Risk managers worry about another possible scandal

UK risk managers are worried that Aon could become embroiled in an accounting scandal after US regulators started investigation the company's accounts.

If the Securities and Exchange Commission (SEC) finds irregularities, it could ask the global broking giant to restate its earnings for 1999, 2000 and early 2002.

Airmic executive director David Gamble said worry was spreading through the risk management community.

"There is a lot of concern among risk managers. Insurance has enough problems already.

"People are watching the situation very carefully."

He said that if the US corporation was forced to restate its earnings, risk managers would "think twice" about where to take their business.

"After all, they are risk managers," he said.

Aon is already being sued amid allegations that it overstated its earnings.

US law firm Milberg Weiss, whose partner William Lerach achieved notoriety through his pursuit of hundreds of securities actions amounting to billions of dollars, is conducting the class action

The lawsuit alleges that Aon overstated its income and financial results and misrepresented itself.

The suit was launched after Aon admitted that if it was required to restate its earnings, its net income would reduce by $27m (£17.6m) in 1999, by $24m (£15.7m) in 2000 and by $5m (£3.3m) in the first quarter of 2002.

Milberg Weiss lost no time to file its action on 8 August, the day after Aon stock fell 30.3% to close at $14.77 a share on the news.

Aon was unable to comment as Insurance Times went to press.