Aon plc (Form: 10-Q, Received: 05/09/2017 17:28:36)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-7933

Aon plc

(Exact Name of Registrant as Specified in Its Charter)



ENGLAND AND WALES		98-1030901
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)



122 LEADENHALL STREET, LONDON, ENGLAND		EC3V 4AN
(Address of Principal Executive Offices)		(Zip Code)

+44 20 7623 5500

(Registrant’s Telephone Number,

Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ý NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer x		Accelerated filer o
Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)		Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO ý

Number of Class A Ordinary Shares of Aon plc, $0.01 nominal value, outstanding as of May 8, 2017 : 262,070,015

Table of Contents



PART I

	Item 1. Financial Statements
	Aon plc Condensed Consolidated Statements of Income
	Aon plc Condensed Consolidated Statements of Comprehensive Income
	Aon plc Condensed Consolidated Statements of Financial Position
	Aon plc Condensed Consolidated Statement of Shareholders’ Equity
	Aon plc Condensed Consolidated Statements of Cash Flows
	Notes to Condensed Consolidated Financial Statements

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures about Market Risk
	Item 4. Controls and Procedures

PART II

	Item 1. Legal Proceedings
	Item 1A. Risk Factors
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 3. Default Upon Senior Securities
	Item 4. Mine Safety Disclosures
	Item 5. Other Information
	Item 6. Exhibits
	Signature
	Exhibit Index

Part I Financial Information

Item 1. Financial Statements

Aon plc

Condensed Consolidated Statements of Income

(Unaudited)



	Three Months Ended
(millions, except per share data)	March 31, 2017			March 31, 2016
Revenue
Total revenue	$	2,381		$	2,276
Expenses
Compensation and benefits	1,461			1,345
Information technology	88			83
Premises	84			82
Depreciation of fixed assets	54			38
Amortization of intangible assets	43			37
Other general expenses	308			271
Total operating expenses	2,038			1,856
Operating income	343			420
Interest income	2			2
Interest expense	(70		)	(69		)
Other income (expense)	(10		)	18
Income from continuing operations before income taxes	265			371
Income taxes	—			59
Income from continuing operations	265			312
Income from discontinued operations, net of tax	40			25
Net income	305			337
Less: Net income attributable to noncontrolling interests	14			12
Net income attributable to Aon shareholders	$	291		$	325

Basic net income per share attributable to Aon shareholders
Continuing operations	$	0.95		$	1.11
Discontinued operations	0.15			0.09
Net income	$	1.10		$	1.20
Diluted net income per share attributable to Aon shareholders
Continuing operations	$	0.94		$	1.10
Discontinued operations	0.15			0.09
Net income	$	1.09		$	1.19
Cash dividends per share paid on ordinary shares	$	0.33		$	0.30
Weighted average ordinary shares outstanding - basic	264.8			271.7
Weighted average ordinary shares outstanding - diluted	267.0			273.7

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Aon plc

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended
(millions)	March 31, 2017			March 31, 2016
Net income	$	305		$	337
Less: Net income attributable to noncontrolling interests	14			12
Net income attributable to Aon shareholders	$	291		$	325
Other comprehensive (loss) income, net of tax:
Change in fair value of financial instruments	(2		)	(7		)
Foreign currency translation adjustments	147			(79		)
Postretirement benefit obligation	18			(201		)
Total other comprehensive income (loss)	163			(287		)
Less: Other comprehensive income attributable to noncontrolling interests	1			—
Total other comprehensive income (loss) attributable to Aon shareholders	162			(287		)
Comprehensive income attributable to Aon shareholders	$	453		$	38

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Aon plc

Condensed Consolidated Statements of Financial Position

(Unaudited)



(millions, except nominal value)	March 31, 2017			December 31, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	433		$	426
Short-term investments	200			290
Receivables, net	2,103			2,106
Fiduciary assets	9,162			8,959
Other current assets	309			247
Current assets of discontinued operations	3,186			1,118
Total Current Assets	15,393			13,146
Goodwill	7,544			7,410
Intangible assets, net	1,886			1,890
Fixed assets, net	536			550
Deferred tax assets	351			325
Prepaid pension	893			858
Other non-current assets	379			360
Non-current assets of discontinued operations	—			2,076
TOTAL ASSETS	$	26,982		$	26,615

LIABILITIES AND EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	1,332		$	1,604
Short-term debt and current portion of long-term debt	667			336
Fiduciary liabilities	9,162			8,959
Other current liabilities	773			656
Current liabilities of discontinued operations	1,036			940
Total Current Liabilities	12,970			12,495
Long-term debt	5,610			5,869
Deferred tax liabilities	112			101
Pension, other postretirement and postemployment liabilities	1,731			1,760
Other non-current liabilities	733			719
Non-current liabilities of discontinued operations	—			139
TOTAL LIABILITIES	21,156			21,083

EQUITY
Ordinary shares - $0.01 nominal value Authorized: 750 shares (issued: 2017 - 262.8; 2016 - 262.0)	3			3
Additional paid-in capital	5,567			5,577
Retained earnings	3,934			3,807
Accumulated other comprehensive loss	(3,750		)	(3,912		)
TOTAL AON SHAREHOLDERS' EQUITY	5,754			5,475
Noncontrolling interests	72			57
TOTAL EQUITY	5,826			5,532
TOTAL LIABILITIES AND EQUITY	$	26,982		$	26,615

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Aon plc

Condensed Consolidated Statement of Shareholders’ Equity

(Unaudited)



(millions)	Shares		Ordinary Shares and Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss, Net of Tax			Non- controlling Interests		Total
Balance at December 31, 2016	262.0		$	5,580		$	3,807		$	(3,912	)	$	57	$	5,532
Adoption of new accounting guidance	—		—			49			—			—		49
Balance at January 1, 2017	262.0		5,580			3,856			(3,912		)	57		5,581
Net income	—		—			291			—			14		305
Shares issued - employee stock compensation plans	1.9		(85		)	—			—			—		(85		)
Shares purchased	(1.1	)	—			(126		)	—			—		(126		)
Share-based compensation expense	—		75			—			—			—		75
Dividends to shareholders	—		—			(87		)	—			—		(87		)
Net change in fair value of financial instruments	—		—			—			(2		)	—		(2		)
Net foreign currency translation adjustments	—		—			—			146			1		147
Net postretirement benefit obligation	—		—			—			18			—		18
Balance at March 31, 2017	262.8		$	5,570		$	3,934		$	(3,750	)	$	72	$	5,826

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Aon plc

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
(millions)	March 31, 2017			March 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	305		$	337
Less: Income from discontinued operations, net of income taxes	40			25
Adjustments to reconcile net income to cash provided by operating activities:
Loss (gain) from sales of businesses and investments, net	2			(35		)
Depreciation of fixed assets	54			38
Amortization of intangible assets	43			37
Share-based compensation expense	78			79
Deferred income taxes	(2		)	23
Change in assets and liabilities:
Fiduciary receivables	337			399
Short-term investments — funds held on behalf of clients	(330		)	(242		)
Fiduciary liabilities	(7		)	(157		)
Receivables, net	38			33
Accounts payable and accrued liabilities	(390		)	(307		)
Restructuring reserves	99			—
Current income taxes	(56		)	(45		)
Pension, other postretirement and other postemployment liabilities	(41		)	(50		)
Other assets and liabilities	92			59
Cash provided by operating activities - continuing operations	182			144
Cash provided by operating activities - discontinued operations	58			129
CASH PROVIDED BY OPERATING ACTIVITIES	240			273
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments	25			13
Purchases of investments	(9		)	(14		)
Net sale (purchases) of short-term investments — non-fiduciary	94			(227		)
Acquisition of businesses, net of cash acquired	(46		)	(16		)
Sale of businesses, net of cash sold	(2		)	97
Capital expenditures	(34		)	(37		)
Cash provided by (used for) investing activities - continuing operations	28			(184		)
Cash used for investing activities - discontinued operations	(15		)	(15		)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	13			(199		)
CASH FLOWS FROM FINANCING ACTIVITIES
Share repurchase	(126		)	(685		)
Issuance of shares for employee benefit plans	(85		)	(65		)
Issuance of debt	992			1,045
Repayment of debt	(950		)	(175		)
Cash dividends to shareholders	(87		)	(82		)
Noncontrolling interests and other financing activities	(2		)	(42		)
Cash used for financing activities - continuing operations	(258		)	(4		)
Cash used for financing activities - discontinued operations	—			—
CASH USED FOR FINANCING ACTIVITIES	(258		)	(4		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	25			11
NET INCREASE IN CASH AND CASH EQUIVALENTS	20			81
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	431			384
CASH AND CASH EQUIVALENTS AT END OF PERIOD ⁽¹⁾	$	451		$	465
Supplemental disclosures:
Interest paid	$	58		$	52
Income taxes paid, net of refunds	$	58		$	41

(1) Includes 18 million and $3 million of discontinued operations at March 31, 2017 and March 31, 2016, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements and Notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Condensed Consolidated Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries (“Aon” or the “Company”). All intercompany accounts and transactions have been eliminated. The Condensed Consolidated Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented.

Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The results for the three months ended March 31, 2017 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2017 .

Discontinued Operations

On February 9, 2017, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Tempo Acquisition, LLC (the “Buyer”), an entity formed and controlled by affiliates of The Blackstone Group L.P. (the “Sponsor”). Pursuant to the Purchase Agreement, the Company has agreed to sell its benefits administration and business process outsourcing business to the Buyer and certain designated purchasers that are direct or indirect subsidiaries of the Buyer (the “Transaction”). As a result, the benefits administration and business process outsourcing business’s financial results are reflected in the Company’s Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Financial Position, and Condensed Consolidated Statements of Cash Flows, retrospectively, as discontinued operations beginning in the first quarter of 2017. Additionally, all Notes to Condensed Consolidated Financial Statements have been retrospectively restated to only include the impacts of continuing operations, unless noted otherwise. The Company closed the Transaction on May 1, 2017. Refer to Note 3 “Discontinued Operations” for additional information.

Reportable Segments

Beginning in the first quarter of 2017 and following the Transaction described above, the Company began operating as one segment that includes all of Aon’s continuing operations, which as a global professional services firm provides advice and solutions to clients focused on risk, retirement, and health through five revenue lines that make up our principal products and services. Refer to Note 17 “Segment Information” for additional information.

As a result of these initiatives, Aon made the following changes to its presentation of the Condensed Consolidated Statement of Income beginning in the first quarter of 2017:


•	Commissions, fees and other and Fiduciary investment income are now reported as one Total revenue line item; and


•	Other general expenses has been further broken out to provide greater clarity into charges related to Information technology, Premises, Depreciation of fixed assets, and Amortization of intangible assets.

Prior period comparable financial information has been reclassified to conform to the 2017 presentation.

The Company believes this presentation provides greater clarity into the risks and opportunities that management believes are important and allows users of the financial statements to assess the performance in the same way as the CODM.

Use of Estimates

The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the financial statements in future periods.

2. Accounting Principles and Practices

New Accounting Pronouncements

Presentation of Net Periodic Pension and Postretirement Benefit Costs

In March 2017, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Additionally, only the service cost component is eligible for capitalization, when applicable. An entity will apply the new guidance retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension costs and net periodic postretirement benefit in assets. The new guidance allows a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The new guidance is effective for Aon in the first quarter of 2018. The adoption of this guidance will have no impact on the total results of the Company. The presentation of results will reflect a change in operating income offset by an equal change in other income (expense) for the period.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued new accounting guidance on simplifying the test for goodwill impairment. Currently the standard requires an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The new guidance removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. An entity will apply the new guidance on a prospective basis. The new guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted for annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact that the standard will have on its Condensed Consolidated Financial Statements.

Income Tax Consequences of Intercompany Transactions

In October 2016, the FASB issued new accounting guidance on the income tax consequences of intra-entity asset transfers other than inventory. The guidance will require that the seller and buyer recognize the consolidated current and deferred income tax consequences of a transaction in the period the transaction occurs rather than deferring to a future period and recognizing those consequences when the asset has been sold to an outside party or otherwise recovered through use (i.e., depreciated, amortized, impaired). An entity will apply the new guidance on a modified retrospective basis with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The new guidance is effective for Aon in the first quarter of 2018, and the Company is currently evaluating the impact that the standard will have on its Condensed Consolidated Financial Statements.

Statement of Cash Flows

In August 2016, the FASB issued new accounting guidance on the classification of certain cash receipts and cash payments. Under the new guidance, an entity will no longer have discretion to choose the classification for a number of transactions, including contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The new standard will be effective for the Company in the first quarter of 2018, with early adoption permitted. An entity will apply the new guidance through retrospective adjustment to all periods presented. The retrospective approach includes a practical expedient that entities may apply should retrospective adoption be impracticable; in this case, the amendments for these issues may be applied prospectively as of the earliest date practicable. The guidance will not have a material impact on the Company’s Condensed Consolidated Statements of Cash Flows.

Credit Losses

In June 2016, the FASB issued new accounting guidance on the measurement of credit losses on financial instruments. The new guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. Aon is currently evaluating the impact that the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption.

Share-based Compensation

In March 2016, the FASB issued new accounting guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement and treated as discrete items in the reporting period. Further, excess tax benefits are required to be classified along with other income tax cash flows as an operating activity. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method.

The Company adopted this guidance on January 1, 2017, with the following impacts:


•	Increase to Deferred tax assets on the Condensed Consolidated Statement of Financial Position of approximately $49 million through a cumulative-effect adjustment to Retained earnings for excess tax benefits not previously recognized, and


•	Recognition of $29 million , or $0.11 per share income tax benefit from continuing operations in the Condensed Consolidated Statement of Income for the quarter ended March 31, 2017 related to excess tax benefits.

Adoption of the guidance was applied prospectively on the Statement of Cash Flows and prior period comparable information was not restated. Other elements of the guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Leases

In February 2016, the FASB issued new accounting guidance on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from currently effective U.S. GAAP. The new standard will be effective for the Company in the first quarter of 2019, with early application permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight

in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. Aon is currently evaluating the impact the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption.

Financial Assets and Liabilities

In January 2016, the FASB issued new accounting guidance on recognition and measurement of financial assets and financial liabilities. The amendments in the new guidance make targeted improvements, which include the requirement to measure equity investments with readily determinable fair values at fair value through net income, simplification of the impairment assessment for equity investments without readily determinable fair values, adjustments to existing and additional disclosure requirements, and additional tax considerations. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values, including disclosure requirements, should be applied prospectively to equity investments that exist as of the date of adoption of the guidance. The guidance is effective for the Company in the first quarter of 2018 and early adoption is permitted. Aon is currently evaluating the impact that the standard will have on the its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption.

Revenue Recognition

In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers, which, when effective, will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of the standard is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The standard is effective for Aon in the first quarter of 2018 and early adoption is permitted beginning in the first quarter of 2017. Two methods of transition are permitted upon adoption: full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing a comparable view across all periods presented. Under the modified retrospective method, prior periods would not be restated. Rather, revenue and other disclosures for pre-2018 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The Company will adopt this standard in the first quarter of 2018 and is evaluating both methods of transition; however, it is currently anticipated that a modified retrospective adoption approach will be used.

A preliminary assessment to determine the impacts of the new accounting standard has been performed. The Company is currently implementing accounting and operational processes that will be impacted by the new standard, but is still evaluating the quantitative impacts the standard will have on its financial statements.

However, the primary impacts of the new standard to the Company are anticipated to be as follows:

The Company currently recognizes revenue for certain brokerage activities over a period of time either due to the transfer of value to customers or as the remuneration becomes determinable. Under the new standard, this revenue will be recognized on the effective date of the associated policies when control of the policy transfers to the customer. As a result, revenue from these arrangements will be recognized in earlier periods under the new standard in comparison to the current guidance and will change the timing and amount of revenue recognized for annual and interim periods. The Company is currently assessing the timing and measurement of revenue recognition under the new standard for certain other services.

Additionally, the new standard provides guidance on accounting for certain revenue-related costs including when to capitalize costs associated with obtaining and fulfilling a contract. These costs are currently expensed as incurred under existing U.S. GAAP. These assets recognized for the costs to obtain and/or fulfill a contract will be amortized on a on a systematic basis that is consistent with the transfer of the services to which the asset relates. The Company is quantifying the nature and amount of costs that would qualify for capitalization and the amount of amortization that will be recognized in each period.

3. Discontinued Operations

On February 9, 2017 , the Company entered into the Purchase Agreement with Tempo Acquisition, LLC to sell its benefits administration and business process outsourcing business (the “Divested Business”) to the Buyer, an entity formed and controlled by affiliates of The Blackstone Group L.P., and certain designated purchasers that are direct or indirect subsidiaries of the Buyer.

On May 1, 2017, the Buyer purchased all of the outstanding equity interests of the Divested Business, plus certain related assets, for a purchase price of (i) $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and (ii) deferred consideration of up to $500 million , plus the assumption of certain liabilities. Cash proceeds from the sale, before taxes and after customary adjustments as set forth in the Purchase Agreement, were $4.2 billion .

Aon and the Buyer entered into certain related transaction agreements at the closing, including two commercial agreements, a transition services agreement, certain intellectual property license agreements, sub-leases and other customary agreements. Aon expects to continue to be a significant client of the Divested Business and the Divested Business has agreed to use Aon for its broking and other services for a specified period of time.

The Company has classified the results of the Divested Business as discontinued operations in the Company’s Condensed Consolidated Statements of Income for all periods presented. Additionally, the assets and liabilities of the Divested Business are classified as discontinued operations in the Company’s Condensed Consolidated Statements of Financial Position. These assets and liabilities are classified as current in the Company’s Condensed Consolidated Statements of Financial Position as of March 31, 2017 as the Company closed the Transaction within one year.

The financial results of the Divested Business for the three months ended March 31, 2017 and 2016 are presented as Income from discontinued operations on the Company’s Condensed Consolidated Statements of Income. The following table presents financial results of the Divested Business (in millions):



	Three Months Ended
	March 31, 2017		March 31, 2016
Revenue
Total Revenue	$	527	$	529
Expenses
Total Operating Expenses ⁽¹⁾	470		486
Income from discontinued operations before income taxes	57		43
Income taxes	17		18
Income from discontinued operations, net of tax	$	40	$	25

(1)

Upon triggering held for sale criteria in February 2017, Aon ceased depreciating and amortizing all long-lived assets included in discontinued operations. Specifically, included within Total operating expenses was $8 million and $18 million , respectively, of depreciation of fixed assets and $11 million and $30 million , respectively, of intangible asset amortization for the three months ended March 31, 2017 and 2016 .

The following table presents the aggregate carrying amounts of the classes of assets and liabilities presented as discontinued operations within the Company’s Condensed Consolidated Statements of Financial Position (in millions):



	March 31, 2017		December 31, 2016
ASSETS
Cash and cash equivalents	$	18	$	5
Receivables, net	412		483
Fiduciary assets	591		526
Goodwill	1,338		1,337
Intangible assets, net	322		333
Fixed assets, net	222		215
Other assets	283		295
TOTAL ASSETS	$	3,186	$	3,194

LIABILITIES
Accounts payable and accrued liabilities	$	114	$	197
Fiduciary liabilities	591		526
Other liabilities	331		356
TOTAL LIABILITIES	$	1,036	$	1,079

The Company’s Condensed Consolidated Statements of Cash Flows present the operating, investing, and financing cash flows of the Divested Business as discontinued operations. Aon uses a centralized approach to cash management and financing of its operations. Prior to the close of the Transaction, portions of the Divested Business’s cash were transferred to Aon daily, and Aon would fund the Divested Business as needed.

4. Cash and Cash Equivalents and Short-term Investments

Cash and cash equivalents include cash balances and all highly-liquid instruments with initial maturities of three months or less. Short-term investments consist of money market funds. The estimated fair value of cash and cash equivalents and short-term investments approximates their carrying values.

At March 31, 2017 , Cash and cash equivalents and Short-term investments were $633 million compared to $716 million at December 31, 2016 . Of the total balances, $86 million and $82 million was restricted as to its use at March 31, 2017 and December 31, 2016 , respectively. Included within the March 31, 2017 and December 31, 2016 balances, respectively, were £43.3 million ( $54.0 million at March 31, 2017 exchange rates) and £43.3 million ( $53.2 million at December 31, 2016 exchange rates) of operating funds required to be held by the Company in the U.K. by the Financial Conduct Authority, a U.K.-based regulator, which were included in Short-term investments.

5. Other Financial Data

Condensed Consolidated Statements of Income Information

Other Income (Expense)

Other income (expense) consists of the following (in millions):



Three months ended March 31	2017			2016
Foreign currency remeasurement loss	$	(10	)	$	(17	)
(Loss) gain on disposal of business	(2		)	35
Equity earnings	6			2
Loss on financial instruments	(4		)	(2		)
Total	$	(10	)	$	18

Condensed Consolidated Statements of Financial Position Information

Allowance for Doubtful Accounts

An analysis of the allowance for doubtful accounts is as follows (in millions):



Three months ended March 31	2017			2016
Balance at January 1	$	56		$	58
Provision charged to Other general expenses	6			5
Accounts written off, net of recoveries	(3		)	(1		)
Foreign currency translation	2			—
Balance at March 31	$	61		$	62

Other Current Assets

The components of Other current assets are as follows (in millions):



As of	March 31, 2017		December 31, 2016
Taxes receivable	$	147	$	100
Prepaid expenses	125		102
Other	37		45
Total	$	309	$	247

Other Non-Current Assets

The components of Other non-current assets are as follows (in millions):



As of	March 31, 2017		December 31, 2016
Investments	121		119
Taxes receivable	80		82
Other	178		159
Total	$	379	$	360

Other Current Liabilities

The components of Other current liabilities are as follows (in millions):



As of	March 31, 2017		December 31, 2016
Deferred revenue	$	338	$	199
Taxes payable	57		77
Other	378		380
Total	$	773	$	656

Other Non-Current Liabilities

The components of Other non-current liabilities are as follows (in millions):



As of	March 31, 2017		December 31, 2016
Taxes payable	$	317	$	288
Deferred revenue	49		49
Leases	135		136
Compensation and benefits	61		56
Other	171		190
Total	$	733	$	719

6. Acquisitions and Dispositions of Businesses

Acquisitions

The Company completed two acquisitions during the three months ended March 31, 2017 and eight acquisitions during the twelve months ended December 31, 2016 . The following table includes the preliminary fair values of consideration transferred, assets acquired, and liabilities assumed as a result of the Company’s acquisitions (in millions):



	March 31, 2017		December 31, 2016
Cash	$	47	$	891
Deferred and contingent consideration	5		43
Aggregate consideration transferred	52		934
Assets acquired:
Cash and cash equivalents	1		12
Receivables, net	2		52
Goodwill	33		642
Intangible assets, net	23		366
Fixed assets, net	1		30
Other assets	1		2
Total assets acquired	61		1,104
Liabilities assumed:
Current liabilities	3		163
Other liabilities	6		7
Total liabilities assumed	9		170
Net assets acquired	$	52	$	934

The results of operations of these acquisitions are included in the Condensed Consolidated Financial Statements as of the respective acquisition dates. The results of operations of the Company would not have been materially different if these acquisitions had been reported from the beginning of the period in which they were acquired.

