This reality, coupled with the impact of recent industry developments, including our decision to terminate contingent commission arrangements, leads us to withdraw our prior guidance.'

Spitzer, meanwhile, has denied a report that he would settle with insurance broker Marsh & McLennan for $500m in the bid rigging case

'I didn't put that [number] out. I have absolutely no idea where it came from, and it has absolutely nothing to do with reality,' he said.

He added that negotiations with the company had just begun. The Wall Street Journal said any settlement- 'is likely to be at least two weeks off'.

Former SEC enforcement chief Marc Powers said that while companies in Marsh's situation want to settle regulatory matters quickly, the process takes much longer than two weeks. 'These investigations can take months to be thorough and complete,' he added.

Some companies, however, will accept a partial settlement until the probe has been completed.