Despite recording a 12% drop in operating income in its fourth quarter, Aon, the globe's second largest insurance broker, has seen its shares rise by 8% in recent trading.

Aon stock improved $1.97, or 8.7%, to $24.52. The positive outcome was a result of Aon beating analyst predictions that it would suffer greater losses, in the wake of damaging investigations by New York Attorney General Eliot Spitzer.

For the quarter, net income from continuing operations was $192 million, or $0.57 per share, compared to $216 million, or $0.65 per share, a year ago. The drop has been mainly attributed to the company’s decision to end contingency commissions in response to the Spitzer industry probes.

However, for the 12 months, net income per share for 2004 and 2003 was $1.95 and $1.90, respectively, and net income from continuing operations increased to $685 million from $676 million.

During the quarter, the company completed the sale of its Cambridge Integrated Services claims business and the sale of virtually all of its common stock ownership in Endurance Specialty Holdings Ltd.

With regard to the Spitzer investigations, the company has set aside a $50 million provision for use in settling any possible actions taken by the New York Attorney General. Of this amount, $43 million was allocated to the Risk and Insurance Brokerage Services segment and the balance to the Consulting segment.

Patrick Ryan, Aon’s chairman and CEO, stated, It remains a difficult environment in which to achieve meaningful revenue growth given industry pricing trends and our decision to terminate contingent commission agreements. Nevertheless, we are doing everything possible to capitalize on the opportunities which exist in this period of industry transition. In addition, we are doing a much better job of controlling operating expenses and investment spending.