2017 Acquisitions

On March 3, 2017, the Company completed the transaction to acquire Finaccord Limited, a market research, publishing and consulting company based in the United Kingdom.

On January 19, 2017, the Company completed the transaction to acquire VERO Management AG, an insurance broker and risk advisor based in Austria.

2016 Acquisitions

On December 26, 2016, the Company completed the transaction to acquire Admix, a leading health and benefits brokerage and solutions firm based in Brazil.

On November 11, 2016 the Company completed the transaction to acquire CoCubes, a leading hiring assessment company based in India.

On October 31, 2016, the Company completed the transaction to acquire Stroz, Friedberg, Inc., a leading global cyber risk management firm based in New York City, with offices across the U.S. and in London, Zurich, Dubai and Hong Kong.

On August 19, 2016, the Company completed the transaction to acquire Cammack Health LLC, a leading health and benefits consulting firm that serves large health care organizations in the Eastern region of the U.S., including health plans, health systems and employers.

On June 1, 2016, the Company completed the transaction to acquire Univers Workplace Solutions, a leading elective benefit enrollment and communication services firm based in New Jersey.

On April 11, 2016, the Company completed the transaction to acquire Nexus Insurance Brokers Limited and Bayfair Insurance Centre Limited, insurance brokerage firms located in New Zealand.

On February 1, 2016, the Company completed the transaction to acquire Modern Survey, an employee survey and talent analytics solutions provider based in Minneapolis.

On January 1, 2016, the Company completed the transaction to acquire Globe Events Management, an insurance, retirement, and investment consulting business company based in Australia.

Dispositions

The Company completed three dispositions during the three months ended March 31, 2017 and two dispositions during the three months ended March 31, 2016 .

Total pretax losses recognized, net of gains, were $2 million and total pretax gains recognized, net of losses, were $35 million , respectively, for the three months ended March 31, 2017 and 2016 . Gains and losses recognized as a result of a disposition are included in Other income (expense) in the Condensed Consolidated Statements of Income.

Subsequent Events

On May 1, 2017, Aon completed its sale of its benefits administration and business process outsourcing business. Refer to Note 3 “Discontinued Operations” for further information.

7. Restructuring

In 2017, Aon initiated a global restructuring plan (the “Restructuring Plan”) in connection with the sale of its benefits administration and business process outsourcing business. The Restructuring Plan is intended to streamline operations across the organization and deliver greater efficiency, insight, and connectivity. The Company expects these restructuring activities and related expenses to affect continuing operations through 2019, including an estimated 1,600 to 1,900 role eliminations. The Restructuring Plan is expected to result in cumulative costs of approximately $750 million through the end of the plan, consisting of approximately $207 million in employee termination costs, $146 million in technology rationalization costs, $176 million in real estate consolidation costs, $40 million in asset impairments, and $181 million in other costs, including certain separation costs associated with the sale of the benefits administration and business process outsourcing business. Included in the estimated $750 million is $50 million of estimated non-cash charges related to asset impairments and lease consolidations.

From the inception of the Restructuring Plan through March 31, 2017 , 1,065 positions have been eliminated and total expenses of $144 million have been incurred for restructuring and related separation costs. These charges are included in Compensation and benefits, Information technology, Premises, Depreciation of fixed assets, and Other general expenses in the accompanying Condensed Consolidated Statements of Income.

The following summarizes restructuring and separation costs by type that have been incurred through March 31, 2017 and are estimated to be incurred through the end of the Restructuring Plan (in millions):



	First Quarter 2017		Estimated Remaining Costs		Estimated Total Cost ⁽¹⁾
Workforce reduction	$	103	$	104	$	207
Technology rationalization	3		143		146
Lease consolidation	3		173		176
Asset impairments	13		27		40
Other costs associated with restructuring and separation ⁽²⁾	22		159		181
Total restructuring and related expenses	$	144	$	606	$	750

(1)

Actual costs, when incurred, may vary due to changes in the assumptions built into the Restructuring Plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives.


(2)	Other costs associated with the Restructuring Plan, including costs to separate the Divested Business, as well as moving costs, consulting and legal fees. These costs are generally recognized when incurred.

As of March 31, 2017 , the Company’s liabilities for the Restructuring Plan are as follows (in millions):



	Restructuring Plan
Balance at January 1, 2017	$	—
Expensed	130
Cash payments	(31		)
Foreign currency translation and other	9
Balance at March 31, 2017	$	108

8. Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the three months ended March 31, 2017 are as follows (in millions):




Balance as of January 1, 2017	$	7,410
Goodwill related to current year acquisitions	33
Goodwill related to disposals	—
Goodwill related to prior year acquisitions	(21		)
Foreign currency translation	122
Balance as of March 31, 2017	$	7,544

Other intangible assets by asset class are as follows (in millions):



	March 31, 2017						December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets with indefinite lives:
Tradenames	$	999	$	—	$	999	$	998	$	—	$	998

Intangible assets with finite lives:
Customer related and contract based	2,069		1,253		816		2,023		1,198		825
Technology and other	388		317		71		376		309		67
Total	$	3,456	$	1,570	$	1,886	$	3,397	$	1,507	$	1,890

Amortization expense from finite lived intangible assets was $43 million for the three months ended March 31, 2017 . Amortization expense from finite lived intangible assets was $37 million for the three months ended March 31, 2016 .

The estimated future amortization for finite lived intangible assets as of March 31, 2017 is as follows (in millions):



			Subsequent Event
	As of March 31, 2017		Estimated Impairment Charge ⁽¹⁾		Estimated Tradename Amortization ⁽²⁾			Revised Estimated Total Future Amortization
Remainder of 2017	$	131	$	400	$	137		$	668
2018	155		—		206			361
2019	137		—		206			343
2020	121		—		68			189
2021	87		—		(1		)	86
Thereafter	256		—		(17		)	239
Total	$	887	$	400	$	599		$	1,886


(1)	In the second quarter of 2017, in connection with the completion of the sale of the Divested Business, the Company expects to recognize a non-cash impairment charge to the associated indefinite lived tradename of approximately $400 million . Refer to Note 3 “Discontinued Operations” for further information.


(2)	Additionally, effective May 1, 2017, consistent with operating as one segment, the Company has implemented a three -year strategy to transition to a unified Aon brand. As a result, Aon commenced amortization of all indefinite lived tradenames and prospectively accelerated amortization of its finite lived tradenames over the three -year period.

9. Debt

Revolving Credit Facilities

As of March 31, 2017 , Aon had one primary committed credit facility outstanding: its $900 million multi-currency U.S. credit facility expiring in February 2021 (the “2021 Facility”). The Company’s $400 million U.S. credit facility expired in March 2017.

The 2021 Facility includes customary representations, warranties and covenants, including financial covenants that require Aon plc to maintain specified ratios of adjusted consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”) to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At March 31, 2017 , Aon plc did not have borrowings under the 2021 Facility, and was in compliance with all covenants contained therein during the three months ended March 31, 2017 .

Commercial Paper

Aon Corporation, a wholly-owned subsidiary of Aon plc, has established a U.S. commercial paper program, which provides for commercial paper to be issued in an aggregate principal amount of up to $900 million , and Aon plc has established a European multi-currency commercial paper program, which provides for commercial paper to be issued in an aggregate principal amount of up to €300 million ( $324 million at March 31, 2017 exchange rates). The U.S. commercial paper program is fully and unconditionally guaranteed by Aon plc and the European commercial paper program is fully and unconditionally guaranteed by Aon Corporation. In the aggregate, the Company had $384 million and $329 million of commercial paper outstanding at March 31, 2017 and December 31, 2016 , respectively, which is included in Short-term debt and current portion of long-term debt in the Company’s Condensed Consolidated Statements of Financial Position. The weighted average commercial paper outstanding for the three months ended March 31, 2017 and 2016 was $367 million and $177 million , respectively. The weighted average interest rate of the commercial paper outstanding for the three months ended March 31, 2017 and 2016 was 0.12% and 0.11% , respectively.

10. Income Taxes

The effective tax rate on net income from continuing operations was 0.1% for the three months ended March 31, 2017 . The effective tax rate on net income from continuing operations was 15.9% for the three months ended March 31, 2016 . The lower effective tax rate in the first quarter of 2017 was primarily due to changes in the geographical distribution of income, including the estimated impact of the Restructuring Program and accelerated amortization of tradenames, and the impact of share-based payments from adoption of the new share-based compensation guidance. Refer to Note 2 “Accounting Principles and Practices” for additional details.

11. Shareholders’ Equity

Ordinary Shares

Aon has a share repurchase program authorized by the Company’s Board of Directors (the “Repurchase Program”) . The Repurchase Program was established in April 2012 with up to $5.0 billion in authorized repurchases and increased in November 2014 and February 2017 by incremental increases of $5.0 billion in authorized repurchases at each of those times.

In the three months ended March 31, 2017 , the Company repurchased 1.1 million shares at an average price per share of $114.46 , for a total cost of approximately $125 million under the Repurchase Program. The Company recorded an additional $0.6 million of costs associated with the repurchases to retained earnings during the quarter. In the three months ended March 31, 2016 , the Company repurchased 7.7 million shares at an average price per share of $97.92 , for a total cost of approximately $750 million . At March 31, 2017 , the remaining authorized amount for share repurchase under the Repurchase Program was $7.7 billion . Under the Repurchase Program, the Company has repurchased a total of 91.3 million shares for an aggregate cost of approximately $7.3 billion .

Net Income Per Share

Weighted average shares outstanding are as follows (in millions):



	Three months ended March 31
	2017	2016
Basic weighted-average ordinary shares outstanding	264.8	271.7
Dilutive effect of potentially issuable shares	2.2	2.0
Diluted weighted-average ordinary shares outstanding	267.0	273.7

Potentially issuable shares are not included in the computation of diluted net income per share if their inclusion would be antidilutive. There were no shares excluded from the calculation for the three months ended March 31, 2017 and 0.5 million shares excluded from the calculation for the three months ended March 31, 2016 .

Accumulated Other Comprehensive Loss

Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):



	Change in Fair Value of Financial Instruments ⁽¹⁾			Foreign Currency Translation Adjustments			Post-Retirement Benefit Obligation ⁽²⁾			Total
Balance at December 31, 2016	$	(37	)	$	(1,264	)	$	(2,611	)	$	(3,912	)
Other comprehensive (loss) income before reclassifications, net	4			146			—			150
Amounts reclassified from accumulated other comprehensive loss:
Amounts reclassified from accumulated other comprehensive (loss) income	(10		)	—			26			16
Tax benefit (expense)	4			—			(8		)	(4		)
Amounts reclassified from accumulated other comprehensive (loss) income, net	(6		)	—			18			12
Net current period other comprehensive (loss) income	(2		)	146			18			162
Balance at March 31, 2017	$	(39	)	$	(1,118	)	$	(2,593	)	$	(3,750	)


(1)	Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense) , Other general expenses , and Compensation and benefits . See Note 14 “Derivatives and Hedging” for additional information regarding the Company’s derivative and hedging activity.


(2)	Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Compensation and benefits.

12. Employee Benefits

The following table provides the components of the net periodic (benefit) cost recognized in the Condensed Consolidated Statements of Income in Compensation and benefits for Aon’s material U.K., U.S., and other significant international pension plans located in the Netherlands and Canada (in millions):



	Three months ended March 31
	U.K.						U.S.						Other
	2017			2016			2017			2016			2017			2016
Service cost	$	—		$	—		$	—		$	—		$	—		$	—
Interest cost	30			43			24			28			6			7
Expected return on plan assets, net of administration expenses	(48		)	(64		)	(35		)	(39		)	(11		)	(12		)
Amortization of prior-service cost	—			1			—			—			—			—
Amortization of net actuarial loss	7			8			13			13			3			3
Net periodic (benefit) cost	$	(11	)	$	(12	)	$	2		$	2		$	(2	)	$	(2	)

In March 2017, the Company approved a plan to offer a voluntary one-time lump sum payment option to certain eligible employees of the Company’s U.K. pension plans that, if accepted, would settle the Company’s pension obligation to them. A non-cash settlement charge is expected in the fourth quarter of 2017.

Contributions

The Company expects to contribute approximately $80 million , $87 million , and $18 million , based on exchange rates as of December 31, 2016 , to its significant U.K., U.S., and other significant international pension plans, respectively, during 2017. During the three months ended March 31, 2017 , contributions of $16 million , $13 million , and $2 million were made to the Company’s significant U.K., U.S., and other significant international pension plans, respectively.

During the three months ended March 31, 2016 , contributions of $17 million , $13 million , and $7 million were made to the Company’s significant U.K., U.S., and other significant international pension plans, respectively.

13. Share-Based Compensation Plans

The following table summarizes share-based compensation expense recognized in the Condensed Consolidated Statements of Income in Compensation and benefits (in millions):



	Three months ended March 31
	2017		2016
Restricted share units (“RSUs”)	$	55	$	57
Performance share awards (“PSAs”)	19		19
Employee share purchase plans	4		3
Total share-based compensation expense	$	78	$	79

Restricted Share Units

RSUs generally vest between three and five years. The fair value of RSUs is based upon the market value of Aon ordinary shares at the date of grant. With certain limited exceptions, any break in continuous employment will cause the forfeiture of all non-vested awards. Compensation expense associated with RSUs is recognized on a straight-line basis over the requisite service period. Dividend equivalents are paid on certain RSUs, based on the initial grant amount.

The following table summarizes the status of the Company’s RSUs, including shares related to the Divested Business (shares in thousands):



	Three months ended March 31
	2017				2016
	Shares		Fair Value ⁽¹⁾		Shares		Fair Value ⁽¹⁾
Non-vested at beginning of period	6,195		$	89	7,167		$	77
Granted	614		119		851		99
Vested	(960	)	90		(1,379	)	73
Forfeited	(50	)	91		(94	)	78
Non-vested at end of period	5,799		$	92	6,545		$	81


(1)	Represents per share weighted-average fair value of award at date of grant.

Unamortized deferred compensation expense amounted to $392 million as of March 31, 2017 , with a remaining weighted-average amortization period of approximately 2 .0 years.

Performance Share Awards

The vesting of PSAs is contingent upon meeting a cumulative level of earnings per share performance over a three -year period. The actual issue of shares may range from 0 - 200% of the target number of PSAs granted, based on the terms of the plan and level of achievement of the related performance target. The grant date fair value of PSAs is based upon the market price of an Aon ordinary share at the date of grant. The performance conditions are not considered in the determination of the grant date fair value for these awards. Compensation expense is recognized over the performance period based on management’s estimate of the number of units expected to vest. Management evaluates its estimate of the actual number of shares expected to be issued at the end of the programs on a quarterly basis. The cumulative effect of the change in estimate is recognized in the period of change as an adjustment to Compensation and benefits expense, if necessary. Dividend equivalents are not paid on PSAs.

Information as of March 31, 2017 regarding the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the three months ended March 31, 2017 and the years ended December 31, 2016 and 2015 , respectively, is as follows (shares in thousands and dollars in millions, except fair value):



	March 31, 2017		December 31, 2016		December 31, 2015
Target PSAs granted during period	538		750		963
Weighted average fair value per share at date of grant	$	115	$	100	$	96
Number of shares that would be issued based on current performance levels	538		667		1,361
Unamortized expense, based on current performance levels	$	62	$	39	$	32

14. Derivatives and Hedging

The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes.

Foreign Exchange Risk Management

The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, enters into monetary intercompany transfers denominated in a currency that differs from its functional currency, or enters into other transactions that are denominated in a currency other than its functional currency. The Company uses foreign exchange derivatives, typically forward contracts, options and cross currency swaps, to reduce its overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income.

The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company’s global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30 -day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income (expense) in the Condensed Consolidated Statements of Income.

The notional and fair values of derivative instruments are as follows (in millions):



	Notional Amount				Derivative Assets ⁽¹⁾				Derivative Liabilities ⁽²⁾
	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
Foreign exchange contracts:
Accounted for as hedges	$	523	$	758	$	10	$	14	$	11	$	13
Not accounted for as hedges ⁽³⁾	243		189		1		1		2		1
Total	$	766	$	947	$	11	$	15	$	13	$	14


(1)	Included within Other current assets ( $2 million at March 31, 2017 and $6 million at December 31, 2016 ) or Other non-current assets ( $9 million at March 31, 2017 and $9 million at December 31, 2016 ).


(2)	Included within Other current liabilities ( $5 million at March 31, 2017 and $7 million at December 31, 2016 ) or Other non-current liabilities ( $8 million at March 31, 2017 and $7 million at December 31, 2016 ).


(3)	These contracts typically are for 30 day durations and executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date.

Offsetting of financial assets and derivatives assets are as follows (in millions):



	Gross Amounts of Recognized Assets				Gross Amounts Offset in the Statement of Financial Position					Net Amounts of Assets Presented in the Statement of Financial Position ⁽¹⁾
Derivatives accounted for as hedges:	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016			March 31, 2017		December 31, 2016
Foreign exchange contracts	$	10	$	14	$	—	$	(1	)	$	10	$	13


(1)	Included within Other current assets ( $2 million at March 31, 2017 and $4 million at December 31, 2016 ) or Other non-current assets ( $8 million at March 31, 2017 and $9 million at December 31, 2016 ).

Offsetting of financial liabilities and derivative liabilities are as follows (in millions):



	Gross Amounts of Recognized Liabilities				Gross Amounts Offset in the Statement of Financial Position					Net Amounts of Liabilities Presented in the Statement of Financial Position ⁽¹⁾
Derivatives accounted for as hedges:	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016			March 31, 2017		December 31, 2016
Foreign exchange contracts	$	11	$	13	$	—	$	(1	)	$	11	$	12


(1)	Included within Other current liabilities ( $5 million at March 31, 2017 and $5 million at December 31, 2016 ) or Other non-current liabilities ( $6 million at March 31, 2017 and $7 million at December 31, 2016 ).

The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements for the three months ended March 31, 2017 and 2016 are as follows (in millions):



Cash Flow Hedge - Foreign Exchange Contracts	Location of reclassification from Accumulated Other Comprehensive Loss											Gain (Loss) Recognized in Accumulated Other Comprehensive Loss:
Three months ended March 31	Compensation and Benefits			Other General Expenses			Interest Expense		Other Income (Expense)			Total
2017	$	8		$	1		$	—	$	(3	)	$	6
2016	(2		)	(3		)	—		(5		)	(10		)



Cash Flow Hedge - Foreign Exchange Contracts	Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion):
Three months ended March 31	Compensation and Benefits		Other General Expenses			Interest Expense		Other Income			Total
2017	$	13	$	(1	)	$	—	$	(2	)	$	10
2016	1		—			—		(1		)	—

The Company estimates that approximately $15 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified in to earnings in the next twelve months.

The amount of gain (loss) recognized in income on the ineffective portion of derivatives for the three months ended March 31, 2017 and 2016 was immaterial.

During the three months ended March 31, 2017 , the Company recorded a gain of $1 million in Other income (expense) for foreign exchange derivatives not designated or qualifying as hedges. During the three months ended March 31, 2016 , the Company recorded a gain of $1 million in Other income for foreign exchange derivatives not designated or qualifying as hedges.

Net Investments in Foreign Operations Risk Management

The Company uses non-derivative financial instruments to protect the value of its investments in a number of foreign subsidiaries. In 2016, the Company designated a portion of its Euro-denominated commercial paper issuances as a non-derivative hedge of the foreign currency exposure of a net investment in its European operations. The change in fair value of the designated portion of the Euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive income (loss), to the extent it is effective as a hedge. The foreign currency translation adjustment of the hedged net investments that is also recorded in Accumulated other comprehensive income (loss). Ineffective portions of net investment hedges, if any, are reclassified from Accumulated other comprehensive income (loss) into earnings during the period of change.

As of March 31, 2017 , the Company has €217 million ( $234 million at March 31, 2017 exchange rates) of outstanding Euro-denominated commercial paper designated as a hedge of the foreign currency exposure of its net investment in its European operations. As of March 31, 2017 , the unrealized gain recognized in Accumulated other comprehensive income (loss) related to the net investment non derivative hedging instrument was $11 million .

The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive income (loss) to earnings during the three months ended March 31, 2017 . In addition, the Company did not incur any ineffectiveness related to net investment hedges during the three months ended March 31, 2017 .

15. Fair Value Measurements and Financial Instruments

Accounting standards establish a three tier fair value hierarchy that prioritizes the inputs used in measuring fair values as follows:


•	Level 1 — observable inputs such as quoted prices for identical assets in active markets;


•	Level 2 — inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and


•	Level 3 — unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.

The following methods and assumptions are used to estimate the fair values of the Company’s financial instruments:

Money market funds consist of institutional prime, treasury, and government money market funds. The Company reviews these funds to obtain reasonable assurance that the fund net asset value is $1 per share.

Equity investments consist of domestic and international equity securities and equity derivatives valued using the closing stock price on a national securities exchange. Over the counter equity derivatives are valued using observable inputs such as underlying prices of the underlying security and volatility. On a sample basis the Company reviews the listing of Level 1 equity securities in the portfolio and agrees the closing stock prices to a national securities exchange, and independently verifies the observable inputs for Level 2 equity derivatives and securities.

Fixed income investments consist of certain categories of bonds and derivatives. Corporate, government, and agency bonds are valued by pricing vendors who estimate fair value using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves, and credit risk. Asset-backed securities are valued by pricing vendors who estimate fair value using discounted cash flow models utilizing observable inputs based on trade and quote activity of securities with similar features. Fixed income derivatives are valued by pricing vendors using observable inputs such as interest rates and yield curves. The Company obtains an understanding of the models, inputs, and assumptions used in developing prices provided by its vendors through discussions with the fund managers. The Company independently verifies the observable inputs, as well as assesses assumptions used for reasonableness based on relevant market conditions and internal Company guidelines. If an assumption is deemed unreasonable, based on the Company’s guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates used in the Consolidated Financial Statements.

Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities.

Debt is carried at outstanding principal balance, less any unamortized discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements.

The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016 (in millions):



			Fair Value Measurements Using
	Balance at March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds ⁽¹⁾	$	1,649	$	1,649	$	—	$	—
Other investments:
Government bonds	1		—		1		—
Equity investments	9		6		3		—
Derivatives: ⁽²⁾
Foreign exchange contracts	11		—		11		—
Liabilities:
Derivatives:
Foreign exchange contracts	13		—		13		—


(1)	Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity.


(2)	Refer to Note 14 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.



			Fair Value Measurements Using
	Balance at December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds ⁽¹⁾	$	1,371	$	1,371	$	—	$	—
Other investments:
Government bonds	1		—		1		—
Equity investments	9		6		3		—
Derivatives: ⁽²⁾
Foreign exchange contracts	15		—		15		—
Liabilities:
Derivatives:
Foreign exchange contracts	14		—		14		—


(1)	Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity.


(2)	Refer to Note 14 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.

