Aon spins off two units for $2.78 billion

Aon Corp. announced that it will sell two insurance units for $2.78 billion and will use the proceeds to buy back shares. The Chicago-based insurance giant said it sold its Combined Insurance Co. unit to ACE Ltd. of Hamilton, Bermuda for $2.4 billion in cash and that Munich Re is purchasing its Sterling Life Insurance unit for $352 million. Aon is planning on using the $2.6 million in proceeds from the deals to increase its stock buyback plan. The sale of the two units will be used to simplify its business and leave the “lower margin and more capital intensive insurance underwriting business,” said Greg Case, president and chief executive officer, Aon Corp., according to a statement. Aon, which expects to complete the deal by the end of the second quarter, said it plans to extract a one-time cash dividend from the deal. Combined Insurance is a provider of specialty individual accident and supplemental health insurance to middle-income consumers in the U.S., Canada, Europe and Asia Sterling provides health care benefits to senior citizens. Aon said in October that it planned to restructure its business, cutting 2,700 of its jobs, or nearly 6%, in an effort to cut $240 million in expenses. The headline of this story originally said that Aon had spun off units for $2.78 million. The correct amount is $2.78 billion.