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ENGLAND AND WALES
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98-1030901
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(State or Other Jurisdiction of
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(I.R.S. Employer
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Incorporation or Organization)
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Identification No.)
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122 LEADENHALL STREET, LONDON, ENGLAND
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EC3V 4AN
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Emerging growth company
o
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Three Months Ended
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Six Months Ended
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||||||||||||
(millions, except per share data)
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June 30, 2018
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June 30, 2017
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June 30, 2018
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June 30, 2017
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||||||||
Revenue
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||||||
Total revenue
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$
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2,561
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$
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2,368
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$
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5,651
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$
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4,749
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Expenses
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||||||
Compensation and benefits
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1,494
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1,466
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3,110
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2,935
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||||
Information technology
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123
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98
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238
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186
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||||
Premises
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96
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86
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189
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170
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||||
Depreciation of fixed assets
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47
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54
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86
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108
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||||
Amortization and impairment of intangible assets
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282
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460
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392
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503
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||||
Other general expenses
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535
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331
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853
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639
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||||
Total operating expenses
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2,577
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2,495
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4,868
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4,541
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||||
Operating income (loss)
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(16
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)
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(127
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)
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783
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208
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||||
Interest income
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1
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8
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5
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10
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||||
Interest expense
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(69
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)
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(71
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)
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(139
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)
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(141
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)
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||||
Other income (expense)
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(3
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)
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4
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(18
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)
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2
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||||
Income (loss) from continuing operations before income taxes
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(87
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)
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(186
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)
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631
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79
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Income tax benefit
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(144
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)
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(143
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)
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(30
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)
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(143
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)
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Net income (loss) from continuing operations
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57
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(43
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)
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661
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222
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||||
Net income from discontinued operations
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1
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821
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7
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861
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||||
Net income
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58
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778
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668
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1,083
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Less: Net income attributable to noncontrolling interests
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10
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9
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26
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23
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||||
Net income attributable to Aon shareholders
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$
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48
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$
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769
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$
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642
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$
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1,060
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||||||||
Basic net income (loss) per share attributable to Aon shareholders
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||||||||
Continuing operations
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$
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0.19
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$
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(0.20
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)
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$
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2.57
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$
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0.75
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Discontinued operations
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0.01
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3.13
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0.03
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3.27
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Net income
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$
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0.20
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$
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2.93
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$
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2.60
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$
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4.02
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Diluted net income (loss) per share attributable to Aon shareholders
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||||||||
Continuing operations
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$
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0.19
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$
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(0.20
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)
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$
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2.55
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$
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0.75
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Discontinued operations
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—
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3.13
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0.03
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3.24
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Net income
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$
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0.19
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$
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2.93
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$
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2.58
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$
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3.99
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Cash dividends per share paid on ordinary shares
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$
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0.40
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$
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0.36
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$
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0.76
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$
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0.69
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Weighted average ordinary shares outstanding - basic
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246.0
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262.4
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247.2
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263.6
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||||
Weighted average ordinary shares outstanding - diluted
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247.4
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262.4
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248.8
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265.7
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Three Months Ended
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Six Months Ended
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||||||||||||
(millions)
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June 30, 2018
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June 30, 2017
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June 30, 2018
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June 30, 2017
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||||||||
Net income
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$
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58
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$
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778
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$
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668
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$
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1,083
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Less: Net income attributable to noncontrolling interests
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10
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9
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26
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23
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Net income attributable to Aon shareholders
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48
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769
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642
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1,060
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||||
Other comprehensive income (loss), net of tax:
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Change in fair value of financial instruments
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(1
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)
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4
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13
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2
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Foreign currency translation adjustments
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(460
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)
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44
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(213
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)
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191
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||||
Postretirement benefit obligation
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122
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20
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170
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38
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||||
Total other comprehensive income (loss)
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(339
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)
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68
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(30
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)
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231
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|
||||
Less: Other comprehensive loss attributable to noncontrolling interests
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(6
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)
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(5
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)
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(3
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)
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(4
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)
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||||
Total other comprehensive income (loss) attributable to Aon shareholders
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(333
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)
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73
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(27
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)
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235
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|
||||
Comprehensive income (loss) attributable to Aon shareholders
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$
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(285
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)
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$
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842
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$
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615
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$
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1,295
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(millions)
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Shares
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Ordinary
Shares and Additional Paid-in Capital |
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Retained
Earnings |
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Accumulated Other
Comprehensive Loss, Net of Tax |
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Non-
controlling Interests |
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Total
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|||||||||||
Balance at December 31, 2017
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247.6
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$
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5,777
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$
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2,302
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$
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(3,496
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)
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$
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65
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|
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$
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4,648
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Adoption of new accounting guidance
|
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—
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|
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—
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493
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(1
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)
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—
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|
|
492
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|
|||||
Balance at January 1, 2018
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247.6
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|
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5,777
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|
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2,795
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(3,497
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)
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65
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|
|
5,140
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|
|||||
Net income
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—
|
|
|
—
|
|
|
642
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|
|
—
|
|
|
26
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|
|
668
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|
|||||
Shares issued - employee stock compensation plans
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2.1
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|
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(150
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)
|
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—
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|
|
—
|
|
|
—
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|
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(150
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)
|
|||||
Shares purchased
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(6.7
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)
|
|
—
|
|
|
(955
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)
|
|
—
|
|
|
—
|
|
|
(955
|
)
|
|||||
Share-based compensation expense
|
|
—
|
|
|
147
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
147
|
|
|||||
Dividends to shareholders
|
|
—
|
|
|
—
|
|
|
(187
|
)
|
|
—
|
|
|
—
|
|
|
(187
|
)
|
|||||
Net change in fair value of financial instruments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|||||
Net foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(210
|
)
|
|
(3
|
)
|
|
(213
|
)
|
|||||
Net postretirement benefit obligation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
|||||
Purchases
of shares from noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Dividends paid to noncontrolling interests on subsidiary common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
(14
|
)
|
|||||
Balance at June 30, 2018
|
|
243.0
|
|
|
$
|
5,774
|
|
|
$
|
2,295
|
|
|
$
|
(3,524
|
)
|
|
$
|
73
|
|
|
$
|
4,618
|
|
(millions)
|
|
Shares
|
|
Ordinary
Shares and Additional Paid-in Capital |
|
Retained
Earnings |
|
Accumulated Other
Comprehensive Loss, Net of Tax |
|
Non-
controlling Interests |
|
Total
|
|||||||||||
Balance at January 1, 2017
|
|
262.0
|
|
|
$
|
5,580
|
|
|
$
|
3,856
|
|
|
$
|
(3,912
|
)
|
|
$
|
57
|
|
|
$
|
5,581
|
|
Net income
|
|
—
|
|
|
—
|
|
|
1,060
|
|
|
—
|
|
|
23
|
|
|
1,083
|
|
|||||
Shares issued - employee stock compensation plans
|
|
2.9
|
|
|
(138
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(138
|
)
|
|||||
Shares purchased
|
|
(9.2
|
)
|
|
—
|
|
|
(1,160
|
)
|
|
—
|
|
|
—
|
|
|
(1,160
|
)
|
|||||
Share-based compensation expense
|
|
—
|
|
|
148
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148
|
|
|||||
Dividends to shareholders
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
|||||
Net change in fair value of financial instruments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Net foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
(4
|
)
|
|
191
|
|
|||||
Net postretirement benefit obligation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
38
|
|
|||||
Purchases of shares from noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Dividends paid to noncontrolling interests on subsidiary common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|||||
Balance at June 30, 2017
|
|
255.7
|
|
|
$
|
5,590
|
|
|
$
|
3,574
|
|
|
$
|
(3,677
|
)
|
|
$
|
66
|
|
|
$
|
5,553
|
|
|
|
Six Months Ended
|
||||||
(millions)
|
|
June 30, 2018
|
|
June 30, 2017
|
||||
Cash flows from operating activities
|
|
|
|
|
|
|
||
Net income
|
|
$
|
668
|
|
|
$
|
1,083
|
|
Less: Net income from discontinued operations
|
|
7
|
|
|
861
|
|
||
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
||
Loss from sales of businesses, net
|
|
1
|
|
|
3
|
|
||
Depreciation of fixed assets
|
|
86
|
|
|
108
|
|
||
Amortization and impairment of intangible assets
|
|
392
|
|
|
503
|
|
||
Share-based compensation expense
|
|
147
|
|
|
148
|
|
||
Deferred income taxes
|
|
(93
|
)
|
|
(227
|
)
|
||
Change in assets and liabilities:
|
|
|
|
|
|
|
||
Fiduciary receivables
|
|
(883
|
)
|
|
10
|
|
||
Short-term investments — funds held on behalf of clients
|
|
(154
|
)
|
|
(286
|
)
|
||
Fiduciary liabilities
|
|
1,037
|
|
|
275
|
|
||
Receivables, net
|
|
(371
|
)
|
|
(25
|
)
|
||
Accounts payable and accrued liabilities
|
|
(495
|
)
|
|
(377
|
)
|
||
Restructuring reserves
|
|
12
|
|
|
178
|
|
||
Current income taxes
|
|
(144
|
)
|
|
(25
|
)
|
||
Pension, other postretirement and postemployment liabilities
|
|
(84
|
)
|
|
(101
|
)
|
||
Other assets and liabilities
|
|
301
|
|
|
30
|
|
||
Cash provided by operating activities - continuing operations
|
|
413
|
|
|
436
|
|
||
Cash provided by operating activities - discontinued operations
|
|
—
|
|
|
64
|
|
||
Cash provided by operating activities
|
|
413
|
|
|
500
|
|
||
Cash flows from investing activities
|
|
|
|
|
|
|
||
Proceeds from investments
|
|
23
|
|
|
29
|
|
||
Payments for investments
|
|
(36
|
)
|
|
(32
|
)
|
||
Net sales (purchases) of short-term investments — non-fiduciary
|
|
352
|
|
|
(2,451
|
)
|
||
Acquisition of businesses, net of cash acquired
|
|
(50
|
)
|
|
(149
|
)
|
||
Sale of businesses, net of cash sold
|
|
1
|
|
|
4,193
|
|
||
Capital expenditures
|
|
(111
|
)
|
|
(82
|
)
|
||
Cash provided by investing activities - continuing operations
|
|
179
|
|
|
1,508
|
|
||
Cash used for investing activities - discontinued operations
|
|
—
|
|
|
(19
|
)
|
||
Cash provided by investing activities
|
|
179
|
|
|
1,489
|
|
||
Cash flows from financing activities
|
|
|
|
|
|
|
||
Share repurchase
|
|
(971
|
)
|
|
(1,100
|
)
|
||
Issuance of shares for employee benefit plans
|
|
(150
|
)
|
|
(139
|
)
|
||
Issuance of debt
|
|
2,552
|
|
|
1,651
|
|
||
Repayment of debt
|
|
(2,027
|
)
|
|
(1,990
|
)
|
||
Cash dividends to shareholders
|
|
(187
|
)
|
|
(182
|
)
|
||
Noncontrolling interests and other financing activities
|
|
(15
|
)
|
|
(10
|
)
|
||
Cash used for financing activities - continuing operations
|
|
(798
|
)
|
|
(1,770
|
)
|
||
Cash used for financing activities - discontinued operations
|
|
—
|
|
|
—
|
|
||
Cash used for financing activities
|
|
(798
|
)
|
|
(1,770
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
|
(63
|
)
|
|
34
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
(269
|
)
|
|
253
|
|
||
Cash and cash equivalents at beginning of period
|
|
756
|
|
|
431
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
487
|
|
|
$
|
684
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
||
Interest paid
|
|
$
|
145
|
|
|
$
|
144
|
|
Income taxes paid, net of refunds
|
|
$
|
207
|
|
|
$
|
108
|
|
|
|
Three Months Ended
June 30, 2017 |
|
Six Months Ended
June 30, 2017 |
||||||||||||||||||||
|
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||||||||
Operating income (loss)
(1)
|
|
$
|
(118
|
)
|
|
$
|
(9
|
)
|
|
$
|
(127
|
)
|
|
$
|
225
|
|
|
$
|
(17
|
)
|
|
$
|
208
|
|
Other income (expense)
|
|
$
|
(5
|
)
|
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
(15
|
)
|
|
$
|
17
|
|
|
$
|
2
|
|
(1)
|
Reclassification from Operating income is recorded in Compensation and benefits.