There were no transfers of assets or liabilities between fair value hierarchy levels in either the three months ended March 31, 2017 or 2016 . The Company recognized no realized or unrealized gains or losses in the Condensed Consolidated Statements of Income during either the three months ended March 31, 2017 or 2016 , related to assets and liabilities measured at fair value using unobservable inputs.

The fair value of debt is classified as Level 2 of the fair value hierarchy. The following table discloses the Company’s financial instruments where the carrying amounts and fair values differ (in millions):



	March 31, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
Current portion of long-term debt ⁽¹⁾	$	283	$	292	$	—	$	—
Long-term debt	5,610		5,964		5,869		6,264


(1)	Excludes commercial paper program.

16. Commitments and Contingencies

Legal

Aon and its subsidiaries are subject to numerous claims, tax assessments, lawsuits and proceedings that arise in the ordinary course of business, which frequently include errors and omissions (“E&O”) claims. The damages claimed in these matters are or may be substantial, including, in many instances, claims for punitive, treble or extraordinary damages. While Aon maintains meaningful E&O insurance and other insurance programs to provide protection against certain losses that arise in such matters, Aon has exhausted or materially depleted its coverage under some of the policies that protect the Company and, consequently, is self-insured or materially self-insured for some claims. Accruals for these exposures, and related insurance receivables, when applicable, are included in the Consolidated Statements of Financial Position and have been recognized in Other general expenses in the Consolidated Statements of Income to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Matters that are not probable and reasonably estimable are not accrued for in the financial statements.

The Company has included in the current matters described below certain matters in which (1) loss is probable, (2) loss is reasonably possible, that is, more than remote but not probable, or (3) there exists the reasonable possibility of loss greater than the accrued amount. In addition, the Company may from time to time disclose matters for which the probability of loss could be remote but the claim amounts associated with such matters are potentially significant. The reasonably possible range of loss for the matters described below for which loss is estimable, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.2 billion , exclusive of any insurance coverage. These estimates are based on currently available information. As available information changes, the matters for which Aon is able to estimate may change, and the estimates themselves may change. In addition, many estimates involve significant judgment and uncertainty. For example, at the time of making an estimate, Aon may only have limited information about the facts underlying the claim, and predictions and assumptions about future court rulings and outcomes may prove to be inaccurate. Although management at present believes that the ultimate outcome of all matters described below, individually or in the aggregate, will not have a material adverse effect on the consolidated financial position of Aon, legal proceedings are subject to inherent uncertainties and unfavorable rulings or other events. Unfavorable resolutions could include substantial monetary or punitive damages imposed on Aon or its subsidiaries. If unfavorable outcomes of these matters were to occur, future results of operations or cash flows for any particular quarterly or annual period could be materially adversely affected.

Current Matters

A retail insurance brokerage subsidiary of Aon was sued on September 14, 2010 in the Chancery Court for Davidson County, Tennessee Twentieth Judicial District, at Nashville by a client, Opry Mills Mall Limited Partnership (“Opry Mills”) that sustained flood damage to its property in May 2010. The lawsuit seeks $200 million in coverage from numerous insurers with whom this Aon subsidiary placed the client’s property insurance coverage. The insurers contend that only $50 million in coverage (which has already been paid) is available for the loss because the flood event occurred on property in a high hazard flood zone. Opry Mills is seeking full coverage from the insurers for the loss and has sued this Aon subsidiary in the alternative for the same $150 million difference on various theories of professional liability if the court determines there is not full coverage. In addition, Opry Mills seeks prejudgment interest, attorneys’ fees and enhanced damages which could substantially increase Aon’s exposure. In March 2015, the trial court granted partial summary judgment in favor of plaintiffs and against the insurers, holding generally that the plaintiffs are entitled to $200 million in coverage under the language of the policies. In August 2015, a jury returned a verdict in favor of Opry Mills and against the insurers in the amount of $204 million . The insurers have appealed both of these trial court decisions. Aon believes it has meritorious defenses and intends to vigorously defend itself against these claims.

On June 1, 2007, the International Road Transport Union (“IRU”) sued Aon in the Geneva Tribunal of First Instance in Switzerland. IRU alleges, among other things, that, between 1995 and 2004, a business acquired by Aon and, later, an Aon subsidiary (1) accepted commissions for certain insurance placements that violated a fee agreement entered between the parties and (2) negligently failed to ask certain insurance carriers to contribute to the IRU’s risk management costs. IRU sought damages of approximately

CHF 46 million ( $46 million at March 31, 2017 exchange rates) and $3 million , plus legal fees and interest of approximately $30 million . On December 2, 2014, the Geneva Tribunal of First Instance entered a judgment that accepted some, and rejected other, of IRU’s claims. The judgment awarded IRU CHF 16.8 million ( $17 million at March 31, 2017 exchange rates) and $3.1 million , plus interest and adverse costs. The entire amount of the judgment, including interest through December 31, 2014, totaled CHF 27.9 million ( $28 million at December 31, 2014 exchange rates) and $5 million . On January 26, 2015, in return for IRU agreeing not to appeal the bulk of its dismissed claims, the Aon subsidiary agreed not to appeal a part of the judgment and to pay IRU CHF 12.8 million ( $14 million at January 31, 2015 exchange rates) and $4.7 million without Aon admitting liability. The Aon subsidiary appealed those aspects of the judgment it retained the right to appeal. IRU did not appeal. The Geneva Appellate Court affirmed the judgment of the Geneva Tribunal of First Instance. The Aon subsidiary filed an appeal (which is now under submission) to the Swiss Supreme Court. The Aon subsidiary’s maximum liability on appeal is limited to CHF 8.7 million ( $9 million at March 31, 2017 exchange rates) and $115,000 (plus interest and costs) beyond what the subsidiary has already paid.

A pensions consulting and administration subsidiary of Aon provided advisory services to the Trustees of the Gleeds pension fund in the United Kingdom and, on occasion, to the relevant employer of the fund. In April 2014, the High Court, Chancery Division, London found that certain governing documents of the fund that sought to alter the fund’s benefit structure and that had been drafted by Aon were procedurally defective and therefore invalid. No lawsuit naming Aon as a party was filed, although a tolling agreement was entered. The High Court decision says that the additional liabilities in the pension fund resulting from the alleged defect in governing documents amount to approximately £45 million ( $56 million at March 31, 2017 exchange rates). In December 2014, the Court of Appeal granted the employer leave to appeal the High Court decision. At a hearing in October 2016, the Court of Appeal approved a settlement of the pending litigation. On October 31, 2016, the fund’s trustees and employer sued Aon in the High Court, Chancery Division, London, alleging negligence and breach of duty in relation to the governing documents. The proceedings were served on Aon on December 20, 2016. The claimants seek damages of approximately £70 million ( $87 million at March 31, 2017 exchange rates). Aon believes that it has meritorious defenses and intends to vigorously defend itself against this potential claim.

On June 29, 2015, Lyttelton Port Company Limited (“LPC”) sued Aon New Zealand in the Christchurch Registry of the High Court of New Zealand. LPC alleges, among other things, that Aon was negligent and in breach of contract in arranging LPC’s property insurance program for the period covering June 30, 2010, to June 30, 2011. LPC contends that acts and omissions by Aon caused LPC to recover less than it otherwise would have from insurers for losses suffered in the 2010 and 2011 Canterbury Earthquakes. LPC claims damages of approximately NZD 184 million ( $129 million at March 31, 2017 exchange rates) plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims.

Aon recently learned that the Financial Conduct Authority (FCA) has commenced an investigation relating to suspected competition law breaches in the aviation and aerospace broking industry, which, for Aon in 2016, represented less than $100 million in global revenue. Other regulatory agencies may also be conducting formal or informal investigations regarding these matters. In such case, Aon intends to work diligently with the FCA and other regulatory agencies to ensure they can carry out their work as efficiently as possible. At this time, in light of the uncertainties and many variables involved, we cannot estimate the ultimate impact on our company from these investigations or any related private litigation, nor any damages, penalties, or fines related to them. There can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

Guarantees and Indemnifications

In connection with the redomicile of Aon’s headquarters (the “Redomestication”), the Company on April 2, 2012 entered into various agreements pursuant to which it agreed to guarantee the obligations of its subsidiaries arising under issued and outstanding debt securities. Those agreements included the (1) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc, and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) (amending and restating the Indenture, dated as of September 10, 2010, between Aon Corporation and the Trustee), (2) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of December 16, 2002, between Aon Corporation and the Trustee), (3) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of January 13, 1997, as supplemented by the First Supplemental Indenture, dated as of January 13, 1997), and (4) First Supplemental Indenture, dated as of April 2, 2012, among Aon Finance N.S. 1, ULC, as issuer, Aon Corporation, as guarantor, Aon plc, as guarantor, and Computershare Trust Company of Canada, as trustee.

The Company provides a variety of guarantees and indemnifications to its customers and others. The maximum potential amount of future payments represents the notional amounts that could become payable under the guarantees and indemnifications if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or other methods. These amounts may bear no relationship to the expected future payments, if any, for these guarantees and indemnifications. Any anticipated amounts payable are included in the Company’s Condensed Consolidated Financial Statements, and are recorded at fair value.

The Company expects that, as prudent business interests dictate, additional guarantees and indemnifications may be issued from time to time.

Letters of Credit

Aon has entered into a number of arrangements whereby the Company’s performance on certain obligations is guaranteed by a third party through the issuance of letters of credit (“LOCs”). The Company had total LOCs outstanding of approximately $90 million at March 31, 2017 , compared to $90 million at December 31, 2016 . These letters of credit cover the beneficiaries related to certain of Aon’s U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for Aon’s own workers compensation program. The Company has also obtained LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at its international subsidiaries

Premium Payments

The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $64 million at March 31, 2017 compared to $95 million at December 31, 2016 .

17. Segment Information

Beginning in the first quarter of 2017 and following the Transaction described in Note 3 “Discontinued Operations,” the Company began leading a set of initiatives designed to strengthen Aon and unite the firm with one portfolio of capability enabled by proprietary data and analytics and one operating model to deliver additional insight, connectivity and efficiency. These initiatives reinforce Aon’s return on invested capital (ROIC) decision-making process and emphasis on free cash flow. The Company is now operating as one segment that includes all of Aon’s continuing operations, which as a global professional services firm provides advice and solutions to clients focused on risk, retirement, and health through five revenue lines which make up its principal products and services. The CODM assesses the performance of the Company and allocates resources based on one company: Aon United.

The Company’s reportable operating segment has been determined using a management approach, which is consistent with the basis and manner in which Aon’s CODM uses financial information for the purposes of allocating resources and evaluating performance. The CODM assesses performance and allocates resources based on total Aon results against its key four metrics, including organic revenue growth, expense discipline, and collaborative behaviors that maximize value for Aon and its shareholders, regardless of which revenue line it benefits.

Prior period comparative segment information has been restated to conform with current year presentation. In prior periods, the Company did not include unallocated expenses in segment operating income, which represented corporate governance costs not allocated to the previous operating segments. These costs are now reflected within operating expenses for the current and prior period.

Revenue from continuing operations for each of the Company’s principal product and service lines is as follows (in millions):



Three months ended March 31	2017		2016
Commercial Risk Solutions	$	984	$	961
Reinsurance Solutions	371		371
Retirement Solutions	386		395
Health Solutions	372		292
Data & Analytic Services	268		259
Elimination	—		(2		)
Total revenue	2,381		2,276

As Aon is operating as one segment, segment profit or loss is consistent with consolidated reporting as disclosed on the Condensed Consolidated Statements of Income.

The geographic distribution of Aon’s total revenue or long-lived assets did not change as a result of the change in reportable operating segments described above.

18. Guarantee of Registered Securities

As described in Note 16 “Commitments and Contingencies,” in connection with the Redomestication, Aon plc entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, including the 5.00% Notes due September 2020, the 8.205% Notes due January 2027 and the 6.25% Notes due September 2040 (collectively, the “Aon Corp Notes”). Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. All guarantees of Aon plc are full and unconditional. There are no other subsidiaries of Aon plc that are guarantors of the Aon Corp Notes.

In addition, Aon Corporation entered into an agreement pursuant to which it agreed to guarantee the obligations of Aon plc arising under the 4.250% Notes due 2042 exchanged for Aon Corporation’s outstanding 8.205% Notes due January 2027 and also agreed to guarantee the obligations of Aon plc arising under the 4.45% Notes due 2043, the 4.00% Notes due November 2023, the 2.875% Notes due May 2026, the 3.50% Notes due June 2024, the 4.60% Notes due June 2044, the 4.75% Notes due May 2045, the 2.80% Notes due March 2021, and the 3.875% Notes due December 2025 (collectively, the “Aon plc Notes”). In each case, the guarantee of Aon Corporation is full and unconditional. There are no subsidiaries of Aon plc, other than Aon Corporation, that are guarantors of the Aon plc Notes. As a result of the existence of these guarantees, the Company has elected to present the financial information set forth in this footnote in accordance with Rule 3-10 of Regulation S-X.

The following tables set forth condensed consolidating statements of income for the three months ended March 31, 2017 and 2016 , condensed consolidating statements of comprehensive income for the three months ended March 31, 2017 and 2016 , condensed consolidating statements of financial position as of March 31, 2017 and December 31, 2016 , and condensed consolidating statements of cash flows for the three months ended March 31, 2017 and 2016 in accordance with Rule 3-10 of Regulation S-X. The condensed consolidating financial information includes the accounts of Aon plc, the accounts of Aon Corporation, and the combined accounts of the non-guarantor subsidiaries. The condensed consolidating financial statements are presented in all periods as a merger under common control, with Aon plc presented as the parent company in all periods prior and subsequent to the Redomestication. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions.

As described in Note 1 “Basis of Presentation” and consistent with The Company’s Condensed Consolidated Financial Statements, the following tables present the financial results of the Divested Business as discontinued operations for all periods presented within Non-Guarantor Subsidiaries. The impact of intercompany transactions have been reflected within continuing operations in the Condensed Consolidating Financial Statements.

Condensed Consolidating Statement of Income



	Three months ended March 31, 2017
							Other
	Aon			Aon			Non-Guarantor			Consolidating
(millions)	plc			Corporation			Subsidiaries			Adjustments			Consolidated
Revenue
Total revenue	$	—		$	—		$	2,381		$	—		$	2,381
Expenses
Compensation and benefits	52			6			1,403			—			1,461
Information technology	—			—			88			—			88
Premises	—			—			84			—			84
Depreciation of fixed assets	—			—			54			—			54
Amortization of intangible assets	—			—			43			—			43
Other general expenses	5			2			301			—			308
Total operating expenses	57			8			1,973			—			2,038
Operating (loss) income	(57		)	(8		)	408			—			343
Interest income	—			6			(2		)	(2		)	2
Interest expense	(45		)	(24		)	(3		)	2			(70		)
Intercompany interest income (expense)	3			(136		)	133			—			—
Intercompany other (expense) income	(50		)	7			43			—			—
Other income (expense)	(10		)	12			(20		)	8			(10		)
Income from continuing operations before income taxes	(159		)	(143		)	559			8			265
Income tax (benefit) expense	(14		)	(54		)	68			—			—
(Loss) income from continuing operations	(145		)	(89		)	491			8			265
Income from discontinued operations, net of tax	—			—			40			—			40
(Loss) income before equity in earnings of subsidiaries	(145		)	(89		)	531			8			305
Equity in earnings of subsidiaries, net of tax	428			271			182			(881		)	—
Net income	283			182			713			(873		)	305
Less: Net income attributable to noncontrolling interests	—			—			14			—			14
Net income attributable to Aon shareholders	$	283		$	182		$	699		$	(873	)	$	291

Condensed Consolidating Statement of Income



	Three months ended March 31, 2016
							Other
	Aon			Aon			Non-Guarantor			Consolidating
(millions)	plc			Corporation			Subsidiaries			Adjustments			Consolidated
Revenue
Total revenue	$	—		$	—		$	2,276		$	—		$	2,276
Expenses
Compensation and benefits	43			3			1,299			—			1,345
Information technology	—			—			83			—			83
Premises	—			—			82			—			82
Depreciation of fixed assets	—			—			38			—			38
Amortization of intangible assets	—			—			37			—			37
Other general expenses	7			2			262			—			271
Total operating expenses	50			5			1,801			—			1,856
Operating (loss) income	(50		)	(5		)	475			—			420
Interest income	—			5			4			(7		)	2
Interest expense	(45		)	(28		)	(3		)	7			(69		)
Intercompany interest income (expense)	4			(133		)	129			—			—
Intercompany other (expense) income	(54		)	1			53			—			—
Other income (expense)	—			(5		)	23			—			18
Income from continuing operations before income taxes	(145		)	(165		)	681			—			371
Income tax (benefit) expense	(26		)	(62		)	147			—			59
(Loss) income from continuing operations	(119		)	(103		)	534			—			312
Income from discontinued operations, net of tax	—			—			25			—			25
(Loss) income before equity in earnings of subsidiaries	(119		)	(103		)	559			—			337
Equity in earnings of subsidiaries, net of tax	444			356			253			(1,053		)	—
Net income	325			253			812			(1,053		)	337
Less: Net income attributable to noncontrolling interests	—			—			12			—			12
Net income attributable to Aon shareholders	$	325		$	253		$	800		$	(1,053	)	$	325

Condensed Consolidating Statement of Comprehensive Income



	Three months ended March 31, 2017
						Other
	Aon		Aon			Non-Guarantor		Consolidating
(millions)	plc		Corporation			Subsidiaries		Adjustments			Consolidated
Net income (loss)	$	283	$	182		$	713	$	(873	)	$	305
Less: Net income attributable to noncontrolling interests	—		—			14		—			14
Net income (loss) attributable to Aon shareholders	283		182			699		(873		)	291
Other comprehensive (loss) income, net of tax:
Change in fair value of financial instruments	—		(2		)	—		—			(2		)
Foreign currency translation adjustments	—		—			155		(8		)	147
Post-retirement benefit obligation	—		8			10		—			18
Total other comprehensive income (loss)	—		6			165		(8		)	163
Equity in other comprehensive loss of subsidiaries, net of tax	170		164			170		(504		)	—
Less: Other comprehensive income attributable to noncontrolling interests	—		—			1		—			1
Total other comprehensive loss attributable to Aon shareholders	170		170			334		(512		)	162
Comprehensive income (loss) attributable to Aon shareholders	$	453	$	352		$	1,033	$	(1,385	)	$	453

Condensed Consolidating Statement of Comprehensive Income



	Three months ended March 31, 2016
							Other
	Aon			Aon			Non-Guarantor			Consolidating
(millions)	plc			Corporation			Subsidiaries			Adjustments			Consolidated
Net income	$	325		$	253		$	812		$	(1,053	)	$	337
Less: Net income attributable to noncontrolling interests	—			—			12			—			12
Net income attributable to Aon shareholders	325			253			800			(1,053		)	325
Other comprehensive income (loss), net of tax:
Change in fair value of financial instruments	—			(2		)	(5		)	—			(7		)
Foreign currency translation adjustments	—			11			(90		)	—			(79		)
Post-retirement benefit obligation	—			13			(214		)	—			(201		)
Total other comprehensive loss	—			22			(309		)	—			(287		)
Equity in other comprehensive loss of subsidiaries, net of tax	(287		)	(314		)	(292		)	893			—
Less: Other comprehensive loss attributable to noncontrolling interests	—			—			—			—			—
Total other comprehensive loss attributable to Aon shareholders	(287		)	(292		)	(601		)	893			(287		)
Comprehensive income (loss) attributable to Aon Shareholders	$	38		$	(39	)	$	199		$	(160	)	$	38

Condensed Consolidating Statement of Financial Position



	As of March 31, 2017
						Other
	Aon		Aon			Non-Guarantor			Consolidating
(millions)	plc		Corporation			Subsidiaries			Adjustments			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	1,425		$	596		$	(1,588	)	$	433
Short-term investments	—		46			154			—			200
Receivables, net	—		—			2,103			—			2,103
Fiduciary assets	—		—			9,162			—			9,162
Intercompany receivables	73		3,215			8,345			(11,633		)	—
Current assets of discontinued operations	—		—			3,186			—			3,186
Other current assets	6		12			291			—			309
Total Current Assets	79		4,698			23,837			(13,221		)	15,393
Goodwill	—		—			7,544			—			7,544
Intangible assets, net	—		—			1,886			—			1,886
Fixed assets, net	—		—			536			—			536
Non-current deferred tax assets	134		723			172			(678		)	351
Intercompany receivables	372		261			8,716			(9,349		)	—
Prepaid pension	—		5			888			—			893
Other non-current assets	2		120			257			—			379
Investment in subsidiary	10,707		15,836			(10		)	(26,533		)	—
TOTAL ASSETS	$	11,294	$	21,643		$	43,826		$	(49,781	)	$	26,982

LIABILITIES AND EQUITY
Accounts payable and accrued liabilities	$	837	$	18		$	2,065		$	(1,588	)	$	1,332
Short-term debt and current portion of long-term debt	324		60			283			—			667
Fiduciary liabilities	—		—			9,162			—			9,162
Intercompany payables	167		9,799			1,667			(11,633		)	—
Current liabilities of discontinued operations	—		—			1,036			—			1,036
Other current liabilities	—		62			711			—			773
Total Current Liabilities	1,328		9,939			14,924			(13,221		)	12,970
Long-term debt	4,196		1,413			1			—			5,610
Non-current deferred tax liabilities	—		—			790			(678		)	112
Pension, other post-retirement and other post-employment liabilities	—		1,340			391			—			1,731
Intercompany payables	—		8,881			468			(9,349		)	—
Other non-current liabilities	16		80			637			—			733
TOTAL LIABILITIES	5,540		21,653			17,211			(23,248		)	21,156

TOTAL AON SHAREHOLDERS’ EQUITY	5,754		(10		)	26,543			(26,533		)	5,754
Noncontrolling interests	—		—			72			—			72
TOTAL EQUITY	5,754		(10		)	26,615			(26,533		)	5,826
TOTAL LIABILITIES AND EQUITY	$	11,294	$	21,643		$	43,826		$	(49,781	)	$	26,982

Condensed Consolidating Statement of Financial Position



	As of December 31, 2016
						Other
	Aon		Aon			Non-Guarantor			Consolidating
(millions)	plc		Corporation			Subsidiaries			Adjustments			Consolidated
ASSETS

Cash and cash equivalents	$	—	$	1,633		$	655		$	(1,862	)	$	426
Short-term investments	—		140			150			—			290
Receivables, net	—		3			2,103			—			2,106
Fiduciary assets	—		—			8,959			—			8,959
Intercompany receivables	105		1,880			9,825			(11,810		)	—
Current assets of discontinued operations	—		—			1,118			—			1,118
Other current assets	—		25			222			—			247
Total Current Assets	105		3,681			23,032			(13,672		)	13,146
Goodwill	—		—			7,410			—			7,410
Intangible assets, net	—		—			1,890			—			1,890
Fixed assets, net	—		—			550			—			550
Non-current deferred tax assets	134		726			171			(706		)	325
Intercompany receivables	366		261			8,711			(9,338		)	—
Prepaid pension	—		5			853			—			858
Non-current assets of discontinued operations	—		—			2,076			—			2,076
Other non-current assets	2		119			239			—			360
Investment in subsidiary	10,107		17,137			(350		)	(26,894		)	—
TOTAL ASSETS	$	10,714	$	21,929		$	44,582		$	(50,610	)	$	26,615

