(Bloomberg) Aon Corp., the world?s second-largest insurance broker, said profit fell 12 percent as it eliminated commissions that New York Attorney General Eliot Spitzer called kickbacks. The company set aside $50 million for a potential settlement over the fees.

Fourth-quarter net income fell to $189 million, or 56 cents a share, from $215 million, or 65 cents, a year earlier, the Chicago-based company said in a statement. Profit excluding discontinued businesses was 57 cents, compared with the 46-cent average estimate of analysts polled by Thomson Financial. Aon scrapped the contingent commissions after Spitzer sued competitor Marsh & McLennan Cos. on October 14 for allegedly steering business to insurers that paid the most fees.

Aon?s revenue from the fees fell 76 percent to $11 million. Declining insurance prices are also crimping the commissions Aon charges.

?Growth rates and margins are under pressure at Aon and all the brokers,? said Mark Patterson, an analyst at Los Angeles- based NWQ Investment Management, before the earnings were released. NWQ is Aon?s third-largest investor with 24.5 million shares. Fourth-quarter brokerage revenue was unchanged at $1.5 billion and declined one percent excluding acquisitions, Aon said. The broker?s profit margin declined to 11.5 percent before taxes from 16.1 percent a year ago, in part because of the $50 million settlement provision.

The company had a $37 million pretax gain from selling its stock in Endurance Specialty Holdings Ltd., a Bermuda-based insurer it helped found.

Aon said it negotiated this month $1.43 billion of credit lines in dollars and euros with banks including Citigroup Inc.

The broker had been in discussions with its bankers to maintain access to credit since Spitzer sued Marsh. Aon?s previous agreements contained clauses that may have allowed lenders to cancel lines if Aon were sued.

Shares of Aon have tumbled 18 percent since the suit against Marsh, which was also accused of colluding with insurers to fabricate bids.

Marsh, the world?s largest broker, agreed to pay $850 million on January 31 to settle with Spitzer, and the attorney general has said he?s seeking other agreements with insurers and brokers.

Aon said the $50 million settlement provision would go towards potential accords with New York or other states. The company said in December that it was in discussions with Spitzer about ?new business practices? and that some employees hadn?t followed the company?s code of conduct.

Spokesman Al Orendorff said today that the company has found no evidence of bid-rigging.

Since the suit, Marsh and competitors Willis Group Holdings Ltd. and Arthur J. Gallagher & Co. have also eliminated the payments. Spitzer said they created an incentive for brokers to neglect the best interests of their clients.

Aon collected about $200 million of the commissions in 2003, less than 4 percent of its overall brokerage revenue. Marsh got $845 million of the fees, or about 12 percent of 2003 revenue.

Spitzer said the size of future settlements with brokers would probably reflect the amount of their contingent commissions.

?We have now created a template for other companies that are still being scrutinised,? Spitzer said in January 31 interview. For future settlements there will be ?some correlation between size, revenue flow and the payment,? he said.

Marsh didn?t admit or deny Spitzer?s charges, though the company apologised that some employees had ?unlawfully deceived? customers. Its settlement will be used entirely to reimburse clients.

Insurance brokers are middlemen that help companies and other organisations find insurance coverage. They typically earn commissions based on the cost of policies.

Prices for many types of commercial insurance declined in 2004 after three years of increases, according to survey by the Council of Insurance Agents and Brokers released in January. Companies renewing coverage in the fourth quarter were charged about seven percent less than a year earlier, the council said.

?It remains a difficult environment in which to achieve meaningful revenue growth,? Aon Chief Executive Officer Pat Ryan said in a statement.