Aon Corp. more than doubled the size of itsconsulting operations with last year's $4.9 billion acquisition ofhuman resources consultancy Hewitt Associates, although more thanhalf of Aon's $8.5 billion in 2010 revenue came from its insurancebrokerage. As Aon's CFO since 2008, Christa Davies steered thecompany through some of the choppiest markets in decades.Treasury & Risk recently asked Davies to talk abouther priorities now.

T&R: The insurance brokerage industry iscoming through a difficult period. How is Aon operating thatbusiness going forward and what is the outlook for 2011?
Davies: I'd start with how we finished Q4 2010,which was a very strong finish to what was a difficult year in2010. We had 3% organic revenue growth in our risk solutionsbusiness, which was the strongest performance we've had in threeyears. And we do believe we are going to grow organically, both inthe risk solutions segment and in the HR solutions segment, in2011. We think both the risk and HR issues for clients are becomingmore and more complex, and their appetite and demand for theseservices is even greater than ever before, so we see the growthprospects being quite substantial over time. And the capabilitieswe have across our retail brokerage business, our reinsurancebusiness and Aon Hewitt are even stronger than before in being ableto help clients solve difficult problems.

T&R: Are there particular risks that yourclients are showing renewed interest in going forward?
Davies: There are a number of risks that areincreasing in terms of prominence and interest from clients:political risk, environmental risk, sustainability, supply chainand global product management as firms become more global andoffshore more often. Pandemic is a risk that we didn't have 10years ago. So there are a number of risks that exist today thatreally didn't exist 10 years ago, and one of the ways in which wemeasure whether we are successful in helping a client is do we helpimprove earnings, do we help free up capital or do we help managevolatility on a client's balance sheet. If we can't demonstratethat we're doing one of those three things, then we're not clearlyadding value in helping clients manage their risk.

T&R: Are there particular areas of theworld that clients are more focused on or that you are focusingmore on?
Davies: There are a number of areas of growth.Political risk is definitely an area of focus and we just launchedour Political Risk Map for 2011, which is a terrific outline of theglobe and where political risk is increasing and how clients canhelp navigate through that successfully.

T&R: How are you allocating capital withregards to Aon's cash flow and balance sheet?
Davies: It's a very big focus for us as we manageAon going forward. We think about our business in terms of cashmanagement and we value our business on a discounted cash-flowbasis and therefore we've been taking a much more serious look atcash-flow management and forecasting accuracy, and we're reallytrying to optimize the capital to get the best return toshareholders. And one of the things we are doing is redeployingthat capital in a share buyback. As you saw in the fourth quarter,we did $150 million in share buybacks and one of the reasons we'redoing that is because we really believe our stock is significantlyundervalued. We see huge upside potential for the firm, in both therisk and people segments and therefore redeploying that capital inshare buybacks will generate a significant return toshareholders.

T&R: Where is the company now, followingthe acquisition of Hewitt last year, as Aon looks toward thefuture?
Davies: The acquisition closed on the first ofOctober, so we are in the very early days, in the first couple ofmonths post-close. But we're having terrific progress. We areseeing a very positive reaction from clients, which was really ourprimary focus. The team is very focused on delivering for clients.We've seen a number of new wins, both in the large-market spacewhere Hewitt had a terrific presence and in growth in middlemarket. We're also seeing really good excitement with ourcolleagues. We've got the management teams in place across thebusinesses and our clients are really recognizing the breadth anddepth of the products and services we provide. And then lastly, weare focused on delivering the $355 million of total [cost savings]by 2013, and we're well on track to deliver $242 million of totalsynergies by 2011. So we feel very good about the progress,although it's very early days.

In 2009, Davies talked to T&R about Aon'sapproach to political risk, in Doing Business in a Volatile World. And in 2008, shediscussed Aon's standardization of its information reporting,in Cross-BorderData Patrol.