LIABILITIES AND EQUITY

Accounts payable and accrued liabilities	$	585	$	44		$	2,837		$	(1,862	)	$	1,604
Short-term debt and current portion of long-term debt	279		50			7			—			336
Fiduciary liabilities	—		—			8,959			—			8,959
Intercompany payables	142		10,399			1,269			(11,810		)	—
Current liabilities of discontinued operations	—		—			940			—			940
Other current liabilities	—		63			593			—			656
Total Current Liabilities	1,006		10,556			14,605			(13,672		)	12,495
Long-term debt	4,177		1,413			279			—			5,869
Non-current deferred tax liabilities	—		—			759			(658		)	101
Pension, other post-retirement and other post-employment liabilities	—		1,356			404			—			1,760
Intercompany payables	—		8,877			461			(9,338		)	—
Non-current liabilities of discontinued operations	—		—			139			—			139
Other non-current liabilities	8		77			634			—			719
TOTAL LIABILITIES	5,191		22,279			17,281			(23,668		)	21,083

TOTAL AON SHAREHOLDERS’ EQUITY	5,523		(350		)	27,244			(26,942		)	5,475
Noncontrolling interests	—		—			57			—			57
TOTAL EQUITY	5,523		(350		)	27,301			(26,942		)	5,532
TOTAL LIABILITIES AND EQUITY	$	10,714	$	21,929		$	44,582		$	(50,610	)	$	26,615

Condensed Consolidating Statement of Cash Flows



	Three months ended March 31, 2017
	Aon			Aon			Other Non-Guarantor			Consolidating
(millions)	plc			Corporation			Subsidiaries			Adjustments			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Cash provided by operating activities - continuing operations	$	(28	)	$	1,117		$	533		$	(1,440	)	$	182
Cash provided by operating activities - discontinued operations	—			—			58			—			58
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	(28		)	1,117			591			(1,440		)	240

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments	—			565			4			(544		)	25
Purchases of investments	—			(4		)	(546		)	541			(9		)
Net purchases of short-term investments - non-fiduciary	—			94			—			—			94
Acquisition of businesses, net of cash acquired	—			—			(46		)	—			(46		)
Sale of businesses, net of cash sold	—			—			(2		)	—			(2		)
Capital expenditures	—			—			(34		)	—			(34		)
Cash provided by investing activities - continuing operations	—			655			(624		)	(3		)	28
Cash provided by investing activities - discontinued operations	—			—			(15		)	—			(15		)
CASH USED FOR INVESTING ACTIVITIES	—			655			(639		)	(3		)	13

CASH FLOWS FROM FINANCING ACTIVITIES
Share repurchase	(126		)	—			—			—			(126		)
Advances from (to) affiliates	290			(1,990		)	(17		)	1,717			—
Issuance of shares for employee benefit plans	(85		)	—			—			—			(85		)
Issuance of debt	457			535			—			—			992
Repayment of debt	(421		)	(525		)	(4		)	—			(950		)
Cash dividends to shareholders	(87		)	—			—			—			(87		)
Noncontrolling interests and other financing activities	—			—			(2		)	—			(2		)
Cash used for financing activities - continuing operations	28			(1,980		)	(23		)	1,717			(258		)
Cash used for financing activities - discontinued operations	—			—			—			—			—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	28			(1,980		)	(23		)	1,717			(258		)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			25			—			25
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—			(208		)	(46		)	274			20
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	—			1,633			660			(1,862		)	431
CASH AND CASH EQUIVALENTS AT END OF PERIOD ⁽¹⁾	$	—		$	1,425		$	614		$	(1,588	)	$	451

(1) Includes 18 million of discontinued operations at March 31, 2017.

Condensed Consolidating Statement of Cash Flows



	Three months ended March 31, 2016
							Other
	Aon			Aon			Non-Guarantor			Consolidating
(millions)	plc			Corporation			Subsidiaries			Adjustments			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Cash provided by operating activities - continuing operations	$	(47	)	$	(37	)	$	228		$	—		$	144
Cash provided by operating activities - discontinued operations	—			—			129			—			129
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	(47		)	(37		)	357			—			273

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments	—			9			4			—			13
Purchases of investments	—			(5		)	(9		)	—			(14		)
Net (purchases) sales of short-term investments - non-fiduciary	—			(244		)	17			—			(227		)
Acquisition of businesses, net of cash acquired	—			—			(16		)	—			(16		)
Sale of businesses, net of cash sold	—			—			97			—			97
Capital expenditures	—			—			(37		)	—			(37		)
Cash provided by investing activities - continuing operations	—			(240		)	56			—			(184		)
Cash provided by investing activities - discontinued operations	—			—			(15		)	—			(15		)
CASH USED FOR INVESTING ACTIVITIES	—			(240		)	41			—			(199		)

CASH FLOWS FROM FINANCING ACTIVITIES
Share repurchase	(685		)	—			—			—			(685		)
Advances from (to) affiliates	(46		)	(219		)	(147		)	412			—
Issuance of shares for employee benefit plans	(64		)	—			(1		)	—			(65		)
Issuance of debt	996			50			(1		)	—			1,045
Repayment of debt	(72		)	(100		)	(3		)	—			(175		)
Cash dividends to shareholders	(82		)	—			—			—			(82		)
Noncontrolling interests and other financing activities	—			—			(42		)	—			(42		)
Cash used for financing activities - continuing operations	47			(269		)	(194		)	412			(4		)
Cash used for financing activities - discontinued operations	—			—			—			—			—
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	47			(269		)	(194		)	412			(4		)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			11			—			11
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	—			(546		)	215			412			81
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	—			2,083			1,242			(2,941		)	384
CASH AND CASH EQUIVALENTS AT END OF PERIOD ⁽¹⁾	$	—		$	1,537		$	1,457		$	(2,529	)	$	465

(1) Includes $3 million of discontinued operations at March 31, 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY OF FIRST QUARTER 2017 FINANCIAL RESULTS

Aon is a leading global professional services firm providing a broad range of Risk, Retirement and Health solutions underpinned by proprietary data and analytics. Management is leading a set of initiatives designed to strengthen Aon and unite the firm with one portfolio of capability enabled by proprietary data and analytics and one operating model to deliver additional insight, connectivity and efficiency. The divestiture of the benefits administration and business process outsourcing platform represents the next step of our strategy, which is consistent with our journey towards offering advice and solutions, and further aligning Aon’s portfolio around clients’ highest priorities. Further, it reinforces our return on invested capital (ROIC) decision-making process and emphasis on free cash flow.

Discontinued Operations

On February 9, 2017 , the Company entered into a Purchase Agreement with Tempo Acquisition, LLC to sell its benefits administration and business process outsourcing business to the Buyer, an entity formed and controlled by affiliates of The Blackstone Group L.P., and certain designated purchasers that are direct or indirect subsidiaries of the Buyer.

On May 1, 2017, the Buyer purchased all of the outstanding equity interests in each of the Divested Business’ subsidiaries, plus certain related assets, for a purchase price of (i) $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and (ii) deferred consideration of up to $500 million , plus the assumption of certain liabilities. Cash proceeds from the sale, before taxes and after customary adjustments as set forth in the Purchase Agreement, were $4.2 billion.

In the second quarter of 2017, the Company expects to record a gain on sale, net of taxes, of approximately $500 million and a non-cash impairment charge to its indefinite lived tradename associated with the Divested Business of approximately $400 million as this asset was not sold to the Buyer. Additionally, effective May 1, 2017, the Company has implemented a three-year strategy to discontinue the use of its finite lived and indefinite lived tradenames. As a result, additional amortization of $137 million , $206 million , $206 million , and $68 million is expected to be recognized in 2017 , 2018 , 2019 , and 2020 , respectively.

Business Overview

Beginning in the first quarter of 2017, following the classification of the benefits administration and business process outsourcing business as a discontinued operation, as described above, the Company began operating as one segment that includes all of Aon’s continuing operations, which as a global professional services firm provides advice and solutions to clients focused on risk, retirement, and health through five revenue lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions, and Data & Analytic Services.

Commercial Risk Solutions

Commercial Risk Solutions includes retail brokerage, cyber solutions, global risk consulting, and captives. In retail brokerage, our team of expert risk advisors applies a client-focused approach to commercial risk products and services that leverage Aon’s global network of resources, industry-leading data and analytics, and specialized expertise. Cyber solutions is one of the industry’s premier resources in cyber risk management. Our strategic focus extends to identify and protect critical digital assets supported by best in class transactional capabilities, enhanced coverage expertise, deep carrier relationships, and incident response expertise. Global risk consulting is a world leading provider of risk consulting services supporting clients to better understand and manage their risk profile through identifying and quantifying the risks they face. We assist clients with the selection and implementation of the appropriate risk transfer, risk retention, and risk mitigation solutions, and ensure the continuity of their operations through claims consulting. Captives is a leading global captive insurance solutions provider that manages over 1,100 insurance entities worldwide including captives, protected segregated and incorporated cell facilities, as well as entities that support ILS and specialist insurance and reinsurance companies.

Reinsurance Solutions

Reinsurance Solutions includes treaty and facultative reinsurance brokerage and capital markets. Treaty reinsurance brokerage addresses underwriting and capital objectives on a portfolio level, allowing our clients to more effectively manage the combination of premium growth, return on capital and rating agency interests. This includes the development of more competitive, innovative and efficient risk transfer options. Facultative reinsurance brokerage empowers clients to better understand, manage and transfer risk through innovative facultative solutions and provides the most efficient access to the global facultative markets. Capital markets is a global investment bank with expertise in M&A, capital raising, strategic advice, restructuring, recapitalization services, and insurance-linked securities. We work with insurers, reinsurers, investment firms, banks, and corporations to manage complex commercial issues through the provision of corporate finance advisory services, capital markets solutions, and innovative risk management products.

Retirement Solutions

Retirement Solutions includes core retirement, investment consulting, and talent, rewards & performance. Retirement consulting specializes in providing organizations across the globe with strategic design consulting on their retirement programs, actuarial services, risk management - including pension de-risking, governance, integrated pension administration and legal and compliance consulting. Investment consulting provides public and private companies and other institutions, with advice on developing and maintaining investment programs across a broad range of plan types; including defined benefit plans, defined contribution plans, endowments and foundations. Our delegated investment solutions offer ongoing management of investment programs and fiduciary responsibilities either in a partial or full discretionary model for multiple asset owners. It partners with clients to deliver our scale and experience to help them effectively manage their investments, risk, governance and potentially lower costs. Talent, rewards & performance delivers advice and solutions that help clients accelerate business outcomes by improving the performance of their people. It supports the full employee lifecycle from assessment and selection of the right talent, optimized deployment and engagement to the design, alignment and benchmarking of compensation to business strategy and performance outcomes.

Health Solutions

Health Solutions includes heath and benefits brokerage and healthcare exchanges. Health and benefits brokerage partners with employers to develop innovative, customized benefits strategies that help manage risk, drive engagement, and promote accountability. Our private health exchange solutions help employers transform how they sponsor, structure, and deliver health benefits by building and operating a cost effective alternative to traditional employee and retiree healthcare. We seek outcomes of reduced employer costs, risk and volatility, alongside greater coverage and plan choices for individual participants.

Data & Analytic Services

Data & Analytic Services includes Affinity, Aon InPoint, and ReView. Affinity specializes in developing, marketing and administering customized insurance programs and specialty market solutions for affinity organizations and their members or affiliates. Aon InPoint draws on Aon’s proprietary database (Global Risk Insight Platform) and is dedicated to making insurers more competitive through providing data, analytics, engagement and consulting. ReView draws on Aon’s proprietary database and broker market knowledge to provide advisory services analysis and benchmarking to help reinsurers more effectively meet the needs of cedents through the development of more competitive, innovative and efficient risk transfer options.

Financial Results

The following is a summary of our first quarter of 2017 financial results from continuing operations:


•	For the first quarter of 2017 , revenue increased 5% , or $105 million , to $2.4 billion compared to the prior year period due primarily to organic revenue growth of 4% and a 3% increase in commissions and fees related to acquisitions, net of divestitures, which was offset by a 2% unfavorable impact from foreign currency exchange rates.

•

Operating expenses for the first quarter of 2017 were $2.0 billion , an increase of $182 million compared to the prior year period. The increase was due primarily to $144 million of restructuring costs, a $60 million increase in operating expenses related to acquisitions, net of divestitures, and an increase in expense to support 4% organic revenue growth, partially offset by a $42 million favorable impact from currency translation, a $12 million decrease in expense related to certain hedging programs, and $11 million of related to restructuring activities and operational initiatives savings.


•	Operating margin decreased to 14.4% in the first quarter 2017 from 18.5% in the prior year quarter. The decrease compared to the prior year period was driven by an increase in expense due to the factors listed above, partially offset by organic revenue growth of 4% .


•	Due to the factors set forth above, income from continuing operations decreased $47 million , or 15% , to $265 million for the first quarter 2017 compared to the first quarter 2016 .


•	Cash flow provided by operating activities was $182 million for the first three months of 2017 , an increase of $38 million from $144 million in the first three months of 2016 . The increase was driven primarily by operational improvements, partially offset by $31 million of cash restructuring charges.

We focus on four key non-GAAP metrics that we communicate to shareholders: organic revenue, adjusted operating margins, adjusted diluted earnings per share, and free cash flow. These non-GAAP metrics should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto. The following is our measure of performance against these four metrics from continuing operations for the first quarter of 2017 :


•	Organic revenue growth, a non-GAAP measure as defined under the caption “Review of Consolidated Results — Organic Revenue,” was 4% for the first quarter of 2017 , an increase of over 2% organic growth from the prior year first quarter.

•

Adjusted operating margin, a non-GAAP measure as defined under the caption “Review of Consolidated Results — Adjusted Operating Margin,” was 22.3% for the first quarter 2017 . Adjusted operating margin was 20.1% for the first quarter 2016 . The increase in adjusted operating margin for the first quarter of 2017 as compared to the prior year period primarily reflects organic revenue growth of 4% , a 50 basis point favorable impact from reduced expenses related to certain hedging programs resulting from actions undertaken in consideration of reduced ongoing transactional exposure to the Indian Rupee, a 40 basis point favorable impact from restructuring savings and additional expense discipline, and a 30 basis point favorable impact from foreign currency exchange rates.


•	Adjusted diluted earnings per share from continuing operations, a non-GAAP measure as defined under the caption “Review of Consolidated Results — Adjusted Diluted Earnings per Share,” was $1.45 per share for the first quarter of 2017 , compared to $1.21 per share for the first quarter of 2016 .


•	Free cash flow, a non-GAAP measure as defined under the caption “Review of Consolidated Results — Free Cash Flow,” increased in the first three months of 2017 by $41 million , or 38% , to $148 million from the prior year period, driven by an increase of $38 million in cash flow from operations and a decrease of $3 million in capital expenditures.

REVIEW OF CONSOLIDATED RESULTS

Summary of Results

Our consolidated results of operations are as follow (in millions):



	Three Months Ended
(millions, except per share data)	March 31, 2017			March 31, 2016
Revenue
Total revenue	2,381			2,276
Expenses
Compensation and benefits	1,461			1,345
Information technology	88			83
Premises	84			82
Depreciation of fixed assets	54			38
Amortization of intangible assets	43			37
Other general expenses	308			271
Total operating expenses	2,038			1,856
Operating income	343			420
Interest income	2			2
Interest expense	(70		)	(69		)
Other income (expense)	(10		)	18
Income from continuing operations before income taxes	265			371
Income taxes	—			59
Income from continuing operations	265			312
Income from discontinued operations, net of tax	40			25
Net income	305			337
Less: Net income attributable to noncontrolling interests	14			12
Net income attributable to Aon shareholders	$	291		$	325

Revenue

Total revenue increased by 5% , or $105 million , in the first quarter 2017 compared to the first quarter 2016 . This change reflects 4% organic growth and a 3% increase related to acquisitions, net of divestitures, partially offset by a 2% unfavorable impact from foreign currency exchange rates.

Commercial Risk Solutions organic revenue increased 2% compared to the prior year period due to solid growth across EMEA, Asia, and Pacific regions.

Reinsurance Solutions organic revenue increased 2% compared to the prior year period driven by growth across every product line, including treaty, facultative, and capital markets, partially offset by a modest unfavorable market impact globally.

Retirement Solutions organic revenue increased 3% compared to the prior year period due to growth in investment consulting, primarily for delegated investment management, as well as growth in talent, primarily for compensation and engagement services.

Health Solutions organic revenue increased 14% compared to the prior year period driven by solid growth globally in health & benefits brokerage, including double-digit growth across the Asia and EMEA regions, as well as strong growth in health care exchanges driven by follow-on enrollments on the retiree exchange and certain project-related work.

Data & Analytic Services organic revenue increased 5% compared to the prior year period due to strong growth across Affinity, with particular strength in the U.S. across all product lines.

Compensation and Benefits

Compensation and benefits increased $116 million , or 9% , in the first quarter of 2017 compared to the first quarter of 2016 . This increase was primarily driven by $103 million of restructuring costs, a $38 million increase in operating expenses related to acquisitions, net of divestitures, and an increase in expense associated with 4% organic revenue growth, partially offset by a $29 million favorable impact from currency translation, a $12 million decrease in expense related to certain hedging programs resulting from actions undertaken in consideration of reduced ongoing transactional exposure to the Indian Rupee, and $6 million of savings related to restructuring activities and operational initiatives.

Information Technology

Information technology, which represents costs associated with supporting and maintaining our infrastructure, increased $5 million , or 6% , in the first quarter of 2017 compared to the first quarter 2016 . This increase was primarily driven by $3 million of restructuring costs, as well as other infrastructure investments, partially offset by $5 million of savings related to restructuring activities and operational initiatives.

Premises

Premises, which represents the cost of occupying offices in various locations throughout the world, increased $2 million , or 2% , in the first quarter of 2017 compared to the first quarter 2016 . This increase was primarily driven by $3 million of restructuring costs.

Depreciation of Fixed Assets

Depreciation of fixed assets primarily includes software, leasehold improvements, furniture, fixtures and equipment, computer equipment, buildings, and automobiles. Depreciation of fixed assets increased $16 million , or 42% , in the first quarter of 2017 compared to the first quarter 2016 . This increase was primarily driven by $13 million of asset impairments.

Amortization of Intangibles

Amortization of intangibles primarily includes finite lived tradenames, customer lists, and technology assets. Amortization of intangibles increased $6 million , or 16% , in the first quarter of 2017 compared to the first quarter 2016 due to an increase in intangible asset amortization from previous acquisitions.

Other General Expenses

Other general expenses in the first quarter of 2017 increased $37 million , or 14% , compared to the first quarter 2016 . This increase was due primarily to $22 million of restructuring costs and a $13 million increase in operating expenses related to acquisitions, net of divestitures.

Interest Income

Interest income represents income earned on operating cash balances and other income-producing investments. It does not include interest earned on funds held on behalf of clients. During the first quarter 2017 , Interest income was $2 million , comparable to first quarter 2016 interest income of $2 million .

Interest Expense

Interest expense, which represents the cost of our debt obligations, was $70 million during the first quarter 2017 , comparable to first quarter 2016 interest expense of $69 million .

Other Income (Expense)

Other expense was $10 million for the first quarter of 2017 , compared to other income of $18 million for the first quarter of 2016 . Other expense for the first quarter of 2017 primarily includes net losses due to the unfavorable impact of exchange rates on the remeasurement of monetary assets and liabilities in non-functional currencies. Other income of $18 million in the first quarter 2016 primarily included $35 million of net gains on the sale of certain businesses, partially offset by a $17 million loss on the remeasurement of monetary assets and liabilities in non-functional currencies.

Income From Continuing Operations before Income Taxes

Income from continuing operations before income taxes for the first quarter of 2017 was $265 million , a 29% decrease from $371 million in the first quarter of 2016 due to the factors discussed above.

Income Taxes From Continuing Operations

The effective tax rate on net income from continuing operations was 0.1% and 15.9% for the quarters ended March 31, 2017 and 2016 , respectively. The lower effective tax rate for the three months ended March 31, 2017 was primarily due to changes in the geographical distribution of income, including the estimated impact of the Restructuring Program and accelerated amortization of tradenames, and the impact of share-based payments from adoption of the new share-based compensation guidance.

Income from Discontinued Operations, Net of Tax

On February 9, 2017, the Company entered into a Purchase Agreement with Tempo Acquisition, LLC to sell its benefits administration and business process outsourcing business. The Company has retrospectively classified the results of the Divested Business as discontinued operations in the Company’s Condensed Consolidated Statements of Income for all periods presented. Income from discontinued operations, net of tax, increased $15 million in the first quarter of 2017 as compared to the prior year period. The increase is primarily driven by the reduction in depreciation and amortization expense of $29 million over the prior year comparable quarter as a result of triggering held for sale accounting in 2017, which caused depreciation and amortization of all long-lived assets to cease in February offset by an increase of $12 million in compensation related costs.

Net Income Attributable to Aon Shareholders

Net income attributable to Aon shareholders for the three months ended March 31, 2017 decreased to $291 million , or $1.09 per diluted share, from $325 million , or $1.19 per diluted share, in the prior year period.

Non-GAAP Metrics

In our discussion of consolidated results, we sometimes refer to certain non-GAAP supplemental information derived from consolidated financial information specifically related to organic revenue growth, adjusted operating margin, adjusted diluted earnings per share, free cash flow, and the impact of foreign exchange rate fluctuations on operating results. This non-GAAP supplemental information should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto.

Organic Revenue Growth

We use supplemental information related to organic revenue growth to help us and our investors evaluate business growth from existing operations. Organic revenue growth is a non-GAAP measure that includes the impact of intercompany activity and excludes the impact of changes in foreign exchange rate, acquisitions, divestitures, transfers between subsidiaries, fiduciary investment income, and reimbursable expenses. This supplemental information related to organic revenue growth represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto. Industry peers provide similar supplemental information about their revenue performance, although they may not make identical adjustments. A reconciliation of this non-GAAP measure to the reported Total revenue is as follows:



	Three Months Ended
	March 31, 2017		March 31, 2016			% Change		Less: Currency Impact ⁽¹⁾		Less: Fiduciary Investment Income ⁽²⁾		Less: Acquisitions, Divestitures & Other		Organic Revenue Growth ⁽³⁾
Revenue
Commercial Risk Solutions	$	984	$	961		2	%	(2	)%	—	%	2	%	2	%
Reinsurance Solutions	371		371			—		(1	)	—		(1	)	2
Retirement Solutions	386		395			(2	)	(4	)	—		(1	)	3
Health Solutions	372		292			27		(2	)	—		15		14
Data & Analytic Services	268		259			3		(1	)	—		(1	)	5
Elimination	—		(2		)	N/A		N/A		N/A		N/A		N/A
Total revenue	$	2,381	$	2,276		5	%	(2	)%	—	%	3	%	4	%


(1)	Currency impact is determined by translating prior period's revenue at this period's foreign exchange rates.


