offices in Bermuda, said yesterday first-quarter operating profit per share fell 19 percent, in line with expectations, due to lower profits in its core brokerage business and lower investment income.

The Chicago-based company, second only to Marsh & McLennan in worldwide insurance brokerage and risk services, said first-quarter operating profit fell to 47 cents per share from 58 cents in the year-earlier quarter.

The results hit analysts' average forecast of 47 cents per share profit, according to First Call/Thomson Financial estimates.

Aon's shares rose 3-1/8, or 12 percent, to 29-1/2 on the New York Stock Exchange by mid-afternoon. The shares rose on investor relief that revenues continued to grow, analysts said, despite the drop in operating profit.

Aon's shares have fallen over 30 percent this year, driven down by poor fourth quarter profits, -- drastically cut by extra costs of integrating the company's many recent acquisitions and settling its involvement in the collapsed Unicover insurance pool and pension mis-selling in the UK.

"We're quite pleased with the results,'' said Aon chief executive Patrick Ryan in a conference call with analysts. "They seem to be on track.'' Pre-tax operating profit for Aon's core insurance broking operations fell to $180 million from $184 million last time.

The broking profit was cut partly by lower income from profit-sharing agreements with insurance companies' underwriters, caused by poorer underwriting results last year by most insurers. Underwriters often agree to share profits with brokers as an incentive for brokers to pass on better quality business to them.

Ryan said income from such profit-sharing deals only occurred in the first quarter of a year and should not drag down earnings for all the current year.

The costs of severance pay and a small loss at its newly acquired Italian brokerage also cut broking profit, Ryan said.

Overall operating profit was also reduced by lower investment income, which fell to $137 million from $150 million in the year-ago quarter. Aon did not give details on profits from its separate private equity investments, which are included in operating profit figures. First quarter revenues rose 7 percent to a record $1.8 billion, up from $1.7 billion in the year-ago quarter.

Net profit for the quarter rose sharply to 47 cents per share from 19 cents in same quarter a year ago, although that increase was largely due to a 39 cents per share charge in the year-ago quarter. On the subject of Unicover, the collapsed workers compensation insurance pool that Aon worked with, Ryan was comfortable with reserves the company set aside to settle any outstanding issues.