|
•
|
The Company previously recognized revenue either at a point in time or over a period of time based on the transfer of value to customers or as the remuneration became determinable. Under ASC 606, the revenue related to certain brokerage services recognized over a period of time is 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 are typically recognized in earlier periods under ASC 606 in comparison to ASC 605, changing the timing and amount of revenue recognized for annual and interim periods. This change resulted in a significant shift in timing of interim revenue for the Reinsurance Solutions revenue line and, to a lesser extent, certain other brokerage services.
|
•
|
The Standard provides guidance on accounting for certain revenue-related costs including when to capitalize costs associated with obtaining and fulfilling a contract. The majority of these costs were previously expensed as incurred under ASC 605. Assets recognized for the costs to obtain a contract, which includes certain sales commissions, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, considering anticipated renewals when applicable. For situations where the renewal period is one year or less and renewal costs are commensurate with the initial contract, the Company applied a practical expedient and recognizes the costs of obtaining a contract as an expense when incurred. Assets recognized as costs to fulfill a contract, which includes internal costs related to pre-placement broking activities, as well as other costs, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, which is generally less than one year.
|
|
|
December 31,
2017 |
|
|
|
January 1,
2018 |
||||||
(millions)
|
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||
Assets
|
|
|
|
|
|
|
|
|
||||
Receivables, net
|
|
$
|
2,478
|
|
|
$
|
252
|
|
|
$
|
2,730
|
|
Other current assets
|
|
$
|
289
|
|
|
$
|
298
|
|
|
$
|
587
|
|
Deferred tax assets
|
|
$
|
389
|
|
|
$
|
(128
|
)
|
|
$
|
261
|
|
Other non-current assets
|
|
$
|
307
|
|
|
$
|
145
|
|
|
$
|
452
|
|
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
|
$
|
1,961
|
|
|
$
|
8
|
|
|
$
|
1,969
|
|
Other current liabilities
|
|
$
|
870
|
|
|
$
|
13
|
|
|
$
|
883
|
|
Deferred tax liabilities
|
|
$
|
127
|
|
|
$
|
42
|
|
|
$
|
169
|
|
Other non-current liabilities
|
|
$
|
1,102
|
|
|
$
|
(3
|
)
|
|
$
|
1,099
|
|
|
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
|
|
|
||||
Total equity
|
|
$
|
4,648
|
|
|
$
|
507
|
|
|
$
|
5,155
|
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||||||||||||||||||
(millions)
|
|
As Reported
|
|
Adjustments
|
|
Balances Without Adoption of ASC 606
|
|
As Reported
|
|
Adjustments
|
|
Balances Without Adoption of ASC 606
|
||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
2,561
|
|
|
$
|
3
|
|
|
$
|
2,564
|
|
|
$
|
5,651
|
|
|
$
|
(410
|
)
|
|
$
|
5,241
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
$
|
1,494
|
|
|
$
|
(13
|
)
|
|
$
|
1,481
|
|
|
$
|
3,110
|
|
|
$
|
(78
|
)
|
|
$
|
3,032
|
|
Other general expenses
|
|
$
|
535
|
|
|
$
|
2
|
|
|
$
|
537
|
|
|
$
|
853
|
|
|
$
|
2
|
|
|
$
|
855
|
|
Other income (expense)
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
Income taxes
|
|
$
|
(144
|
)
|
|
$
|
7
|
|
|
$
|
(137
|
)
|
|
$
|
(30
|
)
|
|
$
|
(75
|
)
|
|
$
|
(105
|
)
|
|
|
As of June 30, 2018
|
||||||||||
(millions)
|
|
As Reported
|
|
Adjustments
|
|
Balances Without Adoption of ASC 606
|
||||||
Assets
|
|
|
|
|
|
|
|
|
||||
Receivables, net
|
|
$
|
2,992
|
|
|
$
|
(657
|
)
|
|
$
|
2,335
|
|
Other current assets
|
|
$
|
732
|
|
|
$
|
(216
|
)
|
|
$
|
516
|
|
Deferred tax assets
|
|
$
|
452
|
|
|
$
|
128
|
|
|
$
|
580
|
|
Other non-current assets
|
|
$
|
404
|
|
|
$
|
(144
|
)
|
|
$
|
260
|
|
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||
Other current liabilities
|
|
$
|
1,121
|
|
|
$
|
(61
|
)
|
|
$
|
1,060
|
|
Deferred tax liabilities
|
|
$
|
294
|
|
|
$
|
(71
|
)
|
|
$
|
223
|
|
Other non-current liabilities
|
|
$
|
1,088
|
|
|
$
|
1
|
|
|
$
|
1,089
|
|
|
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
|
|
|
||||
Total equity
|
|
$
|
4,618
|
|
|
$
|
(758
|
)
|
|
$
|
3,860
|
|
|
|
Six months ended June 30, 2018
|
||||||||||
(millions)
|
|
As Reported
|
|
Adjustments
|
|
Balances Without Adoption of ASC 606
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
||||
Net income
|
|
$
|
668
|
|
|
$
|
(259
|
)
|
|
$
|
409
|
|
Deferred income taxes
|
|
$
|
(93
|
)
|
|
$
|
(29
|
)
|
|
$
|
(122
|
)
|
Receivables, net
|
|
$
|
(371
|
)
|
|
$
|
405
|
|
|
$
|
34
|
|
Accounts payable and accrued liabilities
|
|
$
|
(495
|
)
|
|
$
|
8
|
|
|
$
|
(487
|
)
|
Current income taxes
|
|
$
|
(144
|
)
|
|
$
|
(46
|
)
|
|
$
|
(190
|
)
|
Other assets and liabilities
|
|
$
|
301
|
|
|
$
|
(79
|
)
|
|
$
|
222
|
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||
Commercial Risk Solutions
|
|
$
|
1,166
|
|
|
$
|
2,350
|
|
Reinsurance Solutions
|
|
380
|
|
|
1,122
|
|
||
Retirement Solutions
|
|
431
|
|
|
855
|
|
||
Health Solutions
|
|
309
|
|
|
760
|
|
||
Data & Analytic Services
|
|
277
|
|
|
571
|
|
||
Elimination
|
|
(2
|
)
|
|
(7
|
)
|
||
Total revenue
|
|
$
|
2,561
|
|
|
$
|
5,651
|
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||
United States
|
|
$
|
1,125
|
|
|
$
|
2,241
|
|
Americas other than United States
|
|
243
|
|
|
480
|
|
||
United Kingdom
|
|
413
|
|
|
897
|
|
||
Europe, Middle East, & Africa other than United Kingdom
|
|
493
|
|
|
1,472
|
|
||
Asia Pacific
|
|
287
|
|
|
561
|
|
||
Total revenue
|
|
$
|
2,561
|
|
|
$
|
5,651
|
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||
Balance at beginning of period
(1)
|
|
$
|
240
|
|
|
$
|
298
|
|
Additions
|
|
341
|
|
|
711
|
|
||
Amortization
|
|
(353
|
)
|
|
(785
|
)
|
||
Impairment
|
|
—
|
|
|
—
|
|
||
Foreign currency translation and other
|
|
(12
|
)
|
|
(8
|
)
|
||
Balance at end of period
|
|
$
|
216
|
|
|
$
|
216
|
|
(1)
|
Upon adoption of the new revenue recognition standard on January 1, 2018, Aon capitalized
$298 million
of costs to fulfill contracts with customers.
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||
Balance at beginning of period
(1)
|
|
$
|
144
|
|
|
$
|
145
|
|
Additions
|
|
13
|
|
|
21
|
|
||
Amortization
|
|
(11
|
)
|
|
(21
|
)
|
||
Impairment
|
|
—
|
|
|
—
|
|
||
Foreign currency translation and other
|
|
(2
|
)
|
|
(1
|
)
|
||
Balance at end of period
|
|
$
|
144
|
|
|
$
|
144
|
|
(1)
|
Upon adoption of the new revenue recognition standard on January 1, 2018, Aon capitalized
$145 million
of costs to obtain contracts with customers.
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
|
$
|
—
|
|
|
$
|
171
|
|
|
$
|
—
|
|
|
$
|
698
|
|
Expenses
|
|
|
|
|
|
|
|
|
||||||||
Total operating expenses
|
|
—
|
|
|
156
|
|
|
3
|
|
|
626
|
|
||||
Income (loss) from discontinued operations before income taxes
|
|
—
|
|
|
26
|
|
|
(3
|
)
|
|
83
|
|
||||
Income tax expense (benefit)
|
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
20
|
|
||||
Income (loss) from discontinued operations excluding gain, net of tax
|
|
—
|
|
|
23
|
|
|
(2
|
)
|
|
63
|
|
||||
Gain on sale of discontinued operations, net of tax
|
|
1
|
|
|
798
|
|
|
9
|
|
|
798
|
|
||||
Net income from discontinued operations
|
|
$
|
1
|
|
|
$
|
821
|
|
|
$
|
7
|
|
|
$
|
861
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Foreign currency remeasurement gain (loss)
|
$
|
29
|
|
|
$
|
(2
|
)
|
|
$
|
13
|
|
|
$
|
(12
|
)
|
Loss on disposal of business
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
||||
Pension and other postretirement income (expense)
|
(7
|
)
|
|
9
|
|
|
(5
|
)
|
|
17
|
|
||||
Equity earnings
|
1
|
|
|
3
|
|
|
2
|
|
|
9
|
|
||||
Loss on financial instruments
|
(27
|
)
|
|
(6
|
)
|
|
(27
|
)
|
|
(10
|
)
|
||||
Other
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
(3
|
)
|
|
$
|
4
|
|
|
$
|
(18
|
)
|
|
$
|
2
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balance at beginning of period
|
$
|
65
|
|
|
$
|
61
|
|
|
$
|
59
|
|
|
$
|
56
|
|
Provision charged to Other general expenses
|
3
|
|
|
5
|
|
|
11
|
|
|
11
|
|
||||
Accounts written off, net of recoveries
|
(6
|
)
|
|
(7
|
)
|
|
(8
|
)
|
|
(10
|
)
|
||||
Foreign currency translation and other
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Balance at end of period
|
$
|
62
|
|
|
$
|
59
|
|
|
$
|
62
|
|
|
$
|
59
|
|
As of
|
June 30,
2018 |
|
December 31,
2017 |
||||
Taxes receivable
|
$
|
172
|
|
|
$
|
114
|
|
Prepaid expenses
|
120
|
|
|
126
|
|
||
Receivables from the Divested Business
(1)
|
10
|
|
|
28
|
|
||
Assets held for sale
(2)
|
47
|
|
|
—
|
|
||
Cost to fulfill contracts with customers
(3)
|
216
|
|
|
—
|
|
||
Other
|
167
|
|
|
21
|
|
||
Total
|
$
|
732
|
|
|
$
|
289
|
|
(1)
|
Refer to Note 4 “Discontinued Operations” for further information.
|
(2)
|
Refer to Note 7 “Acquisitions and Dispositions of Businesses” for further information.
|
(3)
|
Refer to Note 3 “Revenue from Contracts with Customers” for further information.
|
As of
|
June 30,
2018 |
|
December 31,
2017 |
||||
Investments
|
$
|
54
|
|
|
$
|
57
|
|
Taxes receivable
|
77
|
|
|
84
|
|
||
Costs to obtain contracts with customers
(1)
|
144
|
|
|
—
|
|
||
Other
|
129
|
|
|
166
|
|
||
Total
|
$
|
404
|
|
|
$
|
307
|
|
(1)
|
Refer to Note 3 “Revenue from Contracts with Customers” for further information.