(2)	Fiduciary Investment Income for the three months ended March 31, 2017 and 2016, respectively, was $6 million and $5 million.


(3)	Organic revenue growth includes the impact of intercompany activity and excludes the impact of changes in foreign exchange rates, acquisitions, divestitures, transfers between business units, fiduciary investment income, and reimbursable expenses.

Adjusted Operating Margin

We use adjusted operating margin as a non-GAAP measure of core operating performance of the Company. Adjusted operating margin excludes the impact of certain items, including intangible asset amortization, because management does not believe these expenses reflect our core operating performance. This supplemental information related to adjusted operating margin represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto.

A reconciliation of this non-GAAP measure to the reported operating margin is as follows (in millions, except percentage data):



	Three Months Ended
	March 31, 2017			March 31, 2016
Revenue from continuing operations	$	2,381		$	2,276

Operating income from continuing operations - as reported	$	343		$	420
Amortization of intangible assets	43			37
Restructuring	144			—
Operating income income from continuing operations - as adjusted	$	530		$	457

Operating margin from continuing operations - as reported	14.4		%	18.5		%
Operating margin from continuing operations - as adjusted	22.3		%	20.1		%

Adjusted Diluted Earnings per Share

We use adjusted diluted earnings per share as a non-GAAP measure of our core operating performance. Adjusted diluted earnings per share excludes the impact of intangible asset amortization, along with related income taxes, because management does not believe these expenses are representative of our core earnings. This supplemental information related to adjusted diluted earnings per share represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto.

A reconciliation of this non-GAAP measure to the reported Diluted earnings per share is as follows (in millions, except per share data):



	Three Months Ended March 31, 2017
(millions, except per share data)	U.S. GAAP			Adjustments	As Adjusted
Operating income from continuing operations - as adjusted	$	343		187	$	530
Interest income	2			—	2
Interest expense	(70		)	—	(70		)
Other income	(10		)	—	(10		)
Income before income taxes from continuing operations - as adjusted	265			187	452
Income taxes ⁽¹⁾	—			50	50
Income from continuing operations - as adjusted	265			137	402
Income from discontinued operations, net of tax ⁽²⁾	40			8	48
Net income - as adjusted	305			145	450
Less: Net income attributable to noncontrolling interests	14			—	14
Net income attributable to Aon shareholders - as adjusted	$	291		145	$	436

Diluted earnings per share attributable to Aon shareholders
Continuing operations, less noncontrolling interests - as adjusted	$	0.94		0.51	$	1.45
Discontinued operations	$	0.15		0.03	$	0.18
Net income - as adjusted	$	1.09		0.54	$	1.63

Weighted average ordinary shares outstanding - diluted	267.0				267.0



	Three Months Ended March 31, 2016
(millions, except per share data)	U.S. GAAP			Adjustments	As Adjusted
Operating income from continuing operations - as adjusted	$	420		37	$	457
Interest income	2			—	2
Interest expense	(69		)	—	(69		)
Other income	18			—	18
Income before income taxes from continuing operations - as adjusted	371			37	408
Income taxes ⁽¹⁾	59			5	64
Income from continuing operations - as adjusted	312			32	344
Income from discontinued operations, net of tax ⁽²⁾	25			23	48
Net income - as adjusted	337			55	392
Less: Net income attributable to noncontrolling interests	12			—	12
Net income attributable to Aon shareholders - as adjusted	$	325		55	$	380

Diluted earnings per share attributable to Aon shareholders
Continuing operations - as adjusted	$	1.10		0.11	$	1.21
Discontinued operations - as adjusted	$	0.09		0.09	$	0.18
Net income - as adjusted	$	1.19		0.20	$	1.39

Weighted average ordinary shares outstanding - diluted	273.7				273.7

(1)

The effective tax rates used in the U.S. GAAP financial statements for continuing operations were 0.1% and 15.9% for the three months ended March 31, 2017 and 2016 , respectively. Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring expenses, accelerated tradename amortization, and non-cash pension settlement charges anticipated in Q4 2017, which are adjusted at the related jurisdictional rate. The non-GAAP effective tax rates for continuing operations, adjusted for these non-GAAP items, were 11.1% and 15.7% for the three months ended March 31, 2017 and 2016, respectively.

(2)

Adjusted income from discontinued operations, net of tax, excludes intangible asset amortization on discontinued operations of $11 million and $30 million , respectively, for the three months ended March 31, 2017 and 2016. The effective tax rates used in the U.S. GAAP financial statements for discontinued operation were 29.8% and 41.9% for the three months ended March 31, 2017 and 2016 , respectively. After adjusting to exclude the applicable tax impact associated with amortization, the adjusted effective tax rates for discontinued operations were 29.4% and 34.2% for the three months ended March 31, 2017 and 2016, respectively.

Free Cash Flow

We use free cash flow, defined as cash flow provided by operations minus capital expenditures, as a non-GAAP measure of our core operating performance. This supplemental information related to free cash flow represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto. The use of this non-GAAP measure does not imply or represent the residual cash flow for discretionary expenditures. A reconciliation of this non-GAAP measure to the reported cash provided by continuing operating activities is as follows (in millions):



	Three Months Ended
	March 31, 2017			March 31, 2016			Percent Change
Cash Provided By Continuing Operating Activities	$	182		$	144		26	%
Capital Expenditures for Continuing Operations	(34		)	(37		)	(8	)
Free Cash Flow for Continuing Operations	$	148		$	107		38	%

Impact of Foreign Exchange Rate Fluctuations

Because we conduct business in more than 120 countries, foreign exchange rate fluctuations have a significant impact on our business. Foreign exchange rate movements may be significant and may distort true period-to-period comparisons of changes in revenue or pretax income. Therefore, to give financial statement users meaningful information about our operations, we have provided an illustration of the impact of foreign currency exchange rates on our financial results. The methodology used to calculate

this impact isolates the impact of the change in currencies between periods by translating the prior year quarter’s revenue, expenses, and net income using the current quarter’s foreign exchange rates.

Translating prior year quarter results at current quarter foreign exchange rates, currency fluctuations had an immaterial impact on net income per diluted share during the three months ended March 31, 2017 and an unfavorable impact of $0.05 on net income per diluted share during the three months ended March 31, 2016 . Currency fluctuations had a $0.01 unfavorable impact on adjusted net income per diluted share during the three months ended March 31, 2017 and an unfavorable impact of $0.05 on adjusted net income per diluted share during the three months ended March 31, 2016 . These translations are performed for comparative and illustrative purposes only and do not impact the accounting policies or practices for amounts included in the Condensed Consolidated Financial Statements.

Restructuring Plan

In 2017, we initiated a global restructuring plan (the “Restructuring Plan”) in connection with the sale of our benefits administration and business process outsourcing business. The Restructuring Plan is intended to streamline operations across the organization and deliver greater efficiency, insight and connectivity. We expect these restructuring activities and related expenses to affect continuing operations through 2019, including an estimated 1,600 to 1,900 role eliminations. The Restructuring Plan is expected to result in cumulative costs of approximately $750 million through the end of the plan, consisting of approximately $207 million in employee termination costs, $146 million in technology rationalization costs, $176 million in real estate consolidation costs, $40 million in asset impairments and $181 million in other costs including certain separation costs associated with the sale of the Divested Business. Included in the estimated $750 million is $50 million of estimated non-cash charges related to asset impairments and lease consolidations. We estimate that our annualized savings from the Restructuring Plan will be approximately $400 million by the end of 2019.

From the inception of the Restructuring Plan through March 31, 2017 , approximately 1,065 positions have been eliminated and total expenses of $144 million have been incurred for restructuring and related separation charges. These charges are included in Compensation and benefits, Information technology, Premises, Depreciation of fixed assets, and Other general expenses in the accompanying Condensed Consolidated Statements of Income.



	First Quarter 2017		Estimated Remaining Costs		Estimated Total Cost (1)
Workforce reduction	$	103	$	104	$	207
Technology rationalization	3		143		146
Lease consolidation	3		173		176
Asset impairments	13		27		40
Other costs associated with restructuring and separation ⁽²⁾	22		159		181
Total restructuring and related expenses	$	144	606		$	750

(1)

Actual costs, when incurred, may vary due to changes in the assumptions built into this plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives.


(2)	Other costs associated with the Restructuring Plan, including costs to separate the Divested Business, as well as moving costs, consulting and legal fees. These costs are generally recognized when incurred.

As of March 31, 2017 , our liabilities for the Restructuring Plan were as follows (in millions):



	Restructuring Plan
Balance at January 1, 2017	$	—
Expensed	130
Cash payments	(31		)
Foreign currency translation and other	9
Balance at March 31, 2017	$	108

LIQUIDITY AND FINANCIAL CONDITION

Liquidity

Executive Summary

We believe that our balance sheet and strong cash flow provide us with adequate liquidity. Our primary sources of liquidity are cash flow from operations, available cash reserves, and debt capacity available under our credit facility. Our primary uses of liquidity are operating expenses, capital expenditures, acquisitions, share repurchases, pension obligations, and shareholder dividends. We believe that cash flows from operations, available credit facilities and the capital markets will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, pension contributions, and anticipated working capital requirements, for the foreseeable future.

Cash on our balance sheet includes funds available for general corporate purposes, as well as amounts restricted as to their use. Funds held on behalf of clients in a fiduciary capacity are segregated and shown together with uncollected insurance premiums in Fiduciary assets in the Condensed Consolidated Statements of Financial Position, with a corresponding amount in Fiduciary liabilities. Fiduciary funds generally cannot be used for general corporate purposes, and are not a source of liquidity for us.

Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2017 decreased $33 million , or 12% , to $240 million from the prior year period. Net cash provided by operating activities for continuing operations during the three months ended March 31, 2017 increased $38 million , or 26% , to $182 million from the prior year period. Net cash provided by operating activities for discontinued operations during the three months ended March 31, 2017 decreased $71 million , or 55% , to $58 million from the prior year period. These amounts reported net income, as adjusted for gains or losses on sales of businesses, financial instruments and foreign exchange, and our non-cash expenses, which include share-based compensation, depreciation, and amortization, as well as changes in working capital that relate primarily to the timing of payments of accounts payable and accrued liabilities and collection of receivables. The total decrease in operating cash from the prior year was primarily driven by increased net income and reductions in pension contributions, as well as working capital improvements.

Pension contributions were $31 million for the three months ended March 31, 2017 as compared to $37 million for the three months ended March 31, 2016 . For the remainder of 2017 , we expect to contribute approximately $154 million to our pension plans, with the majority attributable to non-U.S. pension plans, which are subject to changes in foreign exchange rates.

We expect cash generated by operations for 2017 to be sufficient to service our debt and contractual obligations, finance capital expenditures, continue purchases of shares under the Repurchase Programs, and continue to pay dividends to our shareholders. Although cash from operations is expected to be sufficient to service these activities, we have the ability to access the commercial paper markets or borrow under our credit facilities to accommodate any timing differences in cash flows. We have a committed credit facility totaling $900 million , all of which was available at March 31, 2017 , and can access this facility on a same day or next day basis. Additionally, under current market conditions, we believe that we could access capital markets to obtain debt financing for longer-term funding, if needed.

Investing Activities

Cash flow provided by investing activities was $13 million during the three months ended March 31, 2017 . Cash flow provided by investing activities in continuing operations was $28 million during the three months ended March 31, 2017 and cash flow used for investing activities in discontinued operations was $15 million during the three months ended March 31, 2017 . The primary drivers of the total cash flow provided by investing activities were $94 million in net sale of short-term investments and $16 million of net sale of long-term investments, offset by $49 million of capital expenditures, $46 million of acquisitions of businesses, net of cash acquired, and $2 million of sales of businesses, net of cash sold. The gains and losses corresponding to cash flows provided by the net sales of long-term investments are recognized in Other income (expense) in the Condensed Consolidated Statements of Income.

Cash flow used for investing activities was $199 million during the three months ended March 31, 2016 . Cash flow used for investing activities in continuing operations was $184 million during the three months ended March 31, 2016 and cash flow used for investing activities in discontinued operations was $15 million during the three months ended March 31, 2016 . The primary drivers of the total cash flow used for investing activities were $227 million in net purchases of short-term investments, $52 million of capital expenditures, and $16 million of acquisitions of businesses, net of cash acquired, and $1 million of net purchases of long-term investments, offset by $97 million in proceeds from the sale of businesses.

Financing Activities

Cash flow used for financing activities during the three months ended March 31, 2017 was $258 million , all of which was related to continuing operations. The primary drivers of the cash flow used for financing activities were $126 million of share repurchases, $87 million of dividends paid to shareholders, $85 million in net cash payments related to issuance of shares, and $2 million of transactions with noncontrolling interests and other financing activities, partially offset by $42 million of issuances of debt, net of repayments .

Cash flow used for financing activities during the three months ended March 31, 2016 was $4 million , all of which was related to continuing operations. The primary drivers of cash flow used for financing activities were $685 million of share repurchases, $82 million of dividends paid to shareholders, $65 million in net cash payments related to issuance of shares, and $42 million of transactions with noncontrolling interests and other financing activities, partially offset by $870 million of issuances of debt, net of repayments.

Cash and Investments

At March 31, 2017 , our Cash and cash equivalents and Short-term investments were $633 million , a decrease of $83 million from December 31, 2016 . This decrease was primarily related to $126 million in share repurchases, $87 million in dividends, $49 million of capital expenditures, and $46 million in acquisitions of businesses, net of cash acquired, partially offset by $240 million cash provided by operations, $94 million in net sales of short-term investments, and $42 million in proceeds from debt issuances, net of repayments. Of the total balance at March 31, 2017 , $86 million was restricted as to its use, which was comprised of $54 million of operating funds in the U.K., as required by the Financial Conduct Authority, and $32 million held as collateral for various business purposes. At March 31, 2017 , $1.6 billion of Cash and cash equivalents and Short-term investments were held in the U.S. and overdrawn Cash and cash equivalents and Short-term investments of $937 million were held in other countries. We maintain multicurrency cash pools with third-party banks in which various Aon entities participate. Individual Aon entities are permitted to overdraw on their individual accounts provided the overall global balance does not fall below zero. At March 31, 2017 , non-U.S. cash balances of one or more entities were negative; however, the overall balance was positive.

Of the total balance of Cash and cash equivalents and Short-term investments at December 31, 2016 , $82 million was restricted as to its use, which was comprised of $53 million of operating funds in the U.K., as required by the Financial Conduct Authority, and $29 million held as collateral for various business purposes. At December 31, 2016 , $1.9 billion of cash and cash equivalents and short-term investments were held in the U.S. and overdrawn Cash and cash equivalents and Short-term investments of $1.2 billion were held in other countries.

In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission, remit the premiums to the respective insurance underwriter. We also collect claims or refunds from underwriters on behalf of insureds, which are then returned to the insureds. Unremitted insurance premiums and claims are held by us in a fiduciary capacity. In addition, some of our outsourcing agreements require us to hold funds on behalf of clients to pay obligations on their behalf. The levels of fiduciary assets and liabilities can fluctuate significantly, depending on when we collect premiums, claims, and refunds, make payments to underwriters and insureds, collect funds from clients and make payments on their behalf, and the movement of foreign currency exchange rates. Fiduciary assets, because of their nature, are generally invested in very liquid securities with highly-rated, credit-worthy financial institutions. In our Condensed Consolidated Statements of Financial Position, the amounts we report for Fiduciary assets and Fiduciary liabilities are equal. Our Fiduciary assets included cash and short-term investments of $3.7 billion and $3.3 billion at March 31, 2017 and December 31, 2016 , respectively, and fiduciary receivables of $5.5 billion and $5.7 billion at March 31, 2017 and December 31, 2016 , respectively. While we earn investment income on the fiduciary assets held in cash and investments, the cash and investments cannot be used for general corporate purposes.

As disclosed in Note 13 “Fair Value Measurements and Financial Instruments” of the Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report, the majority of our investments carried at fair value are money market funds. The Company’s investments in money market funds are carried at cost as an approximation of fair value. Consistent with market convention, we consider cost a practical and expedient measure of fair value. These money market funds are held throughout the world with various financial institutions. We are not aware of any market liquidity issues that would materially impact the fair value of these investments.

At March 31, 2017 , our investments in money market funds had a fair value of $1.6 billion and are reported as Short-term investments or Fiduciary assets in the Condensed Consolidated Statements of Financial Position depending on their nature.

The following table summarizes our Fiduciary assets, non-fiduciary Cash and cash equivalents, and Short-term investments at March 31, 2017 (in millions):



	Statement of Financial Position Classification
Asset Type	Cash and Cash Equivalents		Short-term Investments		Fiduciary Assets		Total
Certificates of deposit, bank deposits or time deposits	$	433	$	—	$	2,242	$	2,675
Money market funds	—		200		1,449		1,649
Other investments due within one year	—		—		—		—
Cash and short-term investments	433		200		3,691		4,324
Fiduciary receivables	—		—		5,471		5,471
Total	$	433	$	200	$	9,162	$	9,795

Share Repurchase Program

Aon has a share repurchase program authorized by the Company’s Board of Directors (the “Repurchase Program”) The Repurchase Program was established in April 2012 with up to $5.0 billion in authorized repurchases and increased in November 2014 and February 2017 by incremental increases of $5.0 billion in authorized repurchases at each of those times.

Under the Repurchase Program, Class A Ordinary Shares may be repurchased through the open market or in privately negotiated transactions, from time to time, based on prevailing market conditions, and will be funded from available capital. In the first quarter of 2017 ,we repurchased 1.1 million shares at an average price per share of $114.46 for a total cost of $125 million . We recorded an additional $0.6 million of costs associated with the repurchases to Retained earnings during the quarter. In the first quarter of 2016 , we repurchased 7.7 million shares at an average price per share of $97.92 for a total cost of approximately $750 million .

At March 31, 2017 , the remaining authorized amount for share repurchase under the Share Repurchase Program is approximately $7.7 billion . Under the Repurchase Program, we have repurchased a total of 91.3 million shares for an aggregate cost of approximately $7.3 billion .

For information regarding share repurchases made during the first quarter of 2017 , see Part II, Item 2 of this report.

Distributable Reserves

As a U.K. incorporated company, we are required under U.K. law to have available “distributable reserves” to make share repurchases or pay dividends to shareholders. Distributable reserves are created through the earnings of the U.K. parent company. Distributable reserves are not linked to a U.S. GAAP reported amount (e.g., retained earnings). As of March 31, 2017 and December 31, 2016 , we had distributable reserves in excess of $3.8 billion and $1.6 billion , respectively. We believe that we will have sufficient distributable reserves to fund shareholder dividends, if and to the extent declared, for the foreseeable future.

Borrowings

Total debt at March 31, 2017 was $6.3 billion , which represents an increase of $72 million compared to December 31, 2016 . Commercial paper activity during the three months ended March 31, 2017 included total issuances of $994 million compared to $300 million for the three months ended March 31, 2016 , offset by repayments of $947 million compared to $171 million over the same periods. The proceeds of the commercial paper issuances were used primarily for short-term working capital needs.

Credit Facilities

As of March 31, 2017 , Aon plc had one primary committed credit facility outstanding: its $900 million multi-currency U.S. credit facility expiring in February 2021 (the “2021 Facility”). Our $400 million U.S. credit facility expired in March 2017. The 2021 facility is intended to support our commercial paper obligations and our general working capital needs. In addition, this facility includes customary representations, warranties and covenants, including financial covenants that require us to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, tested quarterly. At March 31, 2017 , we had no borrowings under, and were in compliance with, these financial covenants and all other covenants contained in the 2021 Facility during the three months ended March 31, 2017 .

Our total debt-to-EBITDA ratio at March 31, 2017 and 2016 based on a rolling twelve months is calculated as follows (in millions):



	Twelve months ended
	March 31,
	2017		2016
Net income	$	1,398	$	1,402
Interest expense	283		277
Income taxes	180		259
Depreciation of fixed assets	238		229
Amortization of intangible assets	264		301
Total EBITDA	$	2,363	$	2,468
Total Debt	$	6,277	$	6,597
Total debt-to-EBITDA ratio	2.7		2.7

We use EBITDA for total Aon, as defined by our financial covenants, as a non-GAAP measure. This supplemental information related to EBITDA represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto.

Shelf Registration Statement

On September 3, 2015, we filed a shelf registration statement with the U.S. Securities and Exchange Commission (the “SEC”), registering the offer and sale from time to time of an indeterminate amount of, among other securities, debt securities, preference shares, Class A Ordinary Shares and convertible securities. Our ability to access the market as a source of liquidity is dependent on investor demand, market conditions and other factors.

Rating Agency Ratings

The major rating agencies’ ratings of our debt at May 9, 2017 appear in the table below.



	Ratings
	Senior Long-term Debt	Commercial Paper	Outlook
Standard & Poor’s	A-	A-2	Stable
Moody’s Investor Services	Baa2	P-2	Stable
Fitch, Inc.	BBB+	F-2	Stable

A downgrade in the credit ratings of our senior debt and commercial paper could increase our borrowing costs, reduce or eliminate our access to capital, reduce our financial flexibility, increase our commercial paper interest rates, or restrict our access to the commercial paper market altogether, and/or impact future pension contribution requirements.

Letters of Credit and Other Guarantees

We have entered into a number of arrangements whereby our performance on certain obligations is guaranteed by a third party through the issuance of a letter of credit (“LOCs”). We had total LOCs outstanding of approximately $90 million at March 31, 2017 , compared to $90 million at December 31, 2016 . These LOCs cover the beneficiaries related to certain of our U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for our own workers compensation program. We also have obtained LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at our international subsidiaries.

We have certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $64 million at March 31, 2017 , compared to $95 million at December 31, 2016 .

Other Liquidity Matters

We do not have significant exposure related to off-balance sheet arrangements. Our cash flows from operations, borrowing availability and overall liquidity are subject to risks and uncertainties. See “Information Concerning Forward-Looking Statements” below.

Financial Condition

At March 31, 2017 , our net assets were $5.8 billion , representing total assets minus total liabilities, an increase from $5.5 billion at December 31, 2016 . The increase was due primarily to Net income of $305 million and an increase of $162 million in Accumulated other comprehensive loss, partially offset by $126 million of share repurchases and $87 million of dividend payments for the three months ended March 31, 2017 . Working capital increased by $1,772 million to $2,423 million from December 31, 2016 .

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss increased $162 million to $3,750 million at March 31, 2017 as compared to $3,912 million at December 31, 2016 , which was primarily driven by the following:


•	positive net foreign currency translation adjustments of $146 million , which are attributable to the weakening of the U.S. dollar against certain foreign currencies,


•	an increase of $18 million in net post-retirement benefit obligations, and


•	net financial instrument losses of $2 million .

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes in our critical accounting policies, which include revenue recognition, pensions, goodwill and other intangible assets, contingencies, share-based payments, and income taxes, as discussed in our 2016 Annual Report on Form 10-K, other than those described below.

Restructuring

Workforce reduction costs

The method used to account for workforce reduction costs depends on whether the costs result from an ongoing severance plan or are one-time costs. We account for relevant expenses as severance costs when we have an established severance policy, statutory requirements dictate the severance amounts, or we have an established pattern of paying by a specific formula. We recognize these costs when the likelihood of future settlement is probable and the amount of the related benefit is reasonably estimable, or on a straight-line basis over the remaining service period, if applicable.

