Aon: AIG insurance unit showed 'clear deterioration'

Aon Corp., the world's biggest broker, told clients that insurance operations at American International Group Inc. showed "clear deterioration" in the last three months of 2008.

"Given the results of the fourth quarter, we're all, I think, taken a bit aback," Ted Devine, executive vice president of the Chicago-based broker, said today in a conference call. Devine said a decline in AIG's general premium levels worldwide is "concerning right now for all of us."

Insurance buyers who turn to Aon for help in shopping for commercial coverage are seeking advice after New York-based AIG posted a $61.7 billion quarterly loss. AIG announced plans yesterday to separate its property-casualty division from the holding company in an attempt to reassure clients that losses on derivatives and subprime investments won't hurt the insurance operations.

"Our property-casualty business around the world continues to perform well, and we're grateful for that," John Doyle, president of AIG's commercial insurance unit, told Aon clients on the call. The separation "give us some financial flexibility independent of AIG."

AIG advanced 6 cents, or 14 percent, to 48 cents at 10:28 a.m. in New York Stock Exchange composite trading.