The firm also announced it will be creating a $20 to $30 million reserve during the second quarter in anticipation of losses stemming from Combined's association with National Program Services Inc., a managing general agent.

According to a filing with the Securities and Exchange Commission, Combined signed an agreement with NPS in Dec. 2000 to act as the MGA for apartment owners policies. In May of this year Combined filed a lawsuit against NPS for breach of contract and failure to perform its obligations. Aon said it was granted a restraining order to keep the now defunct MGA from using funds its was paid on behalf of policyholders for insurance coverage.

The firm said it is cooperating with state agencies and regulatory authorities in investigations of NPS.

Aon said "the loss surrounding NPS was not factored into earlier earnings per share guidance." The firm said it will be issuing new guidance.

For the first quarter of 2002, Aon reported net income of $104 million, compared with $19 million in the same period for 2001. This translated into earnings per share of 37 cents, compared with 7 cents last year for the same period.