We estimate our one-time workforce reduction costs related to exit and disposal activities not resulting from an ongoing severance plan based on the benefits available to the employees being terminated. We recognize these costs when we identify the specific classification (or functions) and locations of the employees being terminated, notify the employees who might be included in the termination, and expect to terminate employees within the legally required notification period. When employees are receiving incentives to stay beyond the legally required notification period, we record the cost of their severance over the remaining service period.

Lease consolidation costs

Where we have provided notice of cancellation pursuant to a lease agreement or abandoned space and have no intention of reoccupying it, we recognize a loss. The loss reflects our best estimate of the net present value of the future cash flows associated with the lease at the date we provide notice of cancellation in accordance with contractual terms, vacate the property, or sign a sublease arrangement. To determine the loss, we estimate sublease income based on current market quotes for similar properties. When we finalize definitive agreements with the sublessee, we adjust our sublease losses for actual outcomes.

Fair value concepts of one-time workforce reduction costs and lease losses

Accounting guidance requires that our exit and disposal accruals reflect the fair value of the liability. Where material, we discount the lease loss calculations to arrive at their net present value. Most workforce reductions happen over a short span of time, so no discounting is necessary.

For the remaining lease term, we decrease the liability for payments and increase the liability for accretion of the discount, if material. The discount reflects our incremental borrowing rate, which matches the lifetime of the liability. Significant changes in the discount rate selected or the estimations of sublease income in the case of leases could impact the amounts recorded.

Asset impairments

Asset impairments are accounted for in the period when they become known. Furthermore, we record impairments by reducing the book value to the net present value of future cash flows (in situations where the asset had an identifiable cash flow stream) or accelerating the depreciation to reflect the revised useful life.

Other associated costs of exit and disposal activities

We recognize other costs associated with exit and disposal activities as they are incurred, including separation costs, moving costs and consulting and legal fees.

NEW ACCOUNTING PRONOUNCEMENTS

Note 2 “Accounting Principles and Practices” to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report contains a discussion of recently issued accounting pronouncements and their impact or future potential impact on our financial results, if determinable.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This report and reports we will subsequently file or furnish and have previously filed or furnished with the SEC contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations or forecasts of future events. They use words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “project,” “intend,” “plan,” “probably,” “potential,” “looking forward,” and other similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. For example, we may use forward-looking statements when addressing topics such as: market and industry conditions, including competitive and pricing trends; changes in our business strategies and methods of generating revenue; the development and performance of our services and products; changes in the composition or level of our revenue; our cost structure and the outcome of cost-saving or restructuring initiatives; the outcome of contingencies; dividend policy; the expected impact of acquisitions and dispositions; pension obligations; cash flow and liquidity; expected effective tax rate; future actions by regulators; and the impact of changes in accounting rules. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors, which may be revised or supplemented in subsequent reports filed or furnished with the SEC, that could impact results include:


•	general economic and political conditions in different countries in which we do business around the world;


•	changes in the competitive environment;


•	fluctuations in exchange and interest rates that could influence revenues and expenses;


•	changes in global equity and fixed income markets that could affect the return on invested assets;


•	changes in the funding status of our various defined benefit pension plans and the impact of any increased pension funding resulting from those changes;


•	the level of our debt limiting financial flexibility or increasing borrowing costs;


•	rating agency actions that could affect our ability to borrow funds;


•	the effect of the change in global headquarters and jurisdiction of incorporation, including differences in the anticipated benefits;


•	changes in estimates or assumptions on our financial statements;


•	limits on our subsidiaries to make dividend and other payments to us;


•	the impact of lawsuits and other contingent liabilities and loss contingencies arising from errors and omissions and other claims against us;


•	the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which we operate, particularly given the global scope of our businesses and the possibility of conflicting regulatory requirements across jurisdictions in which we do business;


•	the impact of any investigations brought by regulatory authorities in the U.S., U.K. and other countries;


•	the impact of any inquiries relating to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws and with U.S. and non-U.S. trade sanctions regimes;


•	failure to protect intellectual property rights or allegations that we infringe on the intellectual property rights of others;


•	the effects of English law on our operating flexibility and the enforcement of judgments against us;


•	the failure to retain and attract qualified personnel;


•	international risks associated with our global operations;


•	the effect of natural or man-made disasters;


•	the potential of a system or network breach or disruption resulting in operational interruption or improper disclosure of personal data;


•	our ability to develop and implement new technology;


•	damage to our reputation among clients, markets or third parties;


•	the actions taken by third parties that perform aspects of our business operations and client services;


•	the extent to which we manage certain risks created in connection with the various services, including fiduciary and investments and other advisory services and business process outsourcing services, among others, that we currently provide, or will provide in the future, to clients;


•	our ability to continue, and the costs associated with, growing, developing and integrating companies that we acquire or new lines of business;


•	changes in commercial property and casualty markets, commercial premium rates or methods of compensation;


•	impact of the pending sale of our Benefits Administration and HR Business Process Outsourcing Platform;


•	changes in the health care system or our relationships with insurance carriers;


•	our ability to implement initiatives intended to yield cost savings and the ability to achieve those cost savings;


•	our risks and uncertainties in connection with the sale of our Benefits Administration and HR Business Process Outsourcing business; and


•	our ability to realize the expected benefits from our restructuring plan.

Any or all of our forward-looking statements may turn out to be inaccurate, and there are no guarantees about our performance. The factors identified above are not exhaustive. Aon and its subsidiaries operate in a dynamic business environment in which new risks may emerge frequently. Accordingly, readers should not place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statement that we may make from time to time, whether as a result of new information, future events or otherwise. Further information about factors that could materially affect Aon, including our results of operations and financial condition, is contained in Part III, Item 1A Risk Factors of this report and in the “Risk Factors” section in Part I, “Item 1A Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016 . These factors may be revised or supplemented in subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to potential fluctuations in earnings, cash flows and the fair value of certain of our assets and liabilities due to changes in interest rates and foreign exchange rates. To manage the risk from these exposures, we enter into a variety of derivative instruments. We do not enter into derivatives or financial instruments for trading or speculative purposes.

The following discussion describes our specific exposures and the strategies we use to manage these risks. There have been no changes in our critical accounting policies for financial instruments and derivatives as discussed in our 2016 Annual Report on Form 10-K.

Foreign Exchange Risk

We are subject to foreign exchange rate risk. Our primary exposures include exchange rates between the U.S. Dollar and the Euro, the British Pound, the Canadian Dollar, the Australian Dollar, and the Indian Rupee. We use over-the-counter options and forward contracts to reduce the impact of foreign currency risk to our financial statements.

Additionally, some of our non-U.S. brokerage subsidiaries receive revenue in currencies that differ from their functional currencies. Our U.K. subsidiaries earn a portion of their revenue in U.S. Dollars and Euros, but most of their expenses are incurred in British Pounds. At March 31, 2017 , we have hedged approximately 45% of our U.K. subsidiaries’ expected exposures to both U.S. Dollar and Euro transactions for the years ending December 31, 2017 and 2018 , respectively. We generally do not hedge exposures beyond three years.

We also use forward contracts to economically hedge foreign exchange risk associated with monetary balance sheet exposures, such as inter-company notes and short-term assets and liabilities that are denominated in a non-functional currency and are subject to remeasurement.

The translated value of revenue and expense from our international brokerage operations are subject to fluctuations in foreign exchange rates. If we were to translate prior year results at current quarter exchange rates, diluted earnings per share would be an immaterial impact during the three months ended March 31, 2017 . Further, adjusted diluted earnings per share, a non-GAAP measure as defined and reconciled under the caption “Review of Consolidated Results — Adjusted Diluted Earnings Per Share” would be a $0.01 unfavorable impact during the three months ended March 31, 2017 if we were to translate prior year results at current quarter exchange rates.

Interest Rate Risk

Our fiduciary investment income is affected by changes in international and domestic short-term interest rates. We monitor our net exposure to short-term interest rates and, as appropriate, hedge our exposure with various derivative financial instruments. This activity primarily relates to brokerage funds held on behalf of clients in the U.S. and in continental Europe. A decrease in global short-term interest rates adversely affects our fiduciary investment income.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. We have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report of March 31, 2017 . Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective such that the information relating to Aon, including our consolidated subsidiaries, required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in appropriate statute, SEC rules and forms, and is accumulated and communicated to Aon’s management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. No changes in Aon’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended March 31, 2017 that have materially affected, or that are reasonably likely to materially affect, Aon’s internal control over financial reporting.

Part II

Other Information

Item 1. Legal Proceedings

See Note 16 “Commitments and Contingencies — Legal” to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report, which is incorporated by reference herein.

Item 1A. Risk Factors

The risk factors set forth in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016 reflect certain risks associated with existing and potential lines of business and contain “forward-looking statements” as discussed in Part I, Item 2 of this report. Readers should consider them in addition to the other information contained in this report as our business, financial condition or results of operations could be adversely affected if any of these risks actually occur.

Except as otherwise described below, there were no material changes to the risk factors previously disclosed in our 2016 From 10-k.

We have added the risk factor “We may not realize all of the expected benefits from our restructuring plan.”

We have replaced the risk factor, “We are subject to various risks and uncertainties in connection with the pending sale of our Benefits and Administration and HR Business Process Outsourcing (BPO) Platform” with “We are subject to various risks and uncertainties in connection with the sale of our Benefits Administration and HR Business Process Outsourcing business.”

We may not realize all of the expected benefits from our restructuring plan.

In 2017, we initiated a global restructuring plan (the “Restructuring Plan”) in connection with the sale of our benefits administration and business process outsourcing business. The Restructuring Plan is intended to streamline operations across the organization and deliver greater efficiency, insight and connectivity. We expect these restructuring activities and related expenses to affect continuing operations through 2019, including an estimated 1,600 to 1,900 role eliminations. The Restructuring Plan is expected to result in cumulative costs of approximately $750 million through the end of the Restructuring Plan, consisting of approximately $207 million in employee termination costs, $146 million in IT rationalization costs, $176 million in real estate realization costs, $40 million in asset impairment costs and $181 million in other costs associated with the restructuring. Included in the estimated $750 million is $50 million of estimated non-cash charges related to asset impairments and lease consolidations.

We estimate that our annualized savings from the Restructuring Plan will be approximately $400 million by the end of 2019. Actual total costs, savings and timing of the Restructuring Plan may vary from these estimates due to changes in the scope or assumptions underlying the Restructuring Plan. We therefore cannot assure that we will achieve the targeted savings. Unanticipated costs or unrealized savings in connection with the Restructuring Plan could adversely affect our results of operations and financial condition.

We are subject to various risks and uncertainties in connection with the sale of our Benefits Administration and HR Business Process Outsourcing business.

On February 9, 2017, we entered into a Purchase Agreement with Tempo Acquisition, LLC to sell our benefits administration and business process outsourcing business to the Buyer, an entity controlled by affiliates of The Blackstone Group L.P. On May 1, 2017, the transaction was consummated and the Buyer purchased all of the outstanding equity interests in each of the Divested Business’s subsidiaries, plus certain related assets, for a purchase price of (i) $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and (ii) deferred consideration of up to $500 million, plus the assumption of certain liabilities.

The Transaction carries inherent risks, including the risk that Aon will not earn the $500 million of additional consideration or otherwise realize the intended value of the Transaction, as well as risks connected with separating the Divested Business from Aon. Because the Divested Business represented 19% of our gross revenues for the fiscal year 2016, our results of operations and financial condition may be materially adversely affected, or may not be accretive to adjusted earnings per share as anticipated, if we fail to effectively reduce our overhead costs to reflect the reduced scale of operations or fail to grow our other business as expected. Additionally, the separation of the Divested Businesses from the rest of Aon’s business will require significant resources, which may disrupt operations or divert management’s attention from Aon’s day-today operations and efforts to grow our other businesses.

Furthermore, we have entered into ongoing commercial arrangements with the Buyer. If we do not realize the intended benefits of these arrangements, it could affect our results of operations or adversely affect our relationship with clients, partners, colleagues and other third parties. Additionally, if the Divested Business does not deliver the level of service to which our clients and partners are accustomed, it could adversely affect our relationships with such third parties.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities.

The following information relates to the purchase of equity securities by Aon or any affiliated purchaser during each month within the first quarter of 2017 :



Period	Total Number of Shares Purchased	Average Price Paid per Share ⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾⁽²⁾
1/1/17 - 1/31/17	443,109	$	112.84	443,109	$	2,773,315,760
2/1/17 - 2/28/17	412,712	115.09		412,712	7,725,816,794
3/1/17 - 3/31/17	236,185	116.38		236,185	7,698,328,694
Total	1,092,006	$	114.46	1,092,006	$	7,698,328,694


(1)	Does not include commissions or other costs paid to repurchase shares.


(2)	Our board of directors authorized the Company’s share repurchase program in April 2012. In February 2017, our board of directors authorized a $5.0 billion increase to the then existing remaining authorization under the share repurchase program. During the first quarter of 2017 , we repurchased 1.1 million shares at an average price per share of $114.46 for a total cost of $125 million .

We did not make any unregistered sales of equity in the first quarter.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits

Exhibits — The exhibits filed with this report are listed on the attached Exhibit Index.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	Aon plc
	(Registrant)

May 9, 2017	By:	/s/ Laurel Meissner
	LAUREL MEISSNER
	SENIOR VICE PRESIDENT AND
	GLOBAL CONTROLLER
	(Principal Accounting Officer and duly authorized officer of Registrant)

Exhibit Index



Exhibit Number		Description of Exhibit
10.1		Separation Agreement entered into between Aon Corporation and Stephen McGill, dated January 24, 2017.
10.2		Amendment No. 1 to Purchase Agreement by and among Aon plc and Tempo Acquisition, LLC, entered into on April 17, 2017
12.1		Statement regarding Computation of Ratio of Earnings to Fixed Charges.
31.1		Certification of CEO.
31.2		Certification of CFO.
32.1		Certification of CEO Pursuant to section 1350 of Title 18 of the United States Code.
32.2		Certification of CFO Pursuant to section 1350 of Title 18 of the United States Code.
101		Interactive Data Files. The following materials are filed electronically with this Quarterly Report on Form 10-Q:
		101.INS XBRL Report Instance Document
		101.SCH XBRL Taxonomy Extension Schema Document
		101.CAL XBRL Taxonomy Calculation Linkbase Document
		101.DEF XBRL Taxonomy Definition Linkbase Document
		101.PRE XBRL Taxonomy Presentation Linkbase Document
		101.LAB XBRL Taxonomy Calculation Linkbase Document

SEPARATION AGREEMENT

This Separation Agreement (this “Agreement”) entered into by and between Aon Corporation, a Delaware corporation (the “Company”), and Stephen McGill (the “Executive”).

WHEREAS, the Company and the Executive previously entered into an employment agreement effective July 8, 2015 (the “Prior Employment Agreement”), and an international assignment letter dated June 17, 2016 (the “Assignment Letter”) (collectively and individually, such agreements referred to herein as the “Prior Agreements”); and

WHEREAS, the Company desires to enter into an agreement regarding the Executive’s separation from employment with the Company and its affiliates to be effective January 31, 2017 (the “Separation Date”) and a release of claims, upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereby agree as follows:


1.	Termination .

Termination on the Separation Date . The Prior Agreements and the Executive’s employment thereunder will terminate on the Separation Date. Such termination of the Executive’s employment on the Separation Date shall be deemed a termination of employment pursuant to mutual consent between the Executive and the Company. The Company will pay the Executive all accrued but unpaid base salary and vested benefits (subject to Section 3) as of the Separation Date, payable in accordance with the applicable Company policy, plan, or program, and, subject to the terms and conditions set forth in Section 2, the Separation Benefits (as defined below). Executive’s eligibility to participate in the Company’s employee benefit plans generally available to senior employees of the Company, including without limitation health care plans, shall terminate as of the Separation Date, subject to any applicable rights pursuant to COBRA.

Effecting Termination . As of the Separation Date, the Executive agrees that the Secretary of the Company may, as an irrevocable proxy and in the Executive’s name and stead, execute all documents and things which the Company deems necessary and desirable to effect the Executive’s resignation as an officer or director of the Company or any of its affiliates, parent companies, or subsidiaries (collectively and individually, “Aon”).

Obligations Upon Termination . Upon the Separation Date, the obligations of the parties under the Prior Agreements will cease. The Executive will continue to be indemnified and held harmless to the maximum extent provided under the Company’s charter, by-laws and applicable law for his acts and omissions to act through the termination date, which indemnification shall survive his termination of employment. Executive will continue to be insured under policies of directors and officers liability insurance to the fullest extent provided for former officers or directors under the applicable policy(ies); provided, such insurance coverage may be terminated if Aon terminates coverage generally for all officers and directors. Nothing in this Agreement or its Exhibits waives the Executive’s right to make any claim under any director and officer liability insurance coverage provided by the Company for acts or omissions by Executive while an executive officer of the Company or any affiliate.

Copy of Restrictive Covenants . The Executive agrees that, prior to the commencement of any new employment in the Business (as defined below), the Executive will furnish the prospective new employer with a complete and accurate copy of the text of the restrictive covenant obligation the Executive has to Aon (the “Restrictive Covenant Text”) under Section 5 of this Agreement. The Executive also agrees that the Company may advise any prospective new employer of the Executive of the existence and terms of such restrictive covenants and furnish the prospective new employer with a copy of the Restrictive Covenant Text.

Separation Payments . Contingent upon (a) the Executive’s continued employment in good standing with the Company through the Separation Date, (b) the Executive’s continued compliance with the provisions of Section 5 herein, and (c) the Executive’s execution and return (and non-revocation) of a general release of claims agreement in the form attached hereto as Exhibit A (the “Release”) and the Executive’s execution and return (and non-revocation) of a settlement agreement in the form attached hereto as Exhibit B (the “UK Waiver and Discharge Agreement”) within 21 calendar days after receiving such agreements (but not before the Separation Date), the Executive shall be eligible to receive the following payments (the “Separation Payments”):


a.	A cash payment in the amount of $7,500,000, payable in two installments of (i) $5,500,000 on the later of (x) February 3, 2017 and (y) the expiration of the revocation periods set forth in Section 7(d) of this Agreement and in Section 4 of the Release (without any revocations by the Executive) but in no event later than February 28, 2017; and (ii) $2,000,000 on August 1, 2017;


b.	A cash payment in the amount of $7,500,000, payable on February 2, 2018; and


c.	A cash payment in the amount of $7,500,000, payable on February 1, 2019.

The Separation Agreement shall be subject to all necessary and required payroll deductions. The Company shall use reasonable best efforts to make withholdings in the most tax efficient way possible.

Equity Awards . The Executive’s equity award issued under the Aon plc Amended and Restated 2011 Incentive Plan (the “2011 Incentive Plan”) in connection with the Leadership Performance Program (“LPP”) for the 2014-2016 performance cycle (“LPP9”) will continue to be governed by the terms and conditions of the applicable plan documents, provided that, solely and exclusively for purposes of determining vesting treatment under LPP9, the Executive’s termination of employment on the Separation Date shall be considered without cause. The Executive acknowledges and agrees that the Separation Payments are in full satisfaction of all amounts that may otherwise be due to the Executive in connection with any other outstanding equity awards issued to him under the 2011 Incentive Plan in connection with the 2015-2017 and 2016-2018 performance cycles under the LPP and in connection with the Incentive Stock Program, and that all award agreements issued to the Executive in connection with such equity awards are deemed to be cancelled and rendered null and void.

Acknowledgments . The Executive understands and agrees that he would not otherwise be eligible for, or entitled to, any of the payments or other benefits set forth in this Agreement, if he did not enter into this Agreement. Further, by signing this Agreement, the Executive agrees that he is not entitled to any additional payments and/or benefits that are not specifically listed in this Agreement including, but not limited to, benefits under the Aon Severance Plan, any benefits under the Prior Agreements, any benefits under any tax equalization policy, and/or any applicable Aon bonus or incentive plan, except for those benefits in which he has a vested right pursuant to the terms of the applicable plans and applicable law.


5.	Restrictive Covenants .

General . The Executive acknowledges that in the course of his employment with the Company and any predecessor or affiliated company, the Executive has become familiar with trade secret and other confidential information concerning Aon. The Executive further acknowledges and agrees that his services as Chairman and Chief Executive Officer, Risk Solutions, a Group President of Aon plc and a senior executive have been and are of special, unique, and extraordinary value to Aon, and that his material employment duties and responsibilities (including without limitation with respect to Aon strategic and other business operations, clients, prospective clients, and other employees) are global in nature and span geographic areas that extend well beyond the locations in which the Executive has been physically employed and resided. The Executive further acknowledges and agrees that it therefore is reasonable to protect Aon against certain competitive activities by the Executive for a limited period of time after the Executive leaves employment to protect Aon’s legitimate business interests in all of the geographic areas in which Aon does business, and that the covenants contained in Section 5 are necessary for the protection of Aon and are reasonably limited with respect to the activities prohibited, duration, geographical scope and their effect on the Executive and the public.

Confidential Information . The Executive acknowledges that Aon’s business depends to a significant degree upon the possession of confidential, proprietary and trade secret information which is not generally known to others, and that the profitability of the Business of Aon requires that this information remain proprietary to Aon. The Executive recognizes that, by virtue of the Executive’s employment by the Company and/or its affiliates, and to assist the Executive in the solicitation, production and servicing of client business, the Executive has had otherwise prohibited access to such information. This information (hereinafter referred to as “Confidential Information”) includes, without limitation: lists of clients and prospective clients; contract terms and conditions; client information relating to services, insurance, benefits programs, executives, finances, and compensation; copyrighted materials; corporate, management and business plans and strategies; compensation and revenues; methods and strategies of marketing; market research and data; technical know-how; computer software and manuals; policies and procedures; and the conduct of the affairs of Aon. Confidential Information does not include any information that lawfully is or has become generally or publicly known other than through the Executive’s breach of this Agreement or a breach by another person of some other obligation. The Executive will not disclose or use during after his employment, any Confidential Information, except as required in the course of his employment or as provided by applicable law or in Section 9 below.

Noncompetition . The Executive agrees that for a period of two years after the Separation Date (the “Noncompetition Period”) the Executive will not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer, director, stockholder, investor, or employee of, or as a consultant to, any other corporation or enterprise or otherwise, engage, or be engaged, or assist any other person, firm, corporation, or enterprise in engaging or being engaged, in any business, in which Executive was involved or had material knowledge at any time within the two-year period preceding the Separation Date, being conducted or actively contemplated by the Company or any of its subsidiaries or affiliates as of the Separation Date, in any geographic area in which the Company or its subsidiaries or affiliates is then conducting such business (the “Business”).

Nonsolicitation . The Executive further agrees that during the Noncompetition Period, the Executive will not, without the advance written consent of the Company’s Chief Executive Officer or General Counsel, in any manner, directly or indirectly, induce or attempt to induce any client or any client-facing or managerial employee of the Company or its subsidiaries or affiliates within its Risk Solutions business, to terminate or abandon their relationship or employment with the Company or its subsidiaries or affiliates for any purpose whatsoever.

