Aon Corp. sells 2 insurance units in separate deals for $2.75B

NEW YORK -- Aon Corp. is selling two insurance units for $2.75 billion in separate cash deals and will ramp up its share buyback program, the company said Monday.

Chicago-based Aon, one of the world's largest insurance companies, sold its Combined Insurance Company of America to Ace Ltd. for $2.4 billion, and its Sterling Life Insurance Co. to Munich Re AG for $352 million, the company said.

Proceeds from the sales will increase Aon's share buyback power to $2.78 billion, the company said.

"Our core assets will now be more strategically aligned as we expand our capabilities to better serve our risk brokerage and consulting clients," said Greg Case, president and chief executive officer. "At the same time, the increased share repurchase program reflects our ongoing belief in the underlying positive momentum of the business."

Aon expects to extract a one-time cash dividend from Combined Insurance of $325 million before the deal closes.

Both Aon units will be placed into discontinued operations in the fourth quarter of 2007, the company said.

Ace Ltd., headquartered in Glenview, a suburb of Chicago, said it expects to close the deal in the second quarter of 2008.

Evan Greenberg, chairman and chief executive at Ace, called the acquisition a "milestone" and an opportunity for considerable growth.