Moody's rates Aon debt Baa2

Moody's Investors Service said it assigned a Baa2 rating on up to C$375 million of senior unsecured debentures expected to be issued by Aon Finance NS1 ULC, based on an unconditional and irrevocable guarantee from Aon Corp. The outlook is positive.

Proceeds of the pending issue will be used primarily to refinance current bank borrowings of Aon Finance.

Moody's said the ratings reflect Aon's position as the world's second-largest insurance broker, its expertise in providing complex risk management solutions to global clients and the earnings diversification provided by Aon's consulting and underwriting operations.

These strengths are tempered by Aon's relatively high financial leverage and moderate free-cash-flow-to-debt ratio when these ratios are adjusted for underfunded pension plans and lease obligations, the agency said, although Aon's reported financial leverage has declined significantly over the past several years. Further, as an ordinary business matter, insurance brokers are subject to potential liabilities arising from errors and omissions.

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