Inventions . The Executive hereby assigns to the Company the Executive’s entire right, title and interest in and to all discoveries and improvements, patentable or otherwise, trade secrets and ideas, writings and copyrightable material, which may be conceived by the Executive or developed or acquired by the Executive during the Executive’s employment and which may pertain directly or indirectly to the business of the Company or any of its subsidiaries or affiliates, and which the Executive hereby agrees is work for hire performed in the scope of the Executive’s employment. The Executive agrees to disclose fully all such developments to the Company upon its request, which disclosure will be made in writing promptly following any such request. The Executive will upon the Company’s request, execute, acknowledge and deliver to the Company all instruments and do all other acts which are necessary or desirable to enable the Company or any of its subsidiaries or affiliates to file and prosecute applications for, and to acquire, maintain and enforce, all patents, trademarks, and copyrights in all countries. The Executive acknowledges and agrees that the Executive hereby is and has been notified by the Company, and understands, that the foregoing provisions of this Section 5(e) do not apply to an invention for which no equipment, supplies, facilities or trade secret information of the Company or any of its parent companies, subsidiaries or other affiliates was used and which was developed entirely on the Executive’s own time, unless: (i) the invention relates (x) to the business of the Company or any of its subsidiaries or other affiliates or (y) to the Company’s or any of its subsidiaries’ or other affiliates’ actual or demonstrably anticipated research and development, or (ii) the invention results from any work performed by the Executive for the Company or any of its subsidiaries or other affiliates.


f.	Exceptions . Nothing in this Section 5 will prohibit the Executive from being (i) a stockholder in a mutual fund or a diversified investment company or (ii) a passive owner of note more than two percent of the outstanding stock of any class of a corporation, any securities of which are publicly traded, so long as the Executive has no active participation in the business of such corporation.

Reformation . If, at any time of enforcement of this Section 5, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope, or geographical area reasonable under such circumstances will be substituted for the stated period, scope or area and that the court will be allowed to revise the restrictions contained herein to cover the maximum period, scope, and area permitted by law. This Agreement will not authorize a court to increase or broaden any of the restrictions of this Section 5.

Consideration; Breach . The Company and the Executive agree that the payments to be made by the Company to the Executive pursuant to Sections 2(a)(ii), 2(b) and 2(c) hereof will be made and provided expressly in consideration of the Executive’s agreements contained in, and continued compliance with, this Section 5. The Executive acknowledges and agrees that the Company would not have agreed to provide any of the payments in Section 2 (including without limitation the payment in Section 2(a)(i)) but for the Executive’s promises in this Section 5. In the event that the Company determines, in the sole discretion of the Aon plc Chief Executive Officer, that the Executive has committed a material breach of any provision of Section 5 hereof, on written notice to the Executive setting forth the basis for such determination, such notice provided to the Executive 21 days in advance of any action pursuant to this Section 5(h) or within seven days of the Company becoming aware of the action constituting a material breach, whichever is later, without limiting or otherwise affecting any other available remedy to the Company or any of its subsidiaries or affiliates, the Company will be entitled, subject to the duty of good faith, immediately to terminate making all remaining payments pursuant to Section 2 hereof, and upon such termination the Company will have no further liability to the Executive under this Agreement; provided , however , that if a court of law determines that no such material breach occurred, the Company then will be obligated to make such payments in a timely manner. The Executive further acknowledges and agrees that a breach by him of any provision of Section 5 of this Agreement will result in immediate and irreparable harm to the Company and any of its subsidiaries or affiliates for which full damages cannot readily be calculated and for which damages are an inadequate remedy. Accordingly, the Executive agrees that the Company and its affiliates shall be entitled to injunctive relief to prevent any such actual or threatened breach or any continuing breach by the Executive (without posting a bond or other security), without limiting any other remedies that may be available to them. The Executive further agrees to reimburse the Company and any of its subsidiaries or affiliates for all costs and expenditures, including but not limited to reasonable attorneys' fees and court costs, incurred by any of them in connection with the successful enforcement of any of their rights under any of Section 5 of this Agreement.

Return of Property . Upon the Separation Date or upon the Company’s request (whichever is earlier), the Executive will promptly return to the Company all Confidential Information and all materials and all copies or tangible embodiments of materials involving Confidential Information, and all other Aon property, in the Executive’s possession or control, except as otherwise provided by law or in Section 9 below.

Mergers and Consolidations; Assignability . The rights and obligations under this Agreement will inure to the benefit of and be binding upon the Company and its successors and assigns so long as any assignee, successor, or transferee of the Company has provided an express written and unconditional assumption of the Company’s obligations under this Agreement. This Agreement will not be assignable by the Executive, but in the event of the Executive’s death it will be binding upon and inure to the benefit of the Executive’s legal representatives to the extent required to effectuate its terms. In the event of the Executive’s death after terminating employment and before all payments and benefits otherwise due to him had been paid to him (had he not died), such amounts will be paid to the Executive’s estate (or any beneficiary designated by Executive prior to his death).


7.	Release .

For and in consideration of the payments and benefits provided, or to be provided, to the Executive under this Agreement, the Executive, and anyone claiming through him or on his behalf, hereby waives and releases the Released Parties (as defined below) with respect to any and all claims, whether currently known or unknown, that the Executive now has or ever has had against a Released Party arising from or related to any act, omission, or thing occurring or existing at any time prior to or on the date on which the Executive signs this Agreement. “Released Parties” include (A) the Company and its past, present, and future parents, divisions, subsidiaries, partnerships, affiliates, and other related entities, (B) each of the foregoing entities’ and persons’ past, present, and future owners, trustees, fiduciaries, administrators, shareholders, directors, officers, partners, members, associates, agents, executives, employees, and attorneys, and (C) the predecessors, successors and assigns of each of the foregoing persons and entities. Without limiting the generality of the foregoing, the claims waived and released by the Executive hereunder include, but are not limited to:

All claims arising out of or related in any way to his employment, compensation, other terms and conditions of employment, or termination from employment, including, without limitation, claims with respect to any advance notice of termination and claims arising out of the Prior Agreements or any other employment agreements, incentive plans, severance plans or policies, stock plans or policies, or any other employee benefit plans;

ii.

All claims that were or could have been asserted by the Executive or on his behalf: (A) in any federal, state, or local court, commission, or agency; or (B) under any common law theory (including without limitation all claims for breach of contract (oral, written or implied), wrongful termination, defamation, invasion of privacy, infliction of emotional distress, tortious interference, fraud, estoppel, unjust enrichment, and any other contract, tort or other common law claim of any kind); and

iii.

All claims that were or could have been asserted by the Executive or on his behalf under: (A) the Age Discrimination in Employment Act (the “ADEA”) and the Older Worker Benefit Protection Act (the “OWBPA”); and (B) any other federal, state, local, employment, services or other law, regulation, ordinance, constitutional provision, executive order or other source of law, including without limitation under any of the following laws, as amended from time to time: Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 1981 & 1981a, the Americans with Disabilities Act, the Equal Pay Act, Executive Retirement Income Security Act, the Lilly Ledbetter Fair Pay Act of 2009, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act and all applicable state, county or other local fair employment laws; and


iv.	Without limiting the generality of the above, all claims under the law of England and Wales which are waived in the UK Waiver and Discharge Agreement.


b.	Exceptions . Notwithstanding the foregoing, the releases and waivers in this Agreement shall not apply to any claim for unemployment or workers’ compensation, any claim for vested benefits under any employee benefit plan, any claim that by law is non-waivable, or any claim to rights pursuant to this Agreement (including, without limitation, the last sentence of Section 1(c) and Section 2).

No Further Obligations; Additional Representations . In the event of any further proceedings based upon any released matter, Aon shall have no further monetary or other obligation of any kind to the Executive, and the Executive hereby waives any such monetary or other recovery (provided that nothing limits the Executive’s rights under Section 9 below). The Executive represents and warrants that: (i) there has not been filed by the Executive or on the Executive’s behalf any legal or other proceedings against any of the Released Parties (provided, however, that the Executive need not disclose to the Company, and the foregoing representation and warranty in this subpart (a) does not apply to, conduct or matters described in Section 9 below); (ii) the Executive is the sole owner of the claims that are released in this Section 7; (iii) none of these claims has been transferred or assigned or caused to be transferred or assigned to any other person, firm or other legal entity; and (iv) the Executive has the full right and power to grant, execute, and deliver the releases, undertakings, and agreements contained in this Agreement.

Specific Rights Under OWBPA . They Executive understands and agrees that: (A) this is the full and final release of all claims against the Company and the other Released Parties through the date he signs this Agreement; (B) the Executive knowingly and voluntarily releases claims hereunder for valuable consideration; (C) the Executive hereby is and has been advised of his right to have his attorney review this Agreement before signing it; (D) the Executive has twenty-one (21) days to consider whether to sign this Agreement; and (E) the Executive may, at his sole option, revoke this Agreement upon written notice within seven (7) days after signing it. This Agreement will not become effective until this seven (7) day period has expired and will be void if he revokes it within such period. Although the Executive is releasing claims that he may have under the ADEA and the OWBPA, he understands that he may challenge the knowing and voluntary nature of this Agreement under the OWBPA and the ADEA before a court, the EEOC, the NLRB, or any other federal state or local agency charged with the enforcement of any employment laws. In order to facilitate the review of this Agreement by Executive’s counsel, the Company agrees to pay for the Executive’s legal fees in connection with the preparation and negotiation of this Agreement up to a maximum of $20,000, provided that the Executive submits appropriate invoices or other satisfactory documentation of such fees within thirty (30) calendar days following the Separation Date, with such payment to occur within thirty (30) calendar days after the Company’s receipt of such documentation.

Future Conduct . The Executive agrees that he shall refrain and the Company agrees that it shall use reasonable efforts to refrain from all conduct, verbal or otherwise, that disparages or damages the reputation, goodwill, or standing in the community of the other such party or, with respect to the Executive’s conduct any of the other Released Parties, provided that nothing herein shall prohibit the Executive from exercising his rights detailed in Section 9 or prohibit either party from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. The Executive agrees that he has no present or future right to employment with the Company or any of the other Released Parties and will not apply for employment with any of them. Subject to and except as otherwise provided in Section 9 of this Agreement: (a) the Executive shall cooperate fully with the Company and the other Released Parties in transitioning his responsibilities as requested by the Company; (b) the Executive agrees, subject to the advice of legal counsel, to voluntarily make himself available to the Company and its legal counsel, at the Company’s request without the necessity of obtaining a subpoena or court order, in the Company’s investigation, preparation, prosecution and/or defense of any actual or potential legal proceeding, regulatory action, or internal matter; and (c) subject to the advice of legal counsel, the Executive agrees to provide any information reasonably within the Executive’s recollection. The Executive’s obligation to cooperate hereunder shall include, without limitation, meeting and conferring with such persons at such times and in such places as the Company and the other Released Parties may reasonably require and not unreasonably interfering with the Executive’s other full-time business endeavors, and giving truthful evidence and truthful testimony and executing and delivering to the Company and any of the other Released Parties any truthful papers reasonably requested by any of them. The Executive shall be reimbursed for reasonable out-of-pocket expenses that he incurs in rendering cooperation after the Separation Date pursuant to this Section 7(e).

Protected Rights . Nothing in this Agreement is intended to limit in any way the Executive’s right or ability to report possible violations of law or regulation to, or file a charge or complaint with, the U.S. Securities and Exchange Commission, the U.S. Equal Employment Opportunity Commission, the National Labor Relations Board, or other federal, state or local agencies or commissions (collectively, “Government Agencies”). The Executive further understands that nothing in this Agreement limits the Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies, including providing documents or other information, without notice to the Company. Nothing in this Agreement shall limit the Executive’s ability to disclose in confidence trade secrets to Government Agencies, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law or to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. This Agreement does not limit the Executive’s ability to receive an award from a Government Agency for information provided by the Executive to such Government Agency.


10.	Miscellaneous .

Integration; Amendment; Counterparts . Except as is otherwise provided herein, this Agreement (including the Release and the UK Waiver and Discharge Agreement) contains all of the terms and conditions agreed upon by the parties relating to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements, negotiations, correspondence, undertakings and communications of the parties, whether oral or written, respecting the subject matter of this Agreement. This Agreement may not be amended, altered, or modified without the prior written consent of both parties and such instrument must acknowledge that it is an amendment or modification of this Agreement. This Agreement may be executed in two counterparts, each of which will be deemed an original and both of which together will constitute one and the same instrument. Any signature delivered via .pdf file shall be the same as an original signature.


b.	Waiver . Waiver of any term or condition of this Agreement by any party will not be construed as a waiver of a subsequent breach or failure of the same term or condition, or a waiver of any other term or condition of this Agreement. Any waiver must be in writing.


c.	Captions . The captions in this Agreement are not part of its provisions, are merely for reference and have no force or effect. If any caption is inconsistent with any provision of this Agreement, such provision will govern.

Governing Law . The validity, interpretation, construction, performance, enforcement and remedies of, or relating to, this Agreement (and the Release and the UK Waiver and Discharge Agreement), and the rights and obligations of the parties hereunder, will be governed by and construed in accordance with the substantive laws of the State of Illinois, without regard to the conflict of law principles, rules or statutes of any jurisdiction. The parties hereby irrevocably consent to, and agree not to object or assert any defense or challenge to, the jurisdiction and venue of the federal and state courts located in Chicago, Illinois, and agree that any claim which may be brought in a court of law or equity may be brought in any such Chicago, Illinois court.

Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held by a court of competent jurisdiction to be prohibited or unenforceable for any reason, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

Notice . All notices given hereunder will be in writing and will be sent by registered or certified mail or delivered by hand and, if intended for the Company, will be addressed to it or delivered to it at its principal office for the attention of the Chief Human Resources Officer of the Company. If intended for the Executive, notices will be delivered personally or will be addressed (if sent by mail) to the Executive’s then current residence address as shown on the Company’s records, or to such other address as the Executive directs in a notice to the Company. All notices will be deemed to be given on the date received at the address of the addressee or, if delivered personally, on the date delivered.

Code Section 409A . The parties intend that this Agreement and the benefits provided hereunder be interpreted and construed to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and all regulatory and interpretative guidance issued thereunder (“Code Section 409A”) to the extent applicable thereto. The time and form of payment of incentive compensation, disability benefits, severance payments, expense reimbursements and payments of in-kind benefits described herein will be made in accordance with the applicable sections of this Agreement, provided that with respect to termination of employment for reasons other than death, the payment at such time can be characterized as a “short-term deferral” for purposes of Code Section 409A or as otherwise exempt from the provisions of Code Section 409A, or if any portion of the payment cannot be so characterized, and the Executive is a “specified Executive” under Code Section 409A, such portion of the payment will be delayed until the earlier to occur of the Executive’s death or the date that is six months and one day following the Executive’s termination of employment (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section will be paid or reimbursed to the Executive in a lump sum, and any remaining payments due under this Agreement will be payable at the same time and in the same form as such amounts would have been paid. Further, if the Executive is a “specified employee” and if any equity-based awards granted to the Executive by the Company, pursuant to this Agreement or otherwise, continue to vest upon the Executive’s termination of employment, and are deemed a “deferral of compensation” (as such term is described under Code Section 409A), the equity-based awards will not be settled or released until the expiration of the Delay Period. For purposes of applying the provisions of Code Section 409A, each separately identifiable amount to which the Executive is entitled will be treated as a separate payment. The time or schedule of any payment or amount scheduled to be paid pursuant to the terms of this Agreement, including but not limited to any restricted stock unit or other equity-based award, payment or amount that provides for the “deferral of compensation” (as such term is described under Code Section 409A), may not be accelerated except as otherwise permitted under Code Section 409A and the guidance and Treasury regulations issued thereunder.

All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Code Section 409A, including, where applicable, the requirement that (A) any reimbursement is for expenses actually incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (B) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (C) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (D) the right to reimbursement is not subject to liquidation or exchange for another benefit.

For purposes of this Agreement, the terms “retirement,” “termination of employment,” “terminated,” “termination,” “this Agreement will be terminated” and variations thereof, as used in this Agreement, are intended to mean a termination of employment that constitutes a “separation from service” under Code Section 409A.

If the sixty (60)-day period following a “separation from service” begins in one calendar year and ends in a second calendar year (a “Crossover 60-Day Period”) and if there are payments due the Executive that are subject to Code Section 409A (and not exempt from Code Section 409A) that are: (i) conditioned on the Executive signing and not revoking a release of claims and (ii) otherwise due to be paid during the portion of the Crossover 60-Day Period that falls within the first year, then such payments will be delayed and paid in a lump sum during the portion of the Crossover 60-Day Period that falls within the second year.

Although the Company intends to administer the Agreement so that it will comply with the requirements of Code Section 409A, the Company does not represent or warrant that the Agreement will comply with Code Section 409A or any other provision of federal, state, local, or non-United States law. Neither the Company, its subsidiaries, nor their respective directors, officers, Executives or advisers will be liable to the Executive (or any other individual claiming a benefit through the Executive) for any tax, interest, or penalties the Executive may owe as a result of compensation paid under the Agreement, and the Company and its subsidiaries will have no obligation to indemnify or otherwise protect the Executive from the obligation to pay any taxes pursuant to Code Section 409A.

The provisions of this Agreement will be construed in a manner in favor of complying with any applicable requirements of Code Section 409A to avoid taxation under Code Section 409A. If any compensation or benefits provided by this Agreement result in the application of Code Section 409A, the Company will modify this Agreement in the least restrictive manner necessary in order to comply with the provisions of Code Section 409A, other applicable provisions of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and, in each case, without material diminution in the value of the payments or benefits to the Executive.

IN WITNESS WHEREOF , the parties hereto have executed this Agreement and intend to be bound by its terms.



	AON CORPORATION By: /s/ Peter Lieb Printed Name: Peter Lieb Its: General Counsel Date: January 24, 2017

I have read the above Agreement and understand and agree to be bound by its terms.



	/s/ Stephen McGill Stephen McGill Date: January 24, 2017

EXHIBIT A

GENERAL RELEASE OF CLAIMS

This General Release of Claims Agreement (this “Release”) is entered into by and between Aon Corporation, a Delaware corporation (the “Company”), and Stephen McGill (the “Executive”).

WHEREAS, the Company and the Executive previously entered into a Separation Agreement executed by the Executive on January 23, 2017 (the “Separation Agreement”); and

WHEREAS, the Separation Agreement provides that certain Separation Payments (as defined in the Separation Agreement) are to be paid or provided to the Executive in exchange for, and contingent upon, among other things, the Executive’s execution (and non-revocation) of this Release as set forth in the Separation Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in the Separation Agreement and herein and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereby agree as follows:

Release . The Executive, and anyone claiming through him or on his behalf, hereby waives and releases the Released Parties (as defined below) with respect to any and all claims, whether currently known or unknown, that the Executive now has or ever has had against a Released Party arising from or related to any act, omission, or thing occurring or existing at any time prior to or on the date on which the Executive signs this Release. “Released Parties” include (A) the Company and its past, present, and future parents, divisions, subsidiaries, partnerships, affiliates, and other related entities, (B) each of the foregoing entities’ and persons’ past, present, and future owners, trustees, fiduciaries, administrators, shareholders, directors, officers, partners, members, associates, agents, executives, employees, and attorneys, and (C) the predecessors, successors and assigns of each of the foregoing persons and entities. Without limiting the generality of the foregoing, the claims waived and released by the Executive hereunder include, but are not limited to:


a.	All claims arising out of or related in any way to his employment, compensation, other terms and conditions of employment, or termination from employment, including, without limitation, claims arising out of any employment agreements, severance plans or policies, stock plans or policies, or any other employee benefit plans; and

All claims that were or could have been asserted by the Executive or on his behalf under: (A) the Age Discrimination in Employment Act (the “ADEA”) and the Older Worker Benefit Protection Act (the “OWBPA”); and (B) any other federal, state, local, employment, services or other law, regulation, ordinance, constitutional provision, executive order or other source of law, including without limitation under any of the following laws, as amended from time to time: Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 1981 & 1981a, the Americans with Disabilities Act, the Equal Pay Act, Employee Retirement Income Security Act, the Lilly Ledbetter Fair Pay Act of 2009, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act and all applicable state, county or other local fair employment laws; and


d.	Without limiting the generality of the above, all claims under the laws of England and Wales, including those set out in more detail in the Waiver & Discharge Agreement (“the UK Waiver & Discharge Agreement”) entered into between the parties on the Separation Date.

Exceptions . Notwithstanding the foregoing, the releases and waivers in this Release shall not apply to any claim: (i) for unemployment or workers’ compensation, (ii) for vested benefits under any employee benefit plan, (iii) that by law is non-waivable, (iv) for Separation Payments, (v) as a stockholder of Aon plc, or (vi) for indemnification pursuant to Section 1(c) of the Separation Agreement or applicable law and for coverage as an insured under directors and officers liability insurance.

No Further Obligations; Additional Representations . In the event of any further proceedings based upon any released matter, the Company, its affiliates, parent companies, and subsidiaries (collectively, “Aon”) shall have no further monetary or other obligation of any kind to the Executive, and the Executive hereby waives any such monetary or other recovery (provided that nothing limits the Executive’s rights under Section 5 below). The Executive represents and warrants that: (i) there has not been filed by the Executive or on the Executive’s behalf any legal or other proceedings against any of the Released Parties (provided, however, that the Executive need not disclose to the Company, and the foregoing representation and warranty in this subpart (a) does not apply to, conduct or matters described in Section 5 below); (ii) the Executive is the sole owner of the claims that are released in Section 1 above; (iii) none of these claims has been transferred or assigned or caused to be transferred or assigned to any other person, firm or other legal entity; and (iv) the Executive has the full right and power to grant, execute, and deliver the releases, undertakings, and agreements contained in this Release.

Specific Rights Under OWBPA . The Executive understands and agrees that: (A) this is the full and final release of all claims against Aon through the date he signs this Release; (B) the Executive knowingly and voluntarily releases claims hereunder for valuable consideration; (C) the Executive hereby is and has been advised of his right to have his attorney review this Release before signing it; (D) the Executive has twenty-one (21) days to consider whether to sign this Release; and (E) the Executive may, at his sole option, revoke this Release upon written notice within seven (7) days after signing it. This Release will not become effective until this seven (7) day period has expired and will be void if he revokes it within such period. Although the Executive is releasing claims that he may have under the ADEA and the OWBPA, he understands that he may challenge the knowing and voluntary nature of this Release under the OWBPA and the ADEA before a court, the EEOC, the NLRB, or any other federal state or local agency charged with the enforcement of any employment laws.

Protected Rights . Nothing in this Release is intended to limit in any way the Executive’s right or ability to report possible violations of law or regulation to, or file a charge or complaint with, the U.S. Securities and Exchange Commission, the U.S. Equal Employment Opportunity Commission, the National Labor Relations Board, or other federal, state or local agencies or commissions (collectively, “Government Agencies”). The Executive further understands that nothing in this Release limits the Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Release does not limit the Executive’s ability to receive an award from a Government Agency for information provided by the Executive to such Government Agency..

