NEW YORK (Bloomberg) -- Aon Corp., the world's second-largest insurance broker, will pay $190 million to settle New York Attorney General Eliot Spitzer's accusations that the company and Chief Executive Officer Patrick Ryan deceived clients.

Aon and senior executives including Ryan "ignored clients' interests" and steered business to insurers that paid kickbacks, Spitzer said in a suit on Friday accompanying the accord. The settlement was jointly reached with prosecutors and insurance regulators in New York, Connecticut and Illinois.

"Aon and other insurance brokers and consultants entered into contingent commission agreements and other arrangements that created conflicts of interest," Ryan, 67, said in an apology included with the settlement. "I deeply regret that we took advantage of those conflicts."

The agreement follows Spitzer's $850 million January settlement with Marsh & McLennan Cos., Aon's bigger competitor, over fees from insurers. Chicago-based Aon was also accused of steering business to insurers that allowed the broker to arrange their reinsurance policies. The company is searching for a replacement for Ryan, who last September announced his intention to step down as CEO once a successor was found.

"What happened at Marsh has already prepared us for these kind of ugly details," said Mark Patterson, an analyst at Los Angeles-based NWQ Investment Management, Aon's second-largest shareholder. Resolving the probes "will help with the CEO search," he said.

Restitution

Shares of Aon rose 34 cents, or 1.4 percent, to $24.51 at 1:16 p.m. in New York Stock Exchange composite trading. Through yesterday, they had fallen 13 percent since Marsh was sued on Oct. 14. Patterson, whose firm manages $31 billion and owns 29.2 million shares of Aon, spoke before the announcement.

Spitzer's complaint said Aon received undisclosed fees called contingent commissions from insurers, improperly steered business, and let insurers fund the hiring of brokers. Aon didn't admit or deny the allegations. The settlement will reimburse clients whose insurance costs may have been inflated because of the conduct.

New York worked with Connecticut Attorney General Richard Blumenthal, Illinois Attorney General Lisa Madigan and insurance regulators to reach the Aon agreement. Connecticut's insurance department didn't settle.

Aon plans to pay the restitution over 30 months. The company will revise its fourth-quarter results to record an expense of 32 cents a share for the settlement and a $40 million reserve for related litigation.

O'Halleran

Spitzer said Ryan personally agreed to assist insurer Chubb Corp. get more business from Aon clients because Chubb was using Aon to broker its reinsurance, or insurance for insurers.

Michael O'Halleran also participated in the improper conduct, according to the suit. He left his post as president of Aon last year to run the company's reinsurance, wholesale brokering and underwriting units.

In a statement separate from the apology, Ryan said the company "didn't agree with a number of allegations" in Spitzer's suit. Chubb spokesman Mark Greenberg declined to comment.

Ryan, who founded Aon's predecessor in 1964, announced his plans to step down from the CEO post a month before Spitzer's October lawsuit against Marsh revealed some of the conflicts of interest Spitzer was investigating. Spitzer had subpoenaed Marsh, Aon and Willis Group Holdings Ltd., a third competitor, in April 2004. Ryan said in September he planned to remain chairman.

`Leveraging'

Spitzer's suit said Ryan in 2000 personally negotiated an agreement with Chubb's then chairman and CEO Dean O'Hare in which Chubb would give certain reinsurance business to Aon Re in return for preferential treatment.

The deal between Aon and Chubb was reached over the objections of four Chubb executives, the suit said. One unidentified Chubb executive was quoted in an e-mail saying "Pat Ryan is well-known for leveraging the scope of Aon's brokerage relationships."

Another Chubb executive "intended to talk to O'Hare about why he believed O'Hare had made the wrong decision," the suit said.

Spitzer's probe of collusion led to his suit against New York-based Marsh, which touched off similar inquiries by dozens of state insurance departments and prosecutors.

Marsh had to remove its CEO, Jeffrey Greenberg, before Spitzer would negotiate. Three former managing directors at Marsh and seven executives from American International Group Inc., Ace Ltd. and Zurich Financial Services AG have pleaded guilty to charges that they rigged insurance bids by soliciting inflated quotes from insurers.

Criminal Charges?

Ryan said on a conference call today the company doesn't expect criminal charges related to the allegations. Blumenthal said in an interview he had no plans for such charges. Spitzer spokesman Darren Dopp said the settlement doesn't prevent the attorney general from pursuing criminal cases against individuals.

Aon collected $169 million in fees from insurers in 2003. The fees amounted to 2.5 percent of Aon's brokerage revenue that year, compared with 12 percent at Marsh and 3.5 percent at Willis. All three brokers have given up the payments since Spitzer sued Marsh. Willis hasn't been sued.