|
As of
|
June 30,
2018 |
|
December 31,
2017 |
||||
Deferred revenue
(1)
|
$
|
332
|
|
|
$
|
311
|
|
Taxes payable
(2)
|
25
|
|
|
139
|
|
||
Liabilities held for sale
(3)
|
41
|
|
|
—
|
|
||
Other
|
723
|
|
|
420
|
|
||
Total
|
$
|
1,121
|
|
|
$
|
870
|
|
(1)
|
During the
three and six
months ended
June 30, 2018
,
$115 million
and
$215 million
, respectively, were recognized in the Condensed Consolidated Statement of Income.
|
(2)
|
Includes a provisional estimate of
$42 million
for the current portion of the Transition Tax as of
December 31, 2017
. Refer to Note 11 “Income Taxes” for further information.
|
(3)
|
Refer to Note 7 “Acquisitions and Dispositions of Businesses” for further information.
|
As of
|
June 30,
2018 |
|
December 31,
2017 |
||||
Taxes payable
(1)
|
$
|
535
|
|
|
$
|
529
|
|
Deferred revenue
|
60
|
|
|
49
|
|
||
Leases
|
152
|
|
|
153
|
|
||
Compensation and benefits
|
60
|
|
|
67
|
|
||
Other
|
281
|
|
|
304
|
|
||
Total
|
$
|
1,088
|
|
|
$
|
1,102
|
|
|
|
Six months ended June 30, 2018
|
||
Cash
|
|
$
|
45
|
|
Deferred and contingent consideration
|
|
14
|
|
|
Aggregate consideration transferred
|
|
$
|
59
|
|
|
|
|
||
Assets acquired
|
|
|
||
Receivables, net
|
|
$
|
2
|
|
Goodwill
|
|
31
|
|
|
Intangible assets, net
|
|
28
|
|
|
Other assets
|
|
3
|
|
|
Total assets acquired
|
|
64
|
|
|
Liabilities assumed
|
|
|
||
Current liabilities
|
|
4
|
|
|
Other non-current liabilities
|
|
1
|
|
|
Total liabilities assumed
|
|
5
|
|
|
Net assets acquired
|
|
$
|
59
|
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
|
Inception to Date
|
|
Estimated Remaining Costs
|
|
Estimated Total Cost
(1)
|
||||||||||
Workforce reduction
|
|
$
|
33
|
|
|
$
|
66
|
|
|
$
|
365
|
|
|
$
|
55
|
|
|
$
|
420
|
|
Technology rationalization
(2)
|
|
8
|
|
|
18
|
|
|
51
|
|
|
79
|
|
|
130
|
|
|||||
Lease consolidation
(2)
|
|
10
|
|
|
13
|
|
|
21
|
|
|
39
|
|
|
60
|
|
|||||
Asset impairments
|
|
8
|
|
|
9
|
|
|
35
|
|
|
5
|
|
|
40
|
|
|||||
Other costs associated with restructuring and separation
(2) (3)
|
|
136
|
|
|
163
|
|
|
294
|
|
|
81
|
|
|
375
|
|
|||||
Total restructuring and related expenses
|
|
$
|
195
|
|
|
$
|
269
|
|
|
$
|
766
|
|
|
$
|
259
|
|
|
$
|
1,025
|
|
(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)
|
Total contract termination costs incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, for the three months ended
June 30, 2018
were
$0 million
,
$10 million
, and
$75 million
; for the
six
months ended
June 30, 2018
were, respectively,
$1 million
,
$12 million
, and
$79 million
; and since inception of the Restructuring Plan were, respectively,
$2 million
,
$20 million
, and
$82 million
. Total estimated contract termination costs expected to be incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, are
$15 million
,
$80 million
, and
$82 million
.
|
(3)
|
Other costs associated with the Restructuring Plan include those to separate the Divested Business, as well as moving costs, and consulting and legal fees. These costs are generally recognized when incurred.
|
|
|
|
||
Balance as of December 31, 2017
|
|
$
|
186
|
|
Expensed
|
|
260
|
|
|
Cash payments
|
|
(248
|
)
|
|
Foreign currency translation and other
|
|
(2
|
)
|
|
Balance as of June 30, 2018
|
|
$
|
196
|
|
Balance as of December 31, 2017
|
$
|
8,358
|
|
Goodwill related to current year acquisitions
|
31
|
|
|
Goodwill related to disposals
|
(1
|
)
|
|
Goodwill related to prior year acquisitions
|
10
|
|
|
Foreign currency translation and other
|
(107
|
)
|
|
Balance as of June 30, 2018
|
$
|
8,291
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated
Amortization and Impairment
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization and Impairment |
|
Net Carrying Amount
|
||||||||||||
Customer related and contract based
|
$
|
2,310
|
|
|
$
|
1,417
|
|
|
$
|
893
|
|
|
$
|
2,550
|
|
|
$
|
1,415
|
|
|
$
|
1,135
|
|
Tradenames
|
1,031
|
|
|
634
|
|
|
397
|
|
|
1,047
|
|
|
533
|
|
|
514
|
|
||||||
Technology and other
|
397
|
|
|
324
|
|
|
73
|
|
|
416
|
|
|
332
|
|
|
84
|
|
||||||
Total
|
$
|
3,738
|
|
|
$
|
2,375
|
|
|
$
|
1,363
|
|
|
$
|
4,013
|
|
|
$
|
2,280
|
|
|
$
|
1,733
|
|
Remainder of 2018
|
$
|
205
|
|
2019
|
401
|
|
|
2020
|
228
|
|
|
2021
|
131
|
|
|
2022
|
85
|
|
|
Thereafter
|
313
|
|
|
Total
|
$
|
1,363
|
|
As of
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Commercial paper outstanding
|
|
$
|
798
|
|
|
$
|
—
|
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Weighted average commercial paper outstanding
|
|
$
|
744
|
|
|
$
|
318
|
|
|
$
|
437
|
|
|
$
|
342
|
|
Weighted average interest rate of commercial paper outstanding
|
|
0.92
|
%
|
|
0.26
|
%
|
|
0.85
|
%
|
|
0.18
|
%
|
•
|
The geographical distribution of income including restructuring charges and legacy litigation as well as the impairment of certain assets and liabilities classified as held for sale.
|
•
|
Certain discrete items including the net tax benefit associated with the anticipated sale of certain assets and liabilities classified as held for sale, the impact of share-based payments, changes in uncertain tax positions, and the deferred remeasurement related to the anticipated acceleration of contributions to the qualified U.S. pension plan. The deferred remeasurement also impacted the Company’s provisional estimates.
|
•
|
Adjusted its provisional estimate of the remeasurement of deferred taxes to reflect the anticipated acceleration of contributions to the qualified U.S. pension plan in the third quarter of 2018. The change reduced the provisional charge by
$11 million
and impacted the effective tax rate by
12.6%
and
(1.7)%
for the
three and six
months ended
June 30, 2018
, respectively.
|
•
|
Updated its state tax analysis to consider legislation enacted by the states in the second quarter, which did not result in a significant adjustment.
|
•
|
Continued to update the underlying calculations for the Transition Tax but did not record any significant adjustments. Additional guidance from the U.S. Treasury related to the calculation of the Transition Tax is expected in the third quarter of 2018.
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
2018
|
|
2017
(1)
|
|
2018
|
|
2017
(1)
|
||||||||
Shares repurchased
|
2.8
|
|
|
8.0
|
|
|
6.7
|
|
|
9.1
|
|
||||
Average price per share
|
$
|
141.23
|
|
|
$
|
128.54
|
|
|
$
|
141.06
|
|
|
$
|
126.85
|
|
Costs recorded to retained earnings:
|
|
|
|
|
|
|
|
||||||||
Total repurchase cost
|
$
|
400
|
|
|
$
|
1,030
|
|
|
$
|
950
|
|
|
$
|
1,154
|
|
Additional associated costs
|
2
|
|
|
5
|
|
|
5
|
|
|
6
|
|
||||
Total costs recorded to retained earnings
|
$
|
402
|
|
|
$
|
1,035
|
|
|
$
|
955
|
|
|
$
|
1,160
|
|
(1)
|
Included in the
8.0 million
shares and
9.1 million
shares repurchased during the three and six months ended
June 30, 2017
, respectively, were
0.5 million
shares that did not settle until July 2017. These shares were settled at an average price per share of
$133.24
and total cost of
$60 million
.
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Basic weighted average ordinary shares outstanding
|
246.0
|
|
|
262.4
|
|
|
247.2
|
|
|
263.6
|
|
Dilutive effect of potentially issuable shares
|
1.4
|
|
|
—
|
|
|
1.6
|
|
|
2.1
|
|
Diluted weighted average ordinary shares outstanding
|
247.4
|
|
|
262.4
|
|
|
248.8
|
|
|
265.7
|
|
|
Change in Fair Value of Financial Instruments
(1)
|
|
Foreign Currency Translation Adjustments
|
|
Postretirement Benefit Obligation
(2)
|
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
(25
|
)
|
|
$
|
(879
|
)
|
|
$
|
(2,592
|
)
|
|
$
|
(3,496
|
)
|
Adoption of new accounting guidance
(3)
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Balance at January 1, 2018
|
(26
|
)
|
|
(879
|
)
|
|
(2,592
|
)
|
|
(3,497
|
)
|
||||
Other comprehensive income (loss) before reclassifications, net
|
8
|
|
|
(210
|
)
|
|
110
|
|
|
(92
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|||||
Amounts reclassified from accumulated other comprehensive income
|
7
|
|
|
—
|
|
|
77
|
|
|
84
|
|
||||
Tax expense
|
(2
|
)
|
|
—
|
|
|
(17
|
)
|
|
(19
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income, net
|
5
|
|
|
—
|
|
|
60
|
|
|
65
|
|
||||
Net current period other comprehensive income (loss)
|
13
|
|
|
(210
|
)
|
|
170
|
|
|
(27
|
)
|
||||
Balance at June 30, 2018
|
$
|
(13
|
)
|
|
$
|
(1,089
|
)
|
|
$
|
(2,422
|
)
|
|
$
|
(3,524
|
)
|
(1)
|
Reclassifications from this category included in Accumulated other comprehensive loss are recorded in
Other income (expense)
,
Other general expenses
, and
Compensation and benefits
. Refer to Note 15 “Derivatives and Hedging” for further information regarding the Company’s derivative and hedging activity.
|
(2)
|
Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense).
|
(3)
|
Refer to Note 2 “Accounting Principles and Practices” for further information.
|
|
Three months ended June 30
|
||||||||||||||||||||||
|
U.K.
|
|
U.S.
|
|
Other
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
29
|
|
|
30
|
|
|
25
|
|
|
24
|
|
|
7
|
|
|
6
|
|
||||||
Expected return on plan assets, net of administration expenses
|
(50
|
)
|
|
(49
|
)
|
|
(36
|
)
|
|
(35
|
)
|
|
(11
|
)
|
|
(11
|
)
|
||||||
Amortization of prior-service cost
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of net actuarial loss
|
7
|
|
|
8
|
|
|
15
|
|
|
12
|
|
|
3
|
|
|
3
|
|
||||||
Net periodic cost (benefit)
|
(14
|
)
|
|
(11
|
)
|
|
5
|
|
|
2
|
|
|
(1
|
)
|
|
(2
|
)
|
||||||
Loss on pension settlement
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total net periodic cost (benefit)
|
$
|
2
|
|
|
$
|
(11
|
)
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
Six months ended June 30
|
||||||||||||||||||||||
|
U.K.
|
|
U.S.