IN WITNESS WHEREOF , the parties hereto have executed this Release and intend to be bound by its terms.



	AON CORPORATION By: Printed Name: _________________________ Its:__________________________________ Date:

I have read the above Release and understand and agree to be bound by its terms.



	Stephen McGill Date: _________________________________

Execution Version

AMENDMENT NO. 1 TO PURCHASE AGREEMENT

This AMENDMENT NO. 1 TO PURCHASE AGREEMENT (this “ Amendment ”) is made as of April 17, 2017, by and among Aon plc, a public limited company organized under the laws of England and Wales (“ Seller Parent ”), and Tempo Acquisition, LLC, a Delaware limited liability company (“ Buyer ”), and amends that certain Purchase Agreement, dated February 9, 2017, by and among Seller Parent and Buyer (the “ Original Agreement ” and, when taken together with this Amendment, the “ Purchase Agreement ”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Original Agreement.

WHEREAS, the parties to the Original Agreement and this Amendment desire to amend the Original Agreement as provided herein; and

WHEREAS, the parties hereto constitute all of the parties required to amend the Original Agreement in accordance with Section 13.9 of the Original Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Amendments to Section 1.1 of the Original Agreement .


(a)	Amendments to the Definition of “HR and Other Related Communications Consulting Services” of the Original Agreement . The last sentence of the definition of “HR and Other Related Communications Consulting Services” in Section 1.1 of the Purchase Agreement is hereby amended in its entirety to read as follows:

“Notwithstanding the foregoing, “HR and Other Related Communications Consulting Services” shall not include the communications consulting services performed by employees in the positions identified on Schedule 1.1(e) and the Purchased Assets shall not include assets created by, or used primarily by, such employees in the business of providing such communications consulting services (other than the Asset Sellers’ right, title and interest to the “Financial Mindset Study”, subject to Section 2.1(c)(iv) ).”


(b)	Insertion of Certain Definitions in Section 1.1 of the Original Agreement . Each of the following definitions is hereby included in the appropriate location in Section 1.1:

“ “ Advance ” has the meaning specified in Section 8.2(h) .”

“ “ Canadian VAT ” has the meaning specified in Section 8.2(h) .”

“ “ Deidentified Data ” has the meaning specified in Section 8.15 .”

“ “ ETA ” has the meaning specified in Section 8.2(h) .”

“ “ Satisfaction Date ” has the meaning specified in Section 4.1 .”

2. Amendment to Section 3.1 of the Original Agreement . The last sentence of Section 3.1 of the Original Agreement is hereby amended by adding the words “or its designee” immediately after the words “Seller Parent”.

3. Amendment to Section 4.1 of the Original Agreement . Section 4.1 of the Original Agreement is hereby amended in its entirety to read as follows:

“Section 4.1. Closing Date . The Closing shall be consummated on a date and at a time agreed upon by Buyer and Seller Parent, but in no event later than 11:00 a.m. Chicago time on the third (3rd) business day after the date on which the conditions set forth in ARTICLE IX and ARTICLE X have been satisfied or waived (other than those conditions that by their terms are to be satisfied by actions taken at the Closing but subject to the satisfaction or waiver of those conditions at such time), at the offices of Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois (or at such other time and place as shall be agreed upon by Buyer and Seller Parent); provided that: (a) in the event that the date on which the conditions set forth in ARTICLE IX and ARTICLE X have been satisfied or waived (other than those conditions that by their terms are to be satisfied by actions taken at the Closing but subject to the satisfaction or waiver of those conditions at such time) (the “ Satisfaction Date ”) is on or prior to April 27, 2017, then the Closing shall occur on May 1, 2017 (subject to the satisfaction or waiver of the conditions set forth in ARTICLE IX and ARTICLE X at such time) (unless Buyer determines in good faith in its reasonable discretion that it would be prudent to delay the consummation of the Debt Financing and delivers written notice to Seller Parent of such determination on or prior to April 27, 2017 in which case the Closing shall occur on May 8, 2017 (subject to the satisfaction or waiver of the conditions set forth in ARTICLE IX and ARTICLE X at such time), (b) in the event that the Satisfaction Date is after April 27, 2017 and on or prior to May 4, 2017, then the Closing shall occur on May 8, 2017 (subject to the satisfaction or waiver of the conditions set forth in ARTICLE IX and ARTICLE X at such time) and (c) in the event that the Satisfaction Date is after May 4, 2017, then the Closing shall instead occur (subject to the satisfaction or waiver of those conditions that by their terms are to be satisfied by actions taken at the Closing at such time) on the earlier of (i) a date during the Marketing Period as may be specified by Buyer on at least three business days’ prior notice to Seller Parent (unless a shorter period shall be agreed to by Seller Parent) and (ii) the third business day following the final day of the Marketing Period. The date on which the Closing is actually held is referred to herein as the “ Closing Date ”.”

4. Amendment to Section 4.2(a) of the Original Agreement . Section 4.2(a) of the Original Agreement is hereby amended in its entirety to read as follows:

“ (a) Subject to fulfillment or waiver (where permissible) of the conditions set forth in ARTICLE IX, at the Closing, Buyer shall pay to Seller Parent or its designee an amount equal to the Base Purchase Price plus the Estimated Cash Amount minus Estimated Indebtedness minus Estimated Transaction Expenses Amount minus the Estimated Working Capital Deficit (if any) or plus the Estimated Working Capital Excess (if any) (the “ Preliminary Purchase Price ”), by wire transfer of immediately available funds to the bank account or accounts specified by Seller Parent in accordance with paragraph (b) hereof.”

5. Amendment to Section 4.3(b) of the Original Agreement . Section 4.3(b) of the Original Agreement is hereby amended in its entirety to read as follows:

“ (b) the certificate contemplated by Section 10.5 , duly executed by a duly authorized officer of Buyer;”

6. Amendment to Section 4.4(a) of the Original Agreement . Section 4.4(a) of the Original Agreement is hereby amended in its entirety to read as follows:

“ (a) if requested in writing by Buyer, a certificate of the secretary or an assistant secretary of Seller Parent, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to (i) no amendments to the articles of association of Seller Parent since a specified date; (ii) the resolutions of the board of directors of Seller Parent authorizing the execution and performance of this Agreement, any Seller Ancillary Agreement to which Seller Parent is a party and the transactions contemplated hereby and thereby; and (iii) incumbency and signatures of the officers of Seller Parent executing this Agreement and any Seller Ancillary Agreement to which Seller Parent is a party;”

7. Amendment to Section 4.4(b) of the Original Agreement . Section 4.4(b) of the Original Agreement is hereby amended in its entirety to read as follows:

“ (b) the certificate contemplated by Section 9.6, duly executed by a duly authorized officer of Seller Parent;”

8. Amendment to Section 4.7(a) of the Original Agreement . Section 4.7(a) of the Original Agreement is hereby amended in its entirety to read as follows:

“ (a) Promptly following the receipt from time to time by any Qualifying Buyer Equityholder of any Realized Cash Proceeds in connection with or after any Liquidity Event with respect to such Qualifying Buyer Equityholder, and in any event within five (5) business days thereof (and, if such Liquidity Event is of the type described in clause (i) or (ii) of the definition thereof, on the same date that Realized Cash Proceeds are received by any Qualifying Buyer Equityholder, and in which case, notwithstanding anything in Section 4.7(c) to the contrary, the Earnout Certificate shall be delivered no less than five (5) business days prior to the date of such payment), if at the time of each such receipt, the Total Realized Cash Proceeds received by such Qualifying Buyer Equityholder exceeds the Threshold Amount with respect to such Qualifying Buyer Equityholder, then Buyer shall cause such Qualifying Buyer Equityholder to pay to Seller Parent an amount in cash equal to 20% of any Total Realized Cash Proceeds received by such Qualifying Buyer Equityholder in excess of such Threshold Amount by wire transfer of immediately available funds to the bank account or accounts specified by Seller Parent in writing in advance of such payment; provided, however, that in no event will the aggregate amount of payments made by any Qualifying Buyer Equityholder under this Section 4.7 exceed such Qualifying Buyer Equityholder’s Pro-Rata Share of $500,000,000. At the Closing, Buyer will provide evidence to Seller Parent that each Qualifying Buyer Equityholder has agreed in writing to comply with the obligations applicable to it as a Qualifying Buyer Equityholder under this Section 4.7(a) and Buyer shall not agree or consent to any amendment, supplement, modification, waiver, consent or termination to any such written agreement that would reasonably be expected to adversely affect the rights of Seller Parent under Section 4.7. In the event that any payment to Seller Parent required under this Section 4.7(a) is not made when due, Buyer agrees to enforce the provisions of any such written agreement against the non-performing Qualifying Buyer Equityholder as directed by Seller Parent (including affirmatively bringing a lawsuit or other proceeding against any such non-performing Qualifying Buyer Equityholder).”

9. Amendment to Section 7.4(b) of the Original Agreement . Section 7.4(b)(xiii) of the Original Agreement is hereby amended in its entirety to read as follows:

“ (xiii) (1) adversely modify, amend or terminate any Business Agreement other than in the ordinary course of business (it being acknowledged and agreed that renewals of Business Agreements occur routinely and any such renewal that would not reasonably be expected to have a Material Adverse Effect shall be deemed to have occurred in the ordinary course of business), (2) waive, release, or assign any material rights or claims of Seller Parent or any Selling Party primarily relating to the Business or the Purchased Assets, other than waivers or releases thereof in the ordinary course of business, (3) enter into any new Contract that would be a Business Agreement that would be a Purchased Asset and (A) pursuant to its terms cannot be assigned to Buyer or (B) that contains a change of control provision in favor of the other party or parties thereto that would be triggered by, or would otherwise require a payment or give use to any right to such other party or parties on connection with, any transaction contemplated by this Agreement or (4) agree to provide any Cross Segment Service (as such term is defined in the Subcontract Agreement) other than in the ordinary course of business;”

10. Amendment to Sections 8.2(h) of the Original Agreement . Section 8.2(h) of the Original Agreement is hereby amended in its entirety to read as follows:

“ (h) Seller Parent and Buyer shall cause joint elections to be executed, in the prescribed form and containing the prescribed information, under section 167 of the Excise Tax Act (Canada) (and under the corresponding provisions of any similar provincial legislation) so that no material goods and services tax and/or harmonized sales tax (or similar VAT in Canada) (collectively, “ Canadian VAT ”) is payable under Part IX of the Excise Tax Act (Canada) (and under any other similar provincial legislation) in respect of the purchase and sale of the Purchased Assets being sold to Sheppard Canada Holdings N.S. ULC by Hewitt Associates (including by Hewitt Associates Corp. as agent for and on behalf of Hewitt Associates). Buyer shall cause Sheppard Canada Holdings N.S. ULC to file any such elections within the time prescribed by the Excise Tax Act (Canada) (and any other similar provincial legislation). Provided Sheppard Canada Holdings N.S. ULC makes and files such elections, the Seller Parent agrees that no tax shall be collectible under the Excise Tax Act (Canada) (“ ETA ”) (or similar VAT legislation in Canada) on Closing in respect of the sale of the Canadian Purchased Assets to Sheppard Canada Holding N.S. ULC by Hewitt Associates (including by Hewitt Associates Corp. as agent for and on behalf of Hewitt Associates). With respect to the Canadian Purchased Assets purchased by Sheppard Canada Holdings N.S. ULC from Aon Hewitt Inc., Seller Parent and Buyer agree that, on Closing, Aon Hewitt Inc. shall advance the amount of the Canadian VAT collectible by it from Sheppard Canada Holding N.S. ULC with respect to the purchase and sale of such assets (the “ Advance ”) and Sheppard Canada Holding N.S. ULC shall direct Aon Hewitt Inc. to retain the Advance in satisfaction of the payment of such Canadian VAT so collectible by Aon Hewitt Inc. Aon Hewitt Inc. shall remit the amount of the Advance (or otherwise take into account the Canadian VAT collected from Sheppard Canada Holding N.S. ULC in calculating its net tax remittable for its Canadian VAT reporting period that includes the Closing Date) to the Canada Revenue Agency (or other applicable taxing authorities) in accordance with the applicable Requirements of Law. Seller Parent and Buyer further agree that the Advance shall be repaid by Sheppard Canada Holding N.S. ULC to Aon Hewitt Inc. within 7 business days after Sheppard Canada Holding N.S. ULC receives a refund (or such refund is applied to reduce other taxes payable by Sheppard Canada Holding N.S. ULC) of the Canadian VAT from the Canada Revenue Agency (or other applicable taxing authorities) or, to the extent that the Canadian VAT paid by Sheppard Canada Holding N.S. ULC to Aon Hewitt Inc. reduces the net tax remittable for Canadian VAT purposes by Sheppard Canada Holding N.S. ULC for its applicable Canadian VAT reporting period that includes the Closing Date, within 7 business days after the filing due date of Sheppard Canada Holding N.S. ULC’s Canadian VAT Tax Return in which it claims a credit for such Canadian VAT. Seller Parent and Buyer agree that they will cause Aon Hewitt Inc. and Sheppard Canada Holding N.S. ULC, respectively, to file their Canadian VAT Tax Returns for the applicable Canadian VAT reporting period that includes the Closing Date in accordance with the applicable Requirements of Law and they will each account for (and in the case of Aon Hewitt Inc., remit) the Canadian VAT collected by Aon Hewitt Inc. and paid by Sheppard Canada Holding N.S. ULC to the fullest extent possible in such returns.”

11. Amendment to Section 8.3 of the Original Agreement . The phrase “Section 8.4” shall be added immediately before the words “International Employees” in Section 8.3(u) of the Original Agreement and the phrase “(a)” shall be added immediately after the words “International Employees” in Section 8.3(u) of the Original Agreement.

12. Amendment to Section 8.7(a) of the Original Agreement . The last sentence of Section 8.7(a) of the Purchase Agreement is hereby amended in its entirety to read as follows:

“During the Non-Competition Period, Seller Parent shall not permit the employees in the positions identified on Schedule 1.1(e) (or any employees providing services primarily to or on behalf of the business described in the last sentence of the definition of HR and Other Related Communications Consulting Services) to charge time to clients of the Business (other than shared clients of the Business and the Selling Parties as of the Closing Date, solely with respect to the types of services that are provided by such employees as of the Closing Date).”

13. New Section 8.15 of the Original Agreement: Section 8.15 is hereby inserted into the Original Agreement so as to read in its entirety as follows:

“Section 8.15 Deidentified Data . For a period of two years following the Closing Date, Buyer shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to provide to Seller Parent or its applicable Affiliate, at no cost to Seller Parent or any of its Affiliates, Deidentified Data reasonably necessary for Seller Parent or its applicable Affiliate to conduct the research related to Real Deal publication and to produce and publish the Real Deal publication, in substantially the same manner consistent with the historical provision of such Deidentified Data by the Business in connection with the Real Deal publication in the two year period ending on the Closing Date, subject to the terms of applicable Client Contracts (including restrictions on disclosure of client confidential information to third parties); provided that Seller Parent shall reimburse Buyer for the cost of providing such Deidentified Data. If any industry white papers produced or published by Seller Parent or its Affiliates include references to or otherwise utilize Deidentified Data provided by the Business (other than in a de minimis manner), Seller Parent and/or the applicable Affiliate shall attribute such Deidentified Data to Buyer. For purposes of this Section 8.15 , “ Deidentified Data ” means data related to a natural person from which has been redacted or removed the natural person’s name, street address, telephone number, email address, photograph, social security number, driver’s license number, passport number, and any other piece of information that would identify the natural person.”

14. Amendment to Section 9.6 of the Original Agreement . Section 9.6 of the Original Agreement is hereby amended in its entirety to read as follows:

“ Closing Certificate . There shall have been delivered to Buyer a certificate dated the Closing Date, signed on behalf of Seller Parent by a duly authorized officer of Seller Parent, confirming the satisfaction of the conditions set forth in Section 9.3 , Section 9.4 and Section 9.5 .”

15. Amendment to Section 9.7 of the Original Agreement . Section 9.7 of the Original Agreement is hereby amended in its entirety to read as follows:

“ Termination of Contracts with Affiliates . Buyer shall have received evidence of the termination of the Contracts with Affiliates, other than those Contracts set forth in Schedule 7.5 , in form and substance reasonably satisfactory to Buyer.”

16. Amendment to Schedule 1.1(e) . Schedule 1.1(e) of the Original Agreement is hereby amended in its entirety to read as set forth in Schedule 1.1(e) attached hereto.

17. Schedule 7.5 of the Original Agreement . Schedule 7.5 of the Original Agreement is hereby amended to add new Item 4 as set forth on Schedule 2 attached hereto

18. Section 5.3(b)(i)(2) of the Seller Disclosure Letter of the Original Agreement . Section 5.3(b)(i)(2) of the Seller Disclosure Letter of the Original Agreement is hereby amended to add new Item 118 as set forth on Schedule 3 attached hereto.

19. Section 5.10 of the Seller Disclosure Letter of the Original Agreement . Schedule 5.10(a)(i) is hereby amended by adding “*” immediately after the phrase “REAL DEAL” in the table of Trademarks (unregistered) therein.

20. Reference to and Effect on the Purchase Agreement . This Amendment is an amendment to the Original Agreement and, pursuant to Section 13.9 of the Original Agreement, shall be effective and binding upon all parties to the Original Agreement upon the execution of this Amendment by each of the undersigned. It is the express intention of the parties hereto that this Amendment shall not, and shall not be interpreted to, expand or reduce the rights of any party to the Original Agreement except as and solely to the extent expressly provided herein. Except as expressly provided by this Amendment, the Original Agreement shall continue and remain in full force and effect in accordance with its terms. All references to the Purchase Agreement shall hereafter mean the Purchase Agreement as amended by this Amendment, and references in the Agreement to the “date hereof” or the “date of this Agreement” shall be deemed to refer to the original date of the Agreement.

21. Miscellaneous . Sections 13.3 , 13.4 , 13.10 , 13.11 , 13.12 , 13.13 and 13.18 of the Original Agreement are hereby incorporated by reference and made a part hereof, mutatis mutandis .

* * * * *

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the parties hereto as of the date first written above.

SELLER PARENT :

AON PLC

By:

Name:

Title:

BUYER :

TEMPO ACQUISITION, LLC

By:

Name:

Title:

SCHEDULE 1.1(e)

EXCLUDED COMMUNICATIONS CONSULTING POSITIONS



Position Currently Held By	Position and Description
Jim Hoff	Sr. Partner / Best Team Leader. Strategic Health, Retirement and Talent expertise
Andrea Mindell	Partner - Strategic Generalist. Talent and Leadership strategic leadership
Rob Lewis	Partner - Strategic Generalist across Health, Retirement and Talent
Joann Hall Swenson	Partner - Health Strategist
Natalie Sintek	Health Generalist
Heather Tredup	Partner - Retirement Strategist
Nicole Durham	Retirement Generalist
Pam Hein	Partner - Strategic Generalist
Dina Walker	Generalist - Project Manager (Talent pillar)
John Moses	Partner- Active Exchange
Carol Sladek	Partner - Health and Absence
Ralph Morano	Support Elective Benefits enrollment only clients
Christine DiMattia	Support Elective Benefits enrollment only clients
Andria Tremblay	Support Elective Benefits enrollment only clients
Shane Robinson	Support Elective Benefits enrollment only clients
Jennifer Diodato	Support Elective Benefits enrollment only clients
Nicole Ciabattoni	Support Elective Benefits enrollment only clients
Kate Colasurdo	Support Elective Benefits enrollment only clients
Brittany Mauro	Support Elective Benefits enrollment only clients
David Goodwin	Cammack Communications supporting healthcare providers
Jennifer Edwards	Cammack Communications supporting healthcare providers
Myles Friedman	Cammack Communications supporting healthcare providers
Amelia Windsor	MMX Standard Communications

SCHEDULE 2

AMENDMENT TO SCHEDULE 7.5

4. For the avoidance of doubt, the Multiparty Shared Client Contracts shall not be released, canceled, terminated or otherwise settled as result of Section 7.5 of the Agreement and shall remain in full force and effect.

SCHEDULE 3

AMENDMENT TO SECTION 5.3(B)(I)(2) OF THE SELLER DISCLOSURE LETTER

118. Agreement of Lease, dated as of December 17, 1996, by and between SCC Building I Limited Partnership, as landlord, and Hewitt Associates LLC, as tenant, as amended by First Amendment to Lease, dated as of June 12, 1997, as further amended by Second Amendment to Lease, dated as of June 22, 2001, as further amended by Third Amendment to Lease, dated as of July 10, 2006, as further amended by Fourth Amendment to Lease, dated as of June 6, 2012, and as further amended by Fifth Amendment to Lease, dated as of June 6, 2016. (100 Somerset Corporate Boulevard, Bridgewater, NJ 08807) (consent of SCC Building I Limited Partnership, as landlord).

Exhibit 12.1

Aon plc and Consolidated Subsidiaries

Combined With Unconsolidated Subsidiaries

Computation of Ratio of Earnings to Fixed Charges



	Three Months Ended March 31				Years Ended December 31,
(millions except ratio)	2017		2016		2016		2015		2014		2013
Income from continuing operations before income taxes and noncontrolling interests ⁽¹⁾	$	265	$	371	$	1,401	$	1,428	$	1,559	$	1,347
Less: Equity in earnings on less than 50% owned entities	6		2		13		13		12		20
Add back fixed charges:
Interest on indebtedness	70		69		282		273		255		210
Interest on uncertain tax positions	—		—		—		—		4		5
Portion of rents representative of interest factor	8		9		28		33		40		40
Income as adjusted	$	337	$	447	$	1,698	$	1,721	$	1,846	$	1,582
Fixed charges:
Interest on indebtedness	$	70	$	69	$	282	$	273	$	255	$	210
Interest on uncertain tax positions	—		—		—		—		4		5
Portion of rents representative of interest factor	8		9		28		33		40		40
Total fixed charges	$	78	$	78	$	310	$	306	$	299	$	255
Ratio of earnings to fixed charges	4.3		5.7		5.5		5.6		6.2		6.2

Exhibit 31.1

CERTIFICATIONS

I, Gregory C. Case, the Chief Executive Officer of Aon plc, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Aon plc;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 9, 2017	/s/ GREGORY C. CASE
		Gregory C. Case Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Christa Davies, the Chief Financial Officer of Aon plc, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Aon plc;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 9, 2017	/s/ CHRISTA DAVIES
		Christa Davies Chief Financial Officer

Exhibit 32.1

Certification Pursuant to Section 1350 of Chapter 63

of Title 18 of the United States Code

I, Gregory C. Case, the Chief Executive Officer of Aon plc (the “ Company ”), certify that (i) the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2017 (the “ Report ”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



	/s/ GREGORY C. CASE
	Gregory C. Case Chief Executive Officer
	May 9, 2017

Exhibit 32.2

Certification Pursuant to Section 1350 of Chapter 63

of Title 18 of the United States Code

I, Christa Davies, the Chief Financial Officer of Aon plc (the “ Company ”), certify that (i) the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2017 (the “ Report ”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



	/s/ CHRISTA DAVIES
	Christa Davies Chief Financial Officer
	May 9, 2017