NEW YORK (Bloomberg) ? Aon Corp., the world's second-largest insurance broker, is poised to settle fraud investigations by New York Attorney General Eliot Spitzer and two other states for $190 million, people familiar with the matter said.

The settlement may be announced as soon as today, said the people, who declined to be identified. Spitzer settled with Aon's bigger competitor, Marsh & McLennan Cos., for $850 million in January.

An agreement with Aon would resolve probes by New York, Connecticut and Illinois into fees that Spitzer said were tantamount to kickbacks from insurers. Aon collected $169 million of the payments in 2003 before banning them last year. An accord also would help reassure investors' in Aon, as the Chicago-based company searches for a new chief executive officer to succeed founder Patrick Ryan, 67.

"This will help with the CEO search," said Mark Patterson, an analyst with Los Angeles-based NWQ Investment Management, Aon's second-largest shareholder. "I don't think Aon is going to have a problem dealing with $190 million."

Aon spokesman Gary Sullivan and Spitzer spokesman Darren Dopp declined to comment. Shares of Aon have declined 9.2 percent during the past 12 months, compared with the 35 percent drop in Marsh's market value.

Joint Settlement

Spitzer worked with Connecticut Attorney General Richard Blumenthal, Illinois Attorney General Lisa Madigan and the insurance regulators in all three states to reach the Aon agreement, the people said. The settlement will reimburse clients who may have been harmed, they said.

Blumenthal declined to comment through an assistant, as did Madigan's spokeswoman Melissa Merz. Spokespeople for the three insurance departments also declined to comment.

Spitzer said in his Oct. 14 lawsuit against Marsh that fees from insurers created an incentive for brokers to steer clients to insurers that paid the most, often driving up the cost of insurance for policyholders.

New York-based Marsh got $845 million of fees from insurers in 2003, and Marsh's settlement reflected that amount, Spitzer said in January. Marsh and Willis Group Holdings Ltd. have also given up the payments since Spitzer sued Marsh. Aon and Willis haven't been sued.

Other Hurdles

The fees amounted to 2.5 percent of Aon's 2003 brokerage revenue, compared with 12 percent at Marsh and 3.5 percent at Willis. Aon set aside $50 million for potential settlements with Spitzer and other prosecutors in its fourth quarter. Ryan said on Feb. 8 that it was the company's "best estimate" of its liability.

Aon would be the first broker to settle with Connecticut and Illinois. Marsh only settled with New York and still faces dozens of state investigations touched off by Spitzer's suit. Aon's stock fell 27 cents in German trading today to $23.90 as 250 shares changed hands.

The company still faces hurdles in retaining clients, recovering lost fee revenue and boosting profit margins as declining commercial insurance prices crimp commissions from clients, said Patterson, whose firm manages $31 billion and holds 29.2 million Aon shares. Companies hire brokers to help them find insurance.

Profit Margins

Aon's profit margins have lagged those of Marsh and Willis. In the second quarter of 2004, the last period that brokers reported financial results before Spitzer's lawsuit was filed, Aon had a 14.8 percent pre-tax margin, trailing Marsh's 25 percent and Willis's 29 percent.

Ryan said in September that he would step down as CEO once a successor was found. Last month, he said the company's board narrowed its search and was "down to a nucleus of people." He plans to remain chairman.

An internal review at Aon found no evidence of bid-rigging, Spitzer's most serious accusation against Marsh, Ryan said on Feb. 9. Since October, three former managing directors at Marsh and seven executives from New York-based American International Group Inc., Bermuda-based Ace Ltd. and Zurich Financial Services AG have pleaded guilty to charges that they rigged insurance bids by soliciting inflated quotes from insurers.

Spitzer said in December that Ryan and Aon had cooperated fully with his investigation. Marsh had to remove its CEO, Jeffrey Greenberg, in October before Spitzer would negotiate.