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The Aon Corporation has agreed to sever ties with Iran by April 1 in response to concerns raised by the New York City Pension Funds about corporate connections to terrorist-sponsoring nations, Comptroller William C. Thompson, Jr. announced today.

Aon’s Executive Chairman has written Comptroller Thompson that a senior management level committee review - requested by the City’s Funds – is prompting the company to indefinitely suspend its business ties with Iran.

“After carefully reviewing Aon Corporation’s business relating to Iran and considering recent actions and statements of the Government of Iran, Aon’s Policy Committee has decided to suspend indefinitely all Aon business activities relating to Iran, effective April 1, 2006,” Aon’s Executive Chairman, Patrick G. Ryan, wrote to Thompson. “As of that date, neither Aon nor any of its subsidiaries will maintain an office or other physical presences in Iran or do work for government or business entities domiciled there.”

Comptroller Thompson, who manages more than $83 billion in Pension Funds, praised the company for meeting the City’s request.

“Aon has made the right decision, and one that I hope other companies will achieve as well,” Thompson said. “I am pleased that Aon has examined its overseas operations and realized that its corporate connections to Iran were not in the best interests of its shareholders, and this country.”

“City workers are concerned about investing their pension funds in companies that have ties to the government of Iran, which threatens its neighbors and sponsors terrorism,” said New York City Public Advocate Betsy Gotbaum, a trustee on the New York City Employees’ Retirement System (NYCERS). “Companies that do business with such a regime put their reputations, and by extension, shareholder value at risk. I am proud that the City pension funds have motivated Aon to sever their business dealings with Iran.”

“In 2004, Comptroller Thompson and members of the Pension Funds raised an important red flag for the Aon Corporation that today resulted in a step forward for our City and Nation as we seek to combat the brutal realities of terrorism,” said Manhattan Borough President Scott Stringer, a NYCERS trustee. “Aon has done the right thing and now the pressure ought to be on others - whether pressed to act or not - to immediately sever business ties with nations that sponsor terrorism.”

NYCERS, the New York City Police Pension Fund, New York City Fire Department Pension Fund, Teachers’ Retirement System (TRS) of the City of New York, and New York City Board of Education Retirement System (BERS) initially filed a shareholder proposal requesting the Aon review in late 2004.

Aon provides risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting.

The measure asked Aon to examine its ties with Iran with particular attention to “potential financial and reputational risks.” Aon’s chairman responded in March 2005, indicating the company would conclude the study by year’s end. Details of the review were not provided to the Comptroller’s Office.

In its decision to file the proposal with Aon, the City cited research made available to the Comptroller by the Conflict Securities Advisory Group of Washington, D.C. That research stated that Aon had ties to Iran’s finance sector via two subsidiaries– Mahamy Co. Plc and United Iranian Insurance Services Plc Tehran.

“ U.S. law currently restricts trade and investment activity by American companies with countries that are designated by the U.S. State Department as sponsors of terrorism,” the funds noted. “While the sanction does not apply to the foreign or off-shore subsidiaries of U.S. corporations, so long as the U.S. parent companies are neither directly nor indirectly involved, we believe that American companies should nonetheless adhere to the spirit as well as the letter of the law.”

The Funds have 943,021 shares worth more than $34 million in Aon.

Aon’s decision is the latest victory for the Funds in urging some of America’s largest companies to sever ties with nations that sponsor terrorism. Last month, the Funds announced that Foster Wheeler of Clinton, N.J., agreed to sever ties with Iran. The Funds previously prompted General Electric or Fairfield, CT, and the Cooper Cameron Corporation, Halliburton and ConocoPhillips, all of Houston, Texas, to comply with the shareholder resolutions.

Besides Thompson, the Pension Funds trustees are:

Fire Department Pension Fund: Mayor Michael Bloomberg; New York City Fire Commissioner Nicholas Scoppetta (Chair); New York City Finance Commissioner Martha E. Stark; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; Peter Gorman, President and Captains’ Rep., Nicholas J. Visconti, Chiefs’ Rep., and Stephen J. Carbone, Lieutenants’ Rep., Uniformed Fire Officers Association; and, Joseph Gagliardi, Marine Engineers Association.

Police Pension Fund: Mayor Michael Bloomberg; New York City Finance Commissioner Martha E. Stark; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen’s Benevolent Association; Michael Palladino, Detectives Endowment Association; Edwin Mullins, Sergeants Benevolent Association; Anthony Garvey, Lieutenants Benevolent Association; and, John Driscoll, Captains Endowment Association.

NYCERS: New York City Finance Commissioner Martha E. Stark (Chair); New York City Public Advocate Betsy Gotbaum; Borough Presidents Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), Adolfo Carrion (Bronx), and James Molinaro (Staten Island); Lillian Roberts, Executive Director, District Council 37, AFSCME; Roger Toussaint, President Transport Workers Union Local 100; and, Carroll (Carl) Haynes, President, International Brotherhood of Teamsters, Local 237.

TRS: New York City Finance Commissioner Martha E. Stark (Chair); Deputy Chancellor Kathleen Grimm, New York City Department of Education; and, Sandra March, Melvyn Aaronson and Mona Romain, all of the United Federation of Teachers.

BERS: mayoral appointees Schools Chancellor Joel Klein, Alan Aviles, Philip Berry, David Chang, Tino Hernandez, Augusta Souza Kappner, Richard Menschel and Marita Regan; Borough President appointees Jesse Mojica (Bronx), Martine G. Guerrier (Brooklyn), Vivian Farmery (Manhattan), Michael Flowers (Queens), and Joan Correale (Staten Island); and employee members Thomas J. Malanga of the International Union of Operating Engineers, Local 891, and Milagros Rodriguez of District Council 37, Local 372.

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