AOC » Topics » UNALLOCATED INCOME AND EXPENSE

This excerpt taken from the AOC 8-K filed Feb 5, 2010.

UNALLOCATED INCOME AND EXPENSE

 

 

 

Fourth Quarter Ended

 

 

 

(millions)

 

Dec 31,
2009

 

Dec 31,
2008

 

%
Change

 

Total segment income before tax

 

$

257

 

$

268

 

(4

)%

Unallocated revenue

 

29

 

 

N/A

 

Unallocated expenses

 

(43

)

(74

)

(42

)

Interest income

 

10

 

13

 

(23

)

Interest expense

 

(35

)

(30

)

17

 

Income from continuing operations before tax

 

$

218

 

$

177

 

23

%

 

This excerpt taken from the AOC 8-K filed Oct 30, 2009.

UNALLOCATED INCOME AND EXPENSE

 

 

 

Third Quarter Ended

 

 

 

 

 

Sept 30,

 

Sept 30,

 

%

 

(millions)

 

2009

 

2008

 

Change

 

Operating segment income before tax

 

$

221

 

$

244

 

(9

)%

Unallocated investment income & other revenue

 

19

 

40

 

(53

)

Unallocated expenses

 

(30

)

(34

)

(12

)

Interest expense

 

(32

)

(32

)

 

Income from continuing operations before tax

 

$

178

 

$

218

 

(18

)%

 

This excerpt taken from the AOC 8-K filed Jul 30, 2009.

UNALLOCATED INCOME AND EXPENSE

 

 

 

Second Quarter Ended

 

 

 

June 30,

 

June 30,

 

%

 

(millions)

 

2009

 

2008

 

Change

 

Operating segment income before tax

 

$

251

 

$

277

 

(9

)%

Unallocated investment income & other revenue

 

13

 

17

 

(24

)

Unallocated expenses

 

(28

)

(37

)

(24

)

Interest expense

 

(26

)

(31

)

(16

)

Income from continuing operations before tax

 

$

210

 

$

226

 

(7

)%

 

This excerpt taken from the AOC 10-Q filed May 8, 2009.
Unallocated Income and Expense
 

Unallocated income consists primarily of investment income, including gain or loss on investment disposals and other-than-temporary impairment losses, if any, which is not otherwise reflected in the operating segments.  We include invested assets and related investment income not directly required to support the risk and insurance brokerage services and consulting businesses.

 

Unallocated investment income was $1 million for first quarter 2009, a decrease of $4 million over 2008, and was driven by:

 

·                  $2 million decrease from our PEPS I investment,

·                  lower interest rates, and

·                  the unfavorable impact of foreign currency translation.

 

Unallocated expenses include corporate governance costs not allocated to the operating segments. These expenses increased to $27 million from $20 million in 2008, driven by:

 

·                  higher pension expense, and

·                  increased corporate staff expenses.

 

39



 

The higher costs were partially offset by a $4 million gain from the pension curtailment.

 

Interest expense, which represents the cost of our worldwide debt obligations, decreased $4 million in 2009 to $29 million, primarily due to lower interest rates and the favorable impact of foreign currency translation.

 

This excerpt taken from the AOC 8-K filed May 1, 2009.

UNALLOCATED INCOME AND EXPENSE

 

 

 

First Quarter Ended

 

 

 

 

 

Mar 31,

 

Mar 31,

 

%

 

(millions)

 

2009

 

2008

 

Change

 

Operating segment income before tax

 

$

398

 

$

306

 

30

%

Unallocated investment income

 

1

 

5

 

(80

)

Unallocated expenses

 

(27

)

(20

)

35

 

Interest expense

 

(29

)

(33

)

(12

)

Income from continuing operations before tax

 

$

343

 

$

258

 

33

%

 

These excerpts taken from the AOC 10-K filed Mar 2, 2009.

Unallocated Income and Expense

        Unallocated income consists primarily of investment income, including income or loss on investment disposals and other-than-temporary impairment losses, which is not otherwise reflected in the operating segments. We include invested assets and related investment income not directly required to support the risk and insurance brokerage services and consulting businesses.

        Private equities are principally carried at cost; however, where we have significant influence, they are reported using the equity method of accounting. These investments usually do not pay dividends. Limited partnerships ("LPs") are accounted for using the equity method and changes in the value of the underlying LP investments flow through unallocated investment income.

        This table details our unallocated income and expense (in millions):

Years ended December 31,
  2008
  2007
  2006
 
   

Unallocated investment income

  $ 68   $ 79   $ 17  

Unallocated expenses

    (166 )   (130 )   (98 )

Interest expense

    (126 )   (138 )   (129 )

        Unallocated investment income was $68 million in 2008, a decrease of $11 million over 2007 and was driven by:

    a $29 million decrease in income from our PEPS I investment, partially offset by

    higher investment income from marketable securities due to the investment of proceeds from the sale of CICA and Sterling.

        Unallocated expenses include corporate governance and other costs not attributable to the operating segments. These expenses increased to $166 million in 2008 from $130 million in 2007, driven by:

    $50 million of hedging costs related to the merger with Benfield and

    higher stock compensation expense.

        The higher costs were partially offset by:

    lower Corporate staff expenses,

    the 2007 resolution of a $15 million reconciliation difference in the U.K.,

    lower pension expense, and

51


    2007 expenses associated with a review of historical equity compensation practices.

        Interest expense, which represents the cost of our worldwide debt obligations, decreased $12 million in 2008 to $126 million, principally due to the redemption of our 3.5% Senior Convertible Debentures in 2007.

Unallocated Income and Expense



        Unallocated income consists primarily of investment income, including income or loss on investment disposals and
other-than-temporary impairment losses, which is not otherwise reflected in the operating segments. We include invested assets and related investment income not directly
required to support the risk and insurance brokerage services and consulting businesses.



        Private
equities are principally carried at cost; however, where we have significant influence, they are reported using the equity method of accounting. These investments usually do not
pay dividends. Limited partnerships ("LPs") are accounted for using the equity method and changes in the value of the underlying LP investments flow through unallocated investment income.



        This
table details our unallocated income and expense (in millions):








































































Years ended December 31,
 2008
 2007
 2006
 
  

Unallocated investment income

  $68  $79  $17 

Unallocated expenses

   (166)  (130)  (98)

Interest expense

   (126)  (138)  (129)




        SIZE=2>Unallocated investment income was $68 million in 2008, a decrease of $11 million over 2007 and was driven
by:





    a $29 million decrease in income from our PEPS I investment, partially offset by


    higher investment income from marketable securities due to the investment of proceeds from the sale of CICA and Sterling.



        SIZE=2>Unallocated expenses include corporate governance and other costs not attributable to the operating segments. These expenses increased to
$166 million in 2008 from $130 million in 2007, driven by:





    $50 million of hedging costs related to the merger with Benfield and


    higher stock compensation expense.



        The
higher costs were partially offset by:





    lower Corporate staff expenses,


    the 2007 resolution of a $15 million reconciliation difference in the U.K.,


    lower pension expense, and


51












    2007 expenses associated with a review of historical equity compensation practices.



        SIZE=2>Interest expense, which represents the cost of our worldwide debt obligations, decreased $12 million in 2008 to
$126 million, principally due to the redemption of our 3.5% Senior Convertible Debentures in 2007.



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