|
|
Other
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
58
|
|
|
60
|
|
|
50
|
|
|
48
|
|
|
14
|
|
|
12
|
|
||||||
Expected return on plan assets, net of administration expenses
|
(101
|
)
|
|
(97
|
)
|
|
(72
|
)
|
|
(70
|
)
|
|
(23
|
)
|
|
(22
|
)
|
||||||
Amortization of prior-service cost
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of net actuarial loss
|
15
|
|
|
15
|
|
|
30
|
|
|
25
|
|
|
6
|
|
|
6
|
|
||||||
Net periodic cost (benefit)
|
(28
|
)
|
|
(22
|
)
|
|
9
|
|
|
4
|
|
|
(3
|
)
|
|
(4
|
)
|
||||||
Loss on pension settlement
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total net periodic cost (benefit)
|
$
|
(5
|
)
|
|
$
|
(22
|
)
|
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Restricted share units (“RSUs”)
|
$
|
46
|
|
|
$
|
46
|
|
|
$
|
104
|
|
|
$
|
101
|
|
Performance share awards (“PSAs”)
|
23
|
|
|
21
|
|
|
39
|
|
|
40
|
|
||||
Employee share purchase plans
|
1
|
|
|
2
|
|
|
4
|
|
|
6
|
|
||||
Total share-based compensation expense
|
$
|
70
|
|
|
$
|
69
|
|
|
$
|
147
|
|
|
$
|
147
|
|
|
Six months ended June 30, 2018
|
|
Six months ended June 30, 2017
|
||||||||||
|
Shares
|
|
Fair Value at Date of Grant
|
|
Shares
|
|
Fair Value at Date of Grant
|
||||||
Non-vested at beginning of period
|
4,849
|
|
|
$
|
104
|
|
|
6,195
|
|
|
$
|
89
|
|
Granted
|
1,352
|
|
|
$
|
140
|
|
|
1,497
|
|
|
$
|
121
|
|
Vested
|
(1,664
|
)
|
|
$
|
98
|
|
|
(2,172
|
)
|
|
$
|
82
|
|
Forfeited
|
(109
|
)
|
|
$
|
109
|
|
|
(522
|
)
|
|
$
|
92
|
|
Non-vested at end of period
|
4,428
|
|
|
$
|
117
|
|
|
4,998
|
|
|
$
|
101
|
|
|
June 30,
2018 |
|
December 31,
2017 |
|
December 31,
2016 |
||||||
Target PSAs granted during period
|
564
|
|
|
548
|
|
|
750
|
|
|||
Weighted average fair value per share at date of grant
|
$
|
134
|
|
|
$
|
114
|
|
|
$
|
100
|
|
Number of shares that would be issued based on current performance levels
|
564
|
|
|
941
|
|
|
742
|
|
|||
Unamortized expense, based on current performance levels
|
$
|
68
|
|
|
$
|
58
|
|
|
$
|
12
|
|
|
Notional Amount
|
|
Net Amount of Derivative Assets
Presented in the Statements of Financial Position
(1)
|
|
Net Amount of Derivative Liabilities
Presented in the Statements of Financial Position
(2)
|
||||||||||||||||||
|
June 30,
2018 |
|
December 31,
2017 |
|
June 30,
2018 |
|
December 31,
2017 |
|
June 30,
2018 |
|
December 31,
2017 |
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accounted for as hedges
|
$
|
668
|
|
|
$
|
701
|
|
|
$
|
21
|
|
|
$
|
31
|
|
|
$
|
2
|
|
|
$
|
3
|
|
Not accounted for as hedges
(3)
|
315
|
|
|
254
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||||
Total
|
$
|
983
|
|
|
$
|
955
|
|
|
$
|
21
|
|
|
$
|
32
|
|
|
$
|
5
|
|
|
$
|
6
|
|
(1)
|
Included within Other current assets (
$4 million
at
June 30, 2018
and
$9 million
at
December 31, 2017
) or Other non-current assets (
$17 million
at
June 30, 2018
and
$23 million
at
December 31, 2017
).
|
(2)
|
Included within Other current liabilities (
$1 million
at
June 30, 2018
and
$3 million
at
December 31, 2017
) or Other non-current liabilities (
$4 million
at
June 30, 2018
and
$3 million
at
December 31, 2017
).
|
(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.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2018
|
|
June 30, 2017
|
|
June 30, 2018
|
|
June 30, 2017
|
||||||||
Gain (Loss) Recognized in Accumulated Other Comprehensive Loss
|
|
$
|
(25
|
)
|
|
$
|
1
|
|
|
$
|
(11
|
)
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
||||||||
Location of future reclassification from Accumulated Other Comprehensive Loss
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
9
|
|
Other general expenses
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Other income (expense)
|
|
$
|
(20
|
)
|
|
$
|
(1
|
)
|
|
$
|
(10
|
)
|
|
$
|
(4
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2018
|
|
June 30, 2017
|
|
June 30, 2018
|
|
June 30, 2017
|
||||||||
Compensation and benefits
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
13
|
|
Other general expenses
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||
Interest expense
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Other income (expense)
|
|
(1
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Total
|
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
$
|
(6
|
)
|
|
$
|
6
|
|
•
|
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.
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Balance at June 30, 2018
|
|
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)
|
$
|
1,709
|
|
|
$
|
1,709
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Government bonds
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Equity investments
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Derivatives
(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross foreign exchange contracts
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives
(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross foreign exchange contracts
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
(1)
|
Included within Fiduciary assets or Short-term investments in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity.
|
(2)
|
Refer to Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Balance at December 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)
|
$
|
1,847
|
|
|
$
|
1,847
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Government bonds
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Equity investments
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Derivatives
(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross foreign exchange contracts
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives
(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross foreign exchange contracts
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
(1)
|
Included within Fiduciary assets or Short-term investments in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity.
|
(2)
|
Refer to Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Current portion of long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
299
|
|
|
$
|
301
|
|
Long-term debt
|
$
|
5,659
|
|
|
$
|
5,871
|
|
|
$
|
5,667
|
|
|
$
|
6,267
|
|
|
|
Three months ended June 30, 2018
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,561
|
|
|
$
|
—
|
|
|
$
|
2,561
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
15
|
|
|
1
|
|
|
1,478
|
|
|
—
|
|
|
1,494
|
|
|||||
Information technology
|
|
—
|
|
|
—
|
|
|
123
|
|
|
—
|
|
|
123
|
|
|||||
Premises
|
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
96
|
|
|||||
Depreciation of fixed assets
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
|||||
Amortization and impairment of intangible assets
|
|
—
|
|
|
—
|
|
|
282
|
|
|
—
|
|
|
282
|
|
|||||
Other general expenses
|
|
2
|
|
|
78
|
|
|
455
|
|
|
—
|
|
|
535
|
|
|||||
Total operating expenses
|
|
17
|
|
|
79
|
|
|
2,481
|
|
|
—
|
|
|
2,577
|
|
|||||
Operating income (loss)
|
|
(17
|
)
|
|
(79
|
)
|
|
80
|
|
|
—
|
|
|
(16
|
)
|
|||||
Interest income
|
|
—
|
|
|
15
|
|
|
—
|
|
|
(14
|
)
|
|
1
|
|
|||||
Interest expense
|
|
(48
|
)
|
|
(25
|
)
|
|
(10
|
)
|
|
14
|
|
|
(69
|
)
|
|||||
Intercompany interest income (expense)
|
|
3
|
|
|
(129
|
)
|
|
126
|
|
|
—
|
|
|
—
|
|
|||||
Intercompany other income (expense)
|
|
(61
|
)
|
|
(3
|
)
|
|
64
|
|
|
—
|
|
|
—
|
|
|||||
Other income (expense)
|
|
16
|
|
|
(20
|
)
|
|
19
|
|
|
(18
|
)
|
|
(3
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
|
(107
|
)
|
|
(241
|
)
|
|
279
|
|
|
(18
|
)
|
|
(87
|
)
|
|||||
Income tax expense (benefit)
|
|
(3
|
)
|
|
(50
|
)
|
|
(91
|
)
|
|
—
|
|
|
(144
|
)
|
|||||
Net income (loss) from continuing operations
|
|
(104
|
)
|
|
(191
|
)
|
|
370
|
|
|
(18
|
)
|
|
57
|
|
|||||
Net Income from discontinued operations
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net income (loss) before equity in earnings of subsidiaries
|
|
(104
|
)
|
|
(191
|
)
|
|
371
|
|
|
(18
|
)
|
|
58
|
|
|||||
Equity in earnings of subsidiaries, net of tax
|
|
170
|
|
|
206
|
|
|
15
|
|
|
(391
|
)
|
|
—
|
|
|||||
Net income
|
|
66
|
|
|
15
|
|
|
386
|
|
|
(409
|
)
|
|
58
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Net income attributable to Aon shareholders
|
|
$
|
66
|
|
|
$
|
15
|
|
|
$
|
376
|
|
|
$
|
(409
|
)
|
|
$
|
48
|
|
|
|
Three months ended June 30, 2017
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,368
|
|
|
$
|
—
|
|
|
$
|
2,368
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
8
|
|
|
3
|
|
|
1,455
|
|
|
—
|
|
|
1,466
|
|
|||||
Information technology
|
|
—
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
|||||
Premises
|
|
—
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|||||
Depreciation of fixed assets
|
|
—
|
|
|
—
|
|
|
54
|
|
|
—
|
|
|
54
|
|
|||||
Amortization and impairment of intangible assets
|
|
—
|
|
|
—
|
|
|
460
|
|
|
—
|
|
|
460
|
|
|||||
Other general expenses
|
|
4
|
|
|
(6
|
)
|
|
333
|
|
|
—
|
|
|
331
|
|
|||||
Total operating expenses
|
|
12
|
|
|
(3
|
)
|
|
2,486
|
|
|
—
|
|
|
2,495
|
|
|||||
Operating income (loss)
|
|
(12
|
)
|
|
3
|
|
|
(118
|
)
|
|
—
|
|
|
(127
|
)
|
|||||
Interest income
|
|
—
|
|
|
11
|
|
|
2
|
|
|
(5
|
)
|
|
8
|
|
|||||
Interest expense
|
|
(46
|
)
|
|
(23
|
)
|
|
(7
|
)
|
|
5
|
|
|
(71
|
)
|
|||||
Intercompany interest income (expense)
|
|
4
|
|
|
(136
|
)
|
|
132
|
|
|
—
|
|
|
—
|
|
|||||
Intercompany other income (expense)
|
|
(53
|
)
|
|
(16
|
)
|
|
69
|
|
|
—
|
|
|
—
|
|
|||||
Other income (expense)
|
|
(12
|
)
|
|
(6
|
)
|
|
12
|
|
|
10
|
|
|
4
|
|
|||||
Income (loss) from continuing operations before income taxes
|
|
(119
|
)
|
|
(167
|
)
|
|
90
|
|
|
10
|
|
|
(186
|
)
|
|||||
Income tax expense (benefit)
|
|
(8
|
)
|
|
(63
|
)
|
|
(72
|
)
|
|
—
|
|
|
(143
|
)
|
|||||
Net income (loss) from continuing operations
|
|
(111
|
)
|
|
(104
|
)
|
|
162
|
|
|
10
|
|
|
(43
|
)
|
|||||
Net Income from discontinued operations
|
|
—
|
|
|
—
|
|
|
821
|
|
|
—
|
|
|
821
|
|
|||||
Net income (loss) before equity in earnings of subsidiaries
|
|
(111
|
)
|
|
(104
|
)
|
|
983
|
|
|
10
|
|
|
778
|
|
|||||
Equity in earnings of subsidiaries, net of tax
|
|
870
|
|
|
