Stock in Aon Corporation (NYSE: AOC) dropped 30% yesterday upon release of the company’s second-quarter results, news that a planned spin-off was being halted and an investigation of previous financial reporting by the Securities Exchange Commission (SEC). Second-quarter results for the Chicago-based brokerage were “the worst in Aon’s history”, admits the company’s CEO Patrick G. Ryan. The company reported no net income for the quarter, compared to US$29 million for the second quarter 2001. However, revenue did increase, up to US$2.1 billion from US$1.9 billion in 2001’s first quarter. And overall first-half 2002 result were strong, with revenue up 13% and net income up 117% versus the same period last year. Nonetheless, current markets conditions are being blamed for the company’s decision not to spin-off its insurance underwriting operations, Combined Specialty Group. “Current market conditions are simply not conducive to raising equity capital at this time. Doing so would be unfavorable to our stockholders,” Ryan says. The company is also tackling a probe from the SEC into Combined Specialty’s results from 2001 and first quarter 2002, announced in early July. Aon says that the questions posed by the SEC should not affect its aggregated shareholders’ equity. One of the issues is a reinsurance claim for benefits paid to the families of Aon employees killed in the September 11 terrorist attacks, for which allowance was made in 2002. If that allowance is made in 2001, financials would be restated with net income reduced by US$56 million in 2001, and increased by the same amount in first quarter 2002. Other questions relate to reporting of investment impairments and business transformation/restructuring charges, as well as several other reporting practices Several of the reporting requests are already being met in current and future filings, Aon notes. The combined effect of yesterday’s financial reporting and comment on the Combined Specialty decision and SEC probe was to knock Aon stock down to US$14.77 per share from US$21.20, a drop of 30% in one day.