635
|
|
|
531
|
|
|
(2,036
|
)
|
|
—
|
|
|||||
Net income
|
|
759
|
|
|
531
|
|
|
1,514
|
|
|
(2,026
|
)
|
|
778
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||
Net income attributable to Aon shareholders
|
|
$
|
759
|
|
|
$
|
531
|
|
|
$
|
1,505
|
|
|
$
|
(2,026
|
)
|
|
$
|
769
|
|
|
|
Six months ended June 30, 2018
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,651
|
|
|
$
|
—
|
|
|
$
|
5,651
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
34
|
|
|
2
|
|
|
3,074
|
|
|
—
|
|
|
3,110
|
|
|||||
Information technology
|
|
—
|
|
|
—
|
|
|
238
|
|
|
—
|
|
|
238
|
|
|||||
Premises
|
|
—
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
189
|
|
|||||
Depreciation of fixed assets
|
|
—
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|||||
Amortization and impairment of intangible assets
|
|
—
|
|
|
—
|
|
|
392
|
|
|
—
|
|
|
392
|
|
|||||
Other general expenses
|
|
3
|
|
|
78
|
|
|
772
|
|
|
—
|
|
|
853
|
|
|||||
Total operating expenses
|
|
37
|
|
|
80
|
|
|
4,751
|
|
|
—
|
|
|
4,868
|
|
|||||
Operating income (loss)
|
|
(37
|
)
|
|
(80
|
)
|
|
900
|
|
|
—
|
|
|
783
|
|
|||||
Interest income
|
|
—
|
|
|
29
|
|
|
—
|
|
|
(24
|
)
|
|
5
|
|
|||||
Interest expense
|
|
(97
|
)
|
|
(49
|
)
|
|
(17
|
)
|
|
24
|
|
|
(139
|
)
|
|||||
Intercompany interest income (expense)
|
|
7
|
|
|
(257
|
)
|
|
250
|
|
|
—
|
|
|
—
|
|
|||||
Intercompany other income (expense)
|
|
(132
|
)
|
|
(8
|
)
|
|
140
|
|
|
—
|
|
|
—
|
|
|||||
Other income (expense)
|
|
9
|
|
|
(26
|
)
|
|
14
|
|
|
(15
|
)
|
|
(18
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
|
(250
|
)
|
|
(391
|
)
|
|
1,287
|
|
|
(15
|
)
|
|
631
|
|
|||||
Income tax expense (benefit)
|
|
(19
|
)
|
|
(77
|
)
|
|
66
|
|
|
—
|
|
|
(30
|
)
|
|||||
Net income (loss) from continuing operations
|
|
(231
|
)
|
|
(314
|
)
|
|
1,221
|
|
|
(15
|
)
|
|
661
|
|
|||||
Net Income from discontinued operations
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||
Net income (loss) before equity in earnings of subsidiaries
|
|
(231
|
)
|
|
(314
|
)
|
|
1,228
|
|
|
(15
|
)
|
|
668
|
|
|||||
Equity in earnings of subsidiaries, net of tax
|
|
888
|
|
|
910
|
|
|
596
|
|
|
(2,394
|
)
|
|
—
|
|
|||||
Net income
|
|
657
|
|
|
596
|
|
|
1,824
|
|
|
(2,409
|
)
|
|
668
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|||||
Net income attributable to Aon shareholders
|
|
$
|
657
|
|
|
$
|
596
|
|
|
$
|
1,798
|
|
|
$
|
(2,409
|
)
|
|
$
|
642
|
|
|
|
Six months ended June 30, 2017
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,749
|
|
|
$
|
—
|
|
|
$
|
4,749
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits
|
|
60
|
|
|
6
|
|
|
2,869
|
|
|
—
|
|
|
2,935
|
|
|||||
Information technology
|
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
186
|
|
|||||
Premises
|
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
170
|
|
|||||
Depreciation of fixed assets
|
|
—
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
108
|
|
|||||
Amortization and impairment of intangible assets
|
|
—
|
|
|
—
|
|
|
503
|
|
|
—
|
|
|
503
|
|
|||||
Other general expenses
|
|
9
|
|
|
(4
|
)
|
|
634
|
|
|
—
|
|
|
639
|
|
|||||
Total operating expenses
|
|
69
|
|
|
2
|
|
|
4,470
|
|
|
—
|
|
|
4,541
|
|
|||||
Operating income (loss)
|
|
(69
|
)
|
|
(2
|
)
|
|
279
|
|
|
—
|
|
|
208
|
|
|||||
Interest income
|
|
—
|
|
|
17
|
|
|
—
|
|
|
(7
|
)
|
|
10
|
|
|||||
Interest expense
|
|
(91
|
)
|
|
(47
|
)
|
|
(10
|
)
|
|
7
|
|
|
(141
|
)
|
|||||
Intercompany interest income (expense)
|
|
7
|
|
|
(272
|
)
|
|
265
|
|
|
—
|
|
|
—
|
|
|||||
Intercompany other income (expense)
|
|
(102
|
)
|
|
(9
|
)
|
|
111
|
|
|
—
|
|
|
—
|
|
|||||
Other income (expense)
|
|
(23
|
)
|
|
3
|
|
|
4
|
|
|
18
|
|
|
2
|
|
|||||
Income (loss) from continuing operations before income taxes
|
|
(278
|
)
|
|
(310
|
)
|
|
649
|
|
|
18
|
|
|
79
|
|
|||||
Income tax expense (benefit)
|
|
(22
|
)
|
|
(117
|
)
|
|
(4
|
)
|
|
—
|
|
|
(143
|
)
|
|||||
Net income (loss) from continuing operations
|
|
(256
|
)
|
|
(193
|
)
|
|
653
|
|
|
18
|
|
|
222
|
|
|||||
Net Income from discontinued operations
|
|
—
|
|
|
—
|
|
|
861
|
|
|
—
|
|
|
861
|
|
|||||
Net income (loss) before equity in earnings of subsidiaries
|
|
(256
|
)
|
|
(193
|
)
|
|
1,514
|
|
|
18
|
|
|
1,083
|
|
|||||
Equity in earnings of subsidiaries, net of tax
|
|
1,298
|
|
|
906
|
|
|
713
|
|
|
(2,917
|
)
|
|
—
|
|
|||||
Net income
|
|
1,042
|
|
|
713
|
|
|
2,227
|
|
|
(2,899
|
)
|
|
1,083
|
|
|||||
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|||||
Net income attributable to Aon shareholders
|
|
$
|
1,042
|
|
|
$
|
713
|
|
|
$
|
2,204
|
|
|
$
|
(2,899
|
)
|
|
$
|
1,060
|
|
|
|
Three months ended June 30, 2018
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Net income
|
|
$
|
66
|
|
|
$
|
15
|
|
|
$
|
386
|
|
|
$
|
(409
|
)
|
|
$
|
58
|
|
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Net income attributable to Aon shareholders
|
|
66
|
|
|
15
|
|
|
376
|
|
|
(409
|
)
|
|
48
|
|
|||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in fair value of financial instruments
|
|
—
|
|
|
(4
|
)
|
|
3
|
|
|
—
|
|
|
(1
|
)
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
(478
|
)
|
|
18
|
|
|
(460
|
)
|
|||||
Postretirement benefit obligation
|
|
—
|
|
|
11
|
|
|
111
|
|
|
—
|
|
|
122
|
|
|||||
Total other comprehensive income (loss)
|
|
—
|
|
|
7
|
|
|
(364
|
)
|
|
18
|
|
|
(339
|
)
|
|||||
Equity in other comprehensive income (loss) of subsidiaries, net of tax
|
|
(351
|
)
|
|
(345
|
)
|
|
(338
|
)
|
|
1,034
|
|
|
—
|
|
|||||
Less: Other comprehensive loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
Total other comprehensive income (loss) attributable to Aon shareholders
|
|
(351
|
)
|
|
(338
|
)
|
|
(696
|
)
|
|
1,052
|
|
|
(333
|
)
|
|||||
Comprehensive income (loss) attributable to Aon shareholders
|
|
$
|
(285
|
)
|
|
$
|
(323
|
)
|
|
$
|
(320
|
)
|
|
$
|
643
|
|
|
$
|
(285
|
)
|
|
|
Three months ended June 30, 2017
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Net income
|
|
$
|
759
|
|
|
$
|
531
|
|
|
$
|
1,514
|
|
|
$
|
(2,026
|
)
|
|
$
|
778
|
|
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||
Net income attributable to Aon shareholders
|
|
759
|
|
|
531
|
|
|
1,505
|
|
|
(2,026
|
)
|
|
769
|
|
|||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in fair value of financial instruments
|
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
4
|
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
54
|
|
|
(10
|
)
|
|
44
|
|
|||||
Postretirement benefit obligation
|
|
—
|
|
|
8
|
|
|
12
|
|
|
—
|
|
|
20
|
|
|||||
Total other comprehensive income (loss)
|
|
—
|
|
|
10
|
|
|
68
|
|
|
(10
|
)
|
|
68
|
|
|||||
Equity in other comprehensive income (loss) of subsidiaries, net of tax
|
|
83
|
|
|
71
|
|
|
81
|
|
|
(235
|
)
|
|
—
|
|
|||||
Less: Other comprehensive loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Total other comprehensive income (loss) attributable to Aon shareholders
|
|
83
|
|
|
81
|
|
|
154
|
|
|
(245
|
)
|
|
73
|
|
|||||
Comprehensive income (loss) attributable to Aon shareholders
|
|
$
|
842
|
|
|
$
|
612
|
|
|
$
|
1,659
|
|
|
$
|
(2,271
|
)
|
|
$
|
842
|
|
|
|
Six months ended June 30, 2018
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Net income
|
|
$
|
657
|
|
|
$
|
596
|
|
|
$
|
1,824
|
|
|
$
|
(2,409
|
)
|
|
$
|
668
|
|
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|||||
Net income attributable to Aon shareholders
|
|
657
|
|
|
596
|
|
|
1,798
|
|
|
(2,409
|
)
|
|
642
|
|
|||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in fair value of financial instruments
|
|
—
|
|
|
(1
|
)
|
|
14
|
|
|
—
|
|
|
13
|
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
(228
|
)
|
|
15
|
|
|
(213
|
)
|
|||||
Postretirement benefit obligation
|
|
—
|
|
|
22
|
|
|
148
|
|
|
—
|
|
|
170
|
|
|||||
Total other comprehensive income (loss)
|
|
—
|
|
|
21
|
|
|
(66
|
)
|
|
15
|
|
|
(30
|
)
|
|||||
Equity in other comprehensive income (loss) of subsidiaries, net of tax
|
|
(42
|
)
|
|
(60
|
)
|
|
(39
|
)
|
|
141
|
|
|
—
|
|
|||||
Less: Other comprehensive loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Total other comprehensive income (loss) attributable to Aon shareholders
|
|
(42
|
)
|
|
(39
|
)
|
|
(102
|
)
|
|
156
|
|
|
(27
|
)
|
|||||
Comprehensive income (loss) attributable to Aon shareholders
|
|
$
|
615
|
|
|
$
|
557
|
|
|
$
|
1,696
|
|
|
$
|
(2,253
|
)
|
|
$
|
615
|
|
|
|
Six months ended June 30, 2017
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Net income
|
|
$
|
1,042
|
|
|
$
|
713
|
|
|
$
|
2,227
|
|
|
$
|
(2,899
|
)
|
|
$
|
1,083
|
|
Less: Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|||||
Net income attributable to Aon shareholders
|
|
1,042
|
|
|
713
|
|
|
2,204
|
|
|
(2,899
|
)
|
|
1,060
|
|
|||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in fair value of financial instruments
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
209
|
|
|
(18
|
)
|
|
191
|
|
|||||
Postretirement benefit obligation
|
|
—
|
|
|
16
|
|
|
22
|
|
|
—
|
|
|
38
|
|
|||||
Total other comprehensive income (loss)
|
|
—
|
|
|
16
|
|
|
233
|
|
|
(18
|
)
|
|
231
|
|
|||||
Equity in other comprehensive income (loss) of subsidiaries, net of tax
|
|
253
|
|
|
235
|
|
|
251
|
|
|
(739
|
)
|
|
—
|
|
|||||
Less: Other comprehensive loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Total other comprehensive income (loss) attributable to Aon shareholders
|
|
253
|
|
|
251
|
|
|
488
|
|
|
(757
|
)
|
|
235
|
|
|||||
Comprehensive income (loss) attributable to Aon shareholders
|
|
$
|
1,295
|
|
|
$
|
964
|
|
|
$
|
2,692
|
|
|
$
|
(3,656
|
)
|
|
$
|
1,295
|
|
|
|
As of June 30, 2018
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
2,927
|
|
|
$
|
672
|
|
|
$
|
(3,112
|
)
|
|
$
|
487
|
|
Short-term investments
|
|
—
|
|
|
59
|
|
|
114
|
|
|
—
|
|
|
173
|
|
|||||
Receivables, net
|
|
—
|
|
|
—
|
|
|
2,992
|
|
|
—
|
|
|
2,992
|
|
|||||
Fiduciary assets
|
|
—
|
|
|
—
|
|
|
10,476
|
|
|
—
|
|
|
10,476
|
|
|||||
Current intercompany receivables
|
|
171
|
|
|
3,343
|
|
|
11,424
|
|
|
(14,938
|
)
|
|
—
|
|
|||||
Other current assets
|
|
—
|
|
|
3
|
|
|
729
|
|
|
—
|
|
|
732
|
|
|||||
Total current assets
|
|
171
|
|
|
6,332
|
|
|
26,407
|
|
|
(18,050
|
)
|
|
14,860
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
8,291
|
|
|
—
|
|
|
8,291
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
1,363
|
|
|
—
|
|
|
1,363
|
|
|||||
Fixed assets, net
|
|
—
|
|
|
—
|
|
|
575
|
|
|
—
|
|
|
575
|
|
|||||
Deferred tax assets
|
|
99
|
|
|
410
|
|
|
135
|
|
|
(192
|
)
|
|
452
|
|
|||||
Non-current intercompany receivables
|
|
409
|
|
|
261
|
|
|
8,254
|
|
|
(8,924
|
)
|
|
—
|
|
|||||
Prepaid pension
|
|
—
|
|
|
6
|
|
|
1,266
|
|
|
—
|
|
|
1,272
|
|
|||||
Other non-current assets
|
|
1
|
|
|
28
|
|
|
375
|
|
|
—
|
|
|
404
|
|
|||||
Investment in subsidiary
|
|
10,235
|
|
|
19,008
|
|
|
926
|
|
|
(30,169
|
)
|
|
—
|
|
|||||
Total assets
|
|
$
|
10,915
|
|
|
$
|
26,045
|
|
|
$
|
47,592
|
|
|
$
|
(57,335
|
)
|
|
$
|
27,217
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued liabilities
|
|
$
|
1,452
|
|
|
$
|
67
|
|
|
$
|
3,040
|
|
|
$
|
(3,112
|
)
|
|
$
|
1,447
|
|
Short-term debt and current portion of long-term debt
|
|
459
|
|
|
339
|
|
|
1
|
|
|
—
|
|
|
799
|
|
|||||
Fiduciary liabilities
|
|
—
|
|
|
—
|
|
|
10,476
|
|
|
—
|
|
|
10,476
|
|
|||||
Current intercompany payables
|
|
214
|
|
|
13,364
|
|
|
1,360
|
|
|
(14,938
|
)
|
|
—
|
|
|||||
Other current liabilities
|
|
—
|
|
|
62
|
|
|
1,059
|
|
|
—
|
|
|
1,121
|
|
|||||
Total current liabilities
|
|
2,125
|
|
|
13,832
|
|
|
15,936
|
|
|
(18,050
|
)
|
|
13,843
|
|
|||||
Long-term debt
|
|
4,243
|
|
|
1,415
|
|
|
1
|
|
|
—
|
|
|
5,659
|
|
|||||
Deferred tax liabilities
|
|
—
|
|
|
—
|
|
|
486
|
|
|
(192
|
)
|
|
294
|
|
|||||
Pension, other postretirement and postemployment liabilities
|
|
—
|
|
|
1,349
|
|
|
366
|
|
|
—
|
|
|
1,715
|
|
|||||
Non-current intercompany payables
|
|
—
|
|
|
8,419
|
|
|
505
|
|
|
(8,924
|
)
|
|
—
|
|
|||||
Other non-current liabilities
|
|
2
|
|
|
104
|
|
|
982
|
|
|
—
|
|
|
1,088
|
|
|||||
Total liabilities
|
|
6,370
|
|
|
25,119
|
|
|
18,276
|
|
|
(27,166
|
)
|
|
22,599
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Aon shareholders’ equity
|
|
4,545
|
|
|
926
|
|
|
29,243
|
|
|
(30,169
|
)
|
|
4,545
|
|
|||||
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
73
|
|
|
—
|
|
|
73
|
|
|||||
Total equity
|
|
4,545
|
|
|
926
|
|
|
29,316
|
|
|
(30,169
|
)
|
|
4,618
|
|
|||||
Total liabilities and equity
|
|
$
|
10,915
|
|
|
$
|
26,045
|
|
|
$
|
47,592
|
|
|
$
|
(57,335
|
)
|
|
$
|
27,217
|
|
|
|
As of December 31, 2017
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
1
|
|
|
$
|
2,524
|
|
|
$
|
793
|
|
|
$
|
(2,562
|
)
|
|
$
|
756
|
|
Short-term investments
|
|
—
|
|
|
355
|
|
|
174
|
|
|
—
|
|
|
529
|
|
|||||
Receivables, net
|
|
—
|
|
|
2
|
|
|
2,476
|
|
|
—
|
|
|
2,478
|
|
|||||
Fiduciary assets
|
|
—
|
|
|
—
|
|
|
9,625
|
|
|
—
|
|
|
9,625
|
|
|||||
Current intercompany receivables
|
|
165
|
|
|
1,046
|
|
|
10,824
|
|
|
(12,035
|
)
|
|
—
|
|
|||||
Other current assets
|
|
1
|
|
|
29
|
|
|
259
|
|
|
—
|
|
|
289
|
|
|||||
Total current assets
|
|
167
|
|
|
3,956
|
|
|
24,151
|
|
|
(14,597
|
)
|
|
13,677
|
|
|||||
Goodwill
|
|
—
|
|
|
—
|
|
|
8,358
|
|
|
—
|
|
|
8,358
|
|
|||||
Intangible assets, net
|
|
—
|
|
|
—
|
|
|
1,733
|
|
|
—
|
|
|
1,733
|
|
|||||
Fixed assets, net
|
|
—
|
|
|
—
|
|
|
564
|
|
|
—
|
|
|
564
|
|
|||||
Deferred tax assets
|
|
99
|
|
|
396
|
|
|
143
|
|
|
(249
|
)
|
|
389
|
|
|||||
Non-current intercompany receivables
|
|
414
|
|
|
261
|
|
|
8,232
|
|
|
(8,907
|
)
|
|
—
|
|
|||||
Prepaid pension
|
|
—
|
|
|
6
|
|
|
1,054
|
|
|
—
|
|
|
1,060
|
|
|||||
Other non-current assets
|
|
1
|
|
|
35
|
|
|
271
|
|
|
—
|
|
|
307
|
|
|||||
Investment in subsidiary
|
|
8,884
|
|
|
17,909
|
|
|
19
|
|
|
(26,812
|
)
|
|
—
|
|
|||||
Total assets
|
|
$
|
9,565
|
|
|
$
|
22,563
|
|
|
$
|
44,525
|
|
|
$
|
(50,565
|
)
|
|
$
|
26,088
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable and accrued liabilities
|
|
$
|
574
|
|
|
$
|
36
|
|
|
$
|
3,913
|
|
|
$
|
(2,562
|
)
|
|
$
|
1,961
|
|
Short-term debt and current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
299
|
|
|
—
|
|
|
299
|
|
|||||
Fiduciary liabilities
|
|
—
|
|
|
—
|
|
|
9,625
|
|
|
—
|
|
|
9,625
|
|
|||||
Current intercompany payables
|
|
130
|
|
|
11,149
|
|
|
756
|
|
|
(12,035
|
)
|
|
—
|
|
|||||
Other current liabilities
|
|
16
|
|
|
64
|
|
|
790
|
|
|
—
|
|
|
870
|
|
|||||
Total current liabilities
|
|
720
|
|
|
11,249
|
|
|
15,383
|
|
|
(14,597
|
)
|
|
12,755
|
|
|||||
Long-term debt
|
|
4,251
|
|
|
1,415
|
|
|
1
|
|
|
—
|
|
|
5,667
|
|
|||||
Deferred tax liabilities
|
|
—
|
|
|
—
|
|
|
376
|
|
|
(249
|
)
|
|
127
|
|
|||||
Pension, other postretirement and postemployment liabilities
|
|
—
|
|
|
1,391
|
|
|
398
|
|
|
—
|
|
|
1,789
|
|
|||||
Non-current intercompany payables
|
|
—
|
|
|
8,398
|
|
|
509
|
|
|
(8,907
|
)
|
|
—
|
|
|||||
Other non-current liabilities
|
|
11
|
|
|
91
|
|
|
1,000
|
|
|
—
|
|
|
1,102
|
|
|||||
Total liabilities
|
|
4,982
|
|
|
22,544
|
|
|
17,667
|
|
|
(23,753
|
)
|
|
21,440
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Aon shareholders’ equity
|
|
4,583
|
|
|
19
|
|
|
26,793
|
|
|
(26,812
|
)
|
|
4,583
|
|
|||||
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
65
|
|
|||||
Total equity
|
|
4,583
|
|
|
19
|
|
|
26,858
|
|
|
(26,812
|
)
|
|
4,648
|
|
|||||
Total liabilities and equity
|
|
$
|
9,565
|
|
|
$
|
22,563
|
|
|
$
|
44,525
|
|
|
$
|
(50,565
|
)
|
|
$
|
26,088
|
|
|
|
Six months ended June 30, 2018
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash provided by (used for) operating activities - continuing operations
|
|
$
|
(126
|
)
|
|
$
|
582
|
|
|
$
|
759
|
|
|
$
|
(802
|
)
|
|
$
|
413
|
|
Cash provided by operating activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash provided by (used for) operating activities
|
|
(126
|
)
|
|
582
|
|
|
759
|
|
|
(802
|
)
|
|
413
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from investments
|
|
—
|
|
|
13
|
|
|
10
|
|
|
—
|
|
|
23
|
|
|||||
Payments for investments
|
|
(12
|
)
|
|
(17
|
)
|
|
(19
|
)
|
|
12
|
|
|
(36
|
)
|
|||||
Net sales (purchases) of short-term investments - non-fiduciary
|
|
—
|
|
|
296
|
|
|
56
|
|
|
—
|
|
|
352
|
|
|||||
Acquisition of businesses, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
|
|
|
(50
|
)
|
|||||
Sale of businesses, net of cash sold
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
(111
|
)
|
|||||
Cash provided by (used for) investing activities - continuing operations
|
|
(12
|
)
|
|
292
|
|
|
(113
|
)
|
|
12
|
|
|
179
|
|
|||||
Cash used for investing activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash provided by (used for) investing activities
|
|
(12
|
)
|
|
292
|
|
|
(113
|
)
|
|
12
|
|
|
179
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share repurchase
|
|
(971
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(971
|
)
|
|||||
Advances from (to) affiliates
|
|
965
|
|
|
(810
|
)
|
|
(395
|
)
|
|
240
|
|
|
—
|
|
|||||
Issuance of shares for employee benefit plans
|
|
(150
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(150
|
)
|
|||||
Issuance of debt
|
|
752
|
|
|
1,800
|
|
|
—
|
|
|
—
|
|
|
2,552
|
|
|||||
Repayment of debt
|
|
(272
|
)
|
|
(1,461
|
)
|
|
(294
|
)
|
|
—
|
|
|
(2,027
|
)
|
|||||
Cash dividends to shareholders
|
|
(187
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(187
|
)
|
|||||
Noncontrolling interests and other financing activities
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||
Cash provided by (used for) financing activities - continuing operations
|
|
137
|
|
|
(471
|
)
|
|
(704
|
)
|
|
240
|
|
|
(798
|
)
|
|||||
Cash used for financing activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash provided by (used for) financing activities
|
|
137
|
|
|
(471
|
)
|
|
(704
|
)
|
|
240
|
|
|
(798
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rates on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
(63
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
|
(1
|
)
|
|
403
|
|
|
(121
|
)
|
|
(550
|
)
|
|
(269
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
|
1
|
|
|
2,524
|
|
|
793
|
|
|
(2,562
|
)
|
|
756
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
2,927
|
|
|
$
|
672
|
|
|
$
|
(3,112
|
)
|
|
$
|
487
|
|
|
|
Six months ended June 30, 2017
|
||||||||||||||||||
(millions)
|
|
Aon plc
|
|
Aon Corporation
|
|
Other Non-Guarantor Subsidiaries
|
|
Consolidating Adjustments
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash provided by (used for) operating activities - continuing operations
|
|
$
|
(118
|
)
|
|
$
|
999
|
|
|
$
|
1,056
|
|
|
$
|
(1,501
|
)
|
|
$
|
436
|
|
Cash provided by operating activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
64
|
|
|||||
Cash provided by (used for) operating activities
|
|
(118
|
)
|
|
999
|
|
|
1,120
|
|
|
(1,501
|
)
|
|
500
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from investments
|
|
—
|
|
|
567
|
|
|
6
|
|
|
(544
|
)
|
|
29
|
|
|||||
Payments for investments
|
|
(16
|
)
|
|
(15
|
)
|
|
(558
|
)
|
|
557
|
|
|
(32
|
)
|
|||||
Net sales (purchases) of short-term investments - non-fiduciary
|
|
—
|
|
|
(2,440
|
)
|
|
(11
|
)
|
|
—
|
|
|
(2,451
|
)
|
|||||
Acquisition of businesses, net of cash acquired
|
|
—
|
|
|
2
|
|
|
(151
|
)
|
|
—
|
|
|
(149
|
)
|
|||||
Sale of businesses, net of cash sold
|
|
—
|
|
|
—
|
|
|
4,193
|
|
|
—
|
|
|
4,193
|
|
|||||
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
|
—
|
|
|
(82
|
)
|
|||||
Cash provided by (used for) investing activities - continuing operations
|
|
(16
|
)
|
|
(1,886
|
)
|
|
3,397
|
|
|
13
|
|
|
1,508
|
|
|||||
Cash used for investing activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|||||
Cash provided by (used for) investing activities
|
|
(16
|
)
|
|
(1,886
|
)
|
|
3,378
|
|
|
13
|
|
|
1,489
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Share repurchase
|
|
(1,100
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,100
|
)
|
|||||
Advances from (to) affiliates
|
|
1,846
|
|
|
1,977
|
|
|
(4,381
|
)
|
|
558
|
|
|
—
|
|
|||||
Issuance of shares for employee benefit plans
|
|
(139
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(139
|
)
|
|||||
Issuance of debt
|
|
544
|
|
|
1,102
|
|
|
5
|
|
|
—
|
|
|
1,651
|
|
|||||
Repayment of debt
|
|
(835
|
)
|
|
(1,150
|
)
|
|
(5
|
)
|
|
—
|
|
|
(1,990
|
)
|
|||||
Cash dividends to shareholders
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
|||||
Noncontrolling interests and other financing activities
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|||||
Cash provided by (used for) financing activities - continuing operations
|
|
134
|
|
|
1,929
|
|
|
(4,391
|
)
|
|
558
|
|
|
(1,770
|
)
|
|||||
Cash used for financing activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash provided by (used for) financing activities
|
|
134
|
|
|
1,929
|
|
|
(4,391
|
)
|
|
558
|
|
|
(1,770
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rates on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
|
—
|
|
|
1,042
|
|
|
141
|
|
|
(930
|
)
|
|
253
|
|
|||||
Cash and cash equivalents at beginning of period
|
|
—
|
|
|
1,633
|
|
|
660
|
|
|
(1,862
|
)
|
|
431
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
2,675
|
|
|
$
|
801
|
|
|
$
|
(2,792
|
)
|
|
$
|
684
|
|
(1)
|
Includes
$5 million
of discontinued operations at December 31, 2016.
|
•
|
For the
second
quarter of
2018
, revenue
increased
8%
, or
$193 million
, to
$2.6 billion
compared to the prior year period due primarily to organic revenue growth of
5%
, a
3%
increase related to acquisitions, net of divestitures, and a
2%
favorable impact from foreign currency exchange rates. For the six months ended June 30,
2018
, revenue
increased
19%
, or
$902 million
, to
$5,651 million
compared to the prior year period due primarily to a
8%
increase related to the adoption of the new revenue recognition standard in 2018, organic revenue growth of
4%
, a
4%
favorable impact from foreign currency exchange rates, and a
3%
increase related to acquisitions, net of divestitures.
|
•
|
Operating expenses for the
second
quarter of
2018
were
$2.6 billion
, an increase of
$82 million
compared to the prior year period. The increase was due primarily to a
$176 million
non-cash impairment charge related to certain assets and liabilities classified as held for sale, a
$103 million
increase in expense related to legacy litigation, a
$72 million
increase in operating expenses related to acquisitions, net of divestitures, a
$44 million
unfavorable impact from foreign currency translation, a
$40 million
increase in restructuring charges, an $11 million increase related to the adoption of the new revenue recognition standard in 2018, and an increase in expense associated with
5%
organic revenue growth, partially offset by a
$380 million
decrease in non-cash impairment charges to the tradenames associated with the sale of the Divested Business,
$40 million
of incremental savings related to restructuring and other operational improvement initiatives, and a
$34 million
decrease of costs related to regulatory and compliance matters. Operating expenses for the first six months of
2018
increased $
327 million
compared to the prior year period primarily due to a
$176 million
non-cash impairment charge related to certain assets and liabilities classified as held for sale, a
$143 million
unfavorable impact from foreign currency translation, a
$138 million
increase in expense associated with acquisitions, net of divestitures, a
$103 million
increase in expense related to legacy litigation, a
$76 million
increase related to the adoption of the new revenue recognition standard in 2018,
$73 million
of accelerated amortization related to tradenames, and an increase in expense associated with
4%
organic revenue growth, partially offset by
$380 million
decrease in non-cash impairment charges to the tradenames associated with the sale of the Divested Business,
$92 million
of incremental savings related to restructuring and other operational improvement initiatives, a
$34 million
decrease of costs related to regulatory and compliance matters, and a
$30 million
decrease in restructuring charges.
|
•
|
Operating margin
increased
to
(0.6)%
in the
second
quarter of
2018
from
(5.4)%
in the prior year period, including a decrease of 30 basis points resulting from adoption of the new revenue recognition standard in 2018. The underlying
increase
was driven by organic revenue growth of
5%
and strong core operational improvement, partially offset by an increase in expense due to the factors listed above. Operating margin for the first six months of
2018
increase
d to
13.9%
from
4.4%
in the prior year period, including an increase of 530 basis points resulting from the adoption of the new revenue recognition standard in 2018. The increase from the prior year period was driven by organic revenue growth of
4%
and strong core operational improvement, partially offset by an increase in expense due to the factors listed above.
|
•
|
Due to the factors set forth above, net income from continuing operations
increased
$100 million
, or
233%
, to
$57 million
for the
second
quarter of
2018
compared to the prior year period. During the first six months of
2018
, net income from continuing operations
increased
$
439 million
, or
198%
, to $
661 million
compared to the first six months of 2017.
|
•
|
Diluted earnings per share from continuing operations was
$0.19
per share for the
second
quarter of
2018
compared to
$(0.20)
per share for the prior year period, including a decrease of
$0.02
per share resulting from the adoption of the new revenue recognition standard. During the first six months of
2018
, diluted earnings per share from continuing operations was
$2.55
per share compared to
$0.75
per share for the prior year period, including an increase of
$1.05
per share resulting from the adoption of the new revenue recognition standard.
|
•
|
Cash flow
provided by
operating activities was
$413 million
for the first
six
months of
2018
,
a decrease
of
$23 million
from the prior year period. The
decrease
was driven primarily by a
$67 million
increase in cash restructuring payments, partially offset by operational improvement.
|
•
|
Organic revenue growth, a non-GAAP measure defined under the caption “Review of Consolidated Results — Organic Revenue Growth,” was
5%
for the
second
quarter of
2018
, compared to 3% in the prior year period. Organic revenue growth was
4%
for the first six months of
2018
, consistent with 4% in the prior year period.
|
•
|
Adjusted operating margin, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Operating Margin,” was
22.0%
for the
second
quarter of
2018
compared to
22.0%
in the prior year period. For the first six months of
2018
, adjusted operating margin was
27.4%
compared to
22.0%
for the prior year period. The increase primarily reflects incremental restructuring savings and strong core performance.
|
•
|
Adjusted diluted earnings per share from continuing operations, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Diluted Earnings per Share,” was
$1.71
per share for the
second
quarter of
2018
and
$4.69
in the first six months of 2018, compared to
$1.45
per share and
$2.90
per share for the respective prior year periods.
|
•
|
Free cash flow, a non-GAAP measure defined under the caption “Review of Consolidated Results — Free Cash Flow,”
decreased
in the first
six
months of
2018
by
$52 million
, or
15%
, from the prior year period, to
$302 million
, driven by
an increase
of
$29 million
in capital expenditures, including investments in our operating model and
a decrease
of
$23 million
in cash flow from operations.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2018
|
|
June 30, 2017
|
|
June 30, 2018
|
|
June 30, 2017
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue
|
|
$
|
2,561
|
|
|
$
|
2,368
|
|
|
$
|
5,651
|
|
|
$
|
4,749
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits
|
|
1,494
|
|
|
1,466
|
|
|
3,110
|
|
|
2,935
|
|
||||
Information technology
|
|
123
|
|
|
98
|
|
|
238
|
|
|
186
|
|
||||
Premises
|
|
96
|
|
|
86
|
|
|
189
|
|
|
170
|
|
||||
Depreciation of fixed assets
|
|
47
|
|
|
54
|
|
|
86
|
|
|
108
|
|
||||
Amortization and impairment of intangible assets
|
|
282
|
|
|
460
|
|
|
392
|
|
|
503
|
|
||||
Other general expenses
|
|
535
|
|
|
331
|
|
|
853
|
|
|
639
|
|
||||
Total operating expenses
|
|
2,577
|
|
|
2,495
|
|
|
4,868
|
|
|
4,541
|
|
||||
Operating income (loss)
|
|
(16
|
)
|
|
(127
|
)
|
|
783
|
|
|
208
|
|
||||
Interest income
|
|
1
|
|
|
8
|
|
|
5
|
|
|
10
|
|
||||
Interest expense
|
|
(69
|
)
|
|
(71
|
)
|
|
(139
|
)
|
|
(141
|
)
|
||||
Other income (expense)
|
|
(3
|
)
|
|
4
|
|
|
(18
|
)
|
|
2
|
|
||||
Income (loss) from continuing operations before income taxes
|
|
(87
|
)
|
|
(186
|
)
|
|
631
|
|
|
79
|
|
||||
Income tax benefit
|
|
(144
|
)
|
|
(143
|
)
|
|
(30
|
)
|
|
(143
|
)
|
||||
Net income (loss) from continuing operations
|
|
57
|
|
|
(43
|
)
|
|
661
|
|
|
222
|
|
||||
Income from discontinued operations, net of tax
|
|
1
|
|
|
821
|
|
|
7
|
|
|
861
|
|
||||
Net income
|
|
58
|
|
|
778
|
|
|
668
|
|
|
1,083
|
|
||||
Less: Net income attributable to noncontrolling interests
|
|
10
|
|
|
9
|
|
|
26
|
|
|
23
|
|
||||
Net income attributable to Aon shareholders
|
|
$
|
48
|
|
|
$
|
769
|
|
|
$
|
642
|
|
|
$
|
1,060
|
|
Diluted net income (loss) per share attributable to Aon shareholders
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.19
|
|
|
$
|
(0.20
|
)
|
|
$
|
2.55
|
|
|
$
|
0.75
|
|
Discontinued operations
|
|
—
|
|
|
3.13
|
|
|
0.03
|
|
|
3.24
|
|
||||
Net income
|
|
$
|
0.19
|
|
|
$
|
2.93
|
|
|
$
|
2.58
|
|
|
$
|
3.99
|
|
Weighted average ordinary shares outstanding - diluted
|
|
247.4
|
|
|
262.4
|
|
|
248.8
|
|
|
265.7
|
|
•
|
The geographical distribution of income including restructuring charges and legacy litigation as well as the impairment of certain assets and liabilities classified as held for sale.
|
•
|
Certain discrete items including the net tax benefit associated with the anticipated sale of certain assets and liabilities classified as held for sale, the impact of share-based payments, changes in uncertain tax positions, and the deferred remeasurement related to the anticipated acceleration of contributions to the qualified U.S. pension plan.
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
June 30, 2018
|
|
June 30, 2017
|
|
% Change
|
|
Revenue Recognition
(1)
|
|
Less: Currency Impact
(2)
|
|
Less: Fiduciary Investment Income
(3)
|
|
Less: Acquisitions, Divestitures & Other
|
|
Organic Revenue Growth
(4)
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial Risk Solutions
|
|
$
|
1,166
|
|
|
$
|
1,042
|
|
|
12
|
%
|
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
|
4
|
%
|
|
6
|
%
|
Reinsurance Solutions
|
|
380
|
|
|
344
|
|
|
10
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
(1
|
)
|
|
8
|
|
||
Retirement Solutions
|
|
431
|
|
|
389
|
|
|
11
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
5
|
|
|
3
|
|
||
Health Solutions
|
|
309
|
|
|
312
|
|
|
(1
|
)
|
|
(11
|
)
|
|
1
|
|
|
—
|
|
|
2
|
|
|
7
|
|
||
Data & Analytic Services
|
|
277
|
|
|
285
|
|
|
(3
|
)
|
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
2
|
|
|
(4
|
)
|
||
Elimination
|
|
(2
|
)
|
|
(4
|
)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||
Total revenue
|
|
$
|
2,561
|
|
|
$
|
2,368
|
|
|
8
|
%
|
|
(2
|
)%
|
|
2
|
%
|
|
—
|
%
|
|
3
|
%
|
|
5
|
%
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Jun 30, 2018
|
|
Jun 30, 2017
|
|
% Change
|
|
Revenue Recognition
(1)
|
|
Less: Currency Impact
(2)
|
|
Less: Fiduciary Investment Income
(3)
|
|
Less: Acquisitions, Divestitures & Other
|
|
Organic Revenue Growth
(4)
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial Risk Solutions
|
|
$
|
2,350
|
|
|
$
|
2,026
|
|
|
16
|
%
|
|
—
|
%
|
|
4
|
%
|
|
—
|
%
|
|
7
|
%
|
|
5
|
%
|
Reinsurance Solutions
|
|
1,122
|
|
|
715
|
|
|
57
|
|
|
47
|
|
|
3
|
|
|
—
|
|
|
1
|
|
|
6
|
|
||
Retirement Solutions
|
|
855
|
|
|
775
|
|
|
10
|
|
|
(1
|
)
|
|
4
|
|
|
—
|
|
|
6
|
|
|
1
|
|
||
Health Solutions
|
|
760
|
|
|
684
|
|
|
11
|
|
|
4
|
|
|
3
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||
Data & Analytic Services
|
|
571
|
|
|
553
|
|
|
3
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
||
Elimination
|
|
(7
|
)
|
|
(4
|
)
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
||
Total revenue
|
|
$
|
5,651
|
|
|
$
|
4,749
|
|
|
19
|
%
|
|
8
|
%
|
|
4
|
%
|
|
—
|
%
|
|
3
|
%
|
|
4
|
%
|
(1)
|
Revenue Recognition represents the impact of Aon’s adoption of new revenue recognition standard, effective for Aon in the first quarter of 2018.
|
(2)
|
Currency impact is determined by translating prior period's revenue at this period's foreign exchange rates.
|
(3)
|
Fiduciary investment income for the three months ended
June 30, 2018
and
2017
, respectively, was
$12 million
and
$7 million
. Fiduciary investment income for the six months ended
June 30, 2018
and
2017
, respectively, was
$22 million
and
$13 million
.
|
(4)
|
Organic revenue growth includes the impact of intercompany activity and excludes the impact of the adoption of the new revenue recognition standard, changes in foreign exchange rates, acquisitions, divestitures, transfers between business units, and fiduciary investment income.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
2018 |
|
June 30,
2017 |
|
June 30,
2018 |
|
June 30,
2017 |
||||||||
Revenue from continuing operations
|
|
$
|
2,561
|
|
|
$
|
2,368
|
|
|
$
|
5,651
|
|
|
$
|
4,749
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income from continuing operations - as reported
|
|
$
|
(16
|
)
|
|
$
|
(127
|
)
|
|
$
|
783
|
|
|
$
|
208
|
|
Amortization and impairment of intangible assets
|
|
282
|
|
|
460
|
|
|
392
|
|
|
503
|
|
||||
Restructuring
|
|
195
|
|
|
155
|
|
|
269
|
|
|
299
|
|
||||
Legacy Litigation
|
|
103
|
|
|
—
|
|
|
103
|
|
|
—
|
|
||||
Regulatory and compliance matters
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
||||
Operating income from continuing operations - as adjusted
|
|
$
|
564
|
|
|
$
|
522
|
|
|
$
|
1,547
|
|
|
$
|
1,044
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating margin from continuing operations - as reported
|
|
(0.6
|
)%
|
|
(5.4
|
)%
|
|
13.9
|
%
|
|
4.4
|
%
|
||||
Operating margin from continuing operations - as adjusted
|
|
22.0
|
%
|
|
22.0
|
%
|
|
27.4
|
%
|
|
22.0
|
%
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
|
|
|
|
|
Non-GAAP
|
||||||
|
|
U.S. GAAP
|
|
Adjustments
|
|
Adjusted
|
||||||
Operating income from continuing operations
|
|
$
|
(16
|
)
|
|
$
|
580
|
|
|
$
|
564
|
|
Interest income
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Interest expense
|
|
(69
|
)
|
|
—
|
|
|
(69
|
)
|
|||
Other income (expense)
(1)
|
|
(3
|
)
|
|
16
|
|
|
13
|
|
|||
Income before income taxes from continuing operations
|
|
(87
|
)
|
|
596
|
|
|
509
|
|
|||
Income taxes
(2)
|
|
(144
|
)
|
|
219
|
|
|
75
|
|
|||
Net income from continuing operations
|
|
57
|
|
|
377
|
|
|
434
|
|
|||
Income from discontinued operations, net of tax
(3)
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Net income
|
|
58
|
|
|
376
|
|
|
434
|
|
|||
Less: Net income attributable to noncontrolling interests
|
|
10
|
|
|
—
|
|
|
10
|
|
|||
Net income attributable to Aon shareholders
|
|
$
|
48
|
|
|
$
|
376
|
|
|
$
|
424
|
|
|
|
|
|
|
|
|
||||||
Diluted net income (loss) per share attributable to Aon shareholders
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
0.19
|
|
|
$
|
1.52
|
|
|
$
|
1.71
|
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
|
$
|
0.19
|
|
|
$
|
1.52
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
||||||
Weighted average ordinary shares outstanding - diluted
|
|
247.4
|
|
|
—
|
|
|
247.4
|
|
|||
Effective Tax Rates
(3)
|
|
|
|
|
|
|
||||||
Continuing Operations - U.S. GAAP
|
|
165.5
|
%
|
|
|
|
14.7
|
%
|
||||
Discontinued Operations - U.S. GAAP
|
|
1.7
|
%
|
|
|
|
63.7
|
%
|
|
|
Three Months Ended June 30, 2017
|
||||||||||
|
|
|
|
|
|
Non-GAAP
|
||||||
|
|
U.S. GAAP
|
|
Adjustments
|
|
Adjusted
|
||||||
Operating income from continuing operations
|
|
$
|
(127
|
)
|
|
$
|
649
|
|
|
$
|
522
|
|
Interest income
|
|
8
|
|
|
—
|
|
|
8
|
|
|||
Interest expense
|
|
(71
|
)
|
|
—
|
|
|
(71
|
)
|
|||
Other income (expense)
|
|
4
|
|
|
—
|
|
|
4
|
|
|||
Income before income taxes from continuing operations
|
|
(186
|
)
|
|
649
|
|
|
463
|
|
|||
Income taxes
(2)
|
|
(143
|
)
|
|
215
|
|
|
72
|
|
|||
Net income from continuing operations
|
|
(43
|
)
|
|
434
|
|
|
391
|
|
|||
Income from discontinued operations, net of tax
(3)
|
|
821
|
|
|
(799
|
)
|
|
22
|
|
|||
Net income
|
|
778
|
|
|
(365
|
)
|
|
413
|
|
|||
Less: Net income attributable to noncontrolling interests
|
|
9
|
|
|
—
|
|
|
9
|
|
|||
Net income attributable to Aon shareholders
|
|
$
|
769
|
|
|
$
|
(365
|
)
|
|
$
|
404
|
|
|
|
|
|
|
|
|
||||||
Diluted net income (loss) per share attributable to Aon shareholders
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
(0.20
|
)
|
|
$
|
1.65
|
|
|
$
|
1.45
|
|
Discontinued operations
|
|
3.13
|
|
|
(3.05
|
)
|
|
0.08
|
|
|||
Net income
|
|
$
|
2.93
|
|
|
$
|
(1.40
|
)
|
|
$
|
1.53
|
|
|
|
|
|
|
|
|
||||||
Weighted average ordinary shares outstanding - diluted
|
|
262.4
|
|
|
1.9
|
|
|
264.3
|
|
|||
Effective Tax Rates
(3)
|
|
|
|
|
|
|
||||||
Continuing Operations - U.S. GAAP
|
|
76.9
|
%
|
|
|
|
15.6
|
%
|
||||
Discontinued Operations - U.S. GAAP
|
|
59.0
|
%
|
|
|
|
16.2
|
%
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
|
|
|
|
|
Non-GAAP
|
||||||
|
|
U.S. GAAP
|
|
Adjustments
|
|
Adjusted
|
||||||
Operating income from continuing operations
|
|
$
|
783
|
|
|
$
|
764
|
|
|
$
|
1,547
|
|
Interest income
|
|
5
|
|
|
—
|
|
|
5
|
|
|||
Interest expense
|
|
(139
|
)
|
|
—
|
|
|
(139
|
)
|
|||
Other income (expense)
(1)
|
|
(18
|
)
|
|
23
|
|
|
5
|
|
|||
Income before income taxes from continuing operations
|
|
631
|
|
|
787
|
|
|
1,418
|
|
|||
Income taxes
(2)
|
|
(30
|
)
|
|
255
|
|
|
225
|
|
|||
Net income from continuing operations
|
|
661
|
|
|
532
|
|
|
1,193
|
|
|||
Income from discontinued operations, net of tax
(3)
|
|
7
|
|
|
(9
|
)
|
|
(2
|
)
|
|||
Net income
|
|
668
|
|
|
523
|
|
|
1,191
|
|
|||
Less: Net income attributable to noncontrolling interests
|
|
26
|
|
|
—
|
|
|
26
|
|
|||
Net income attributable to Aon shareholders
|
|
$
|
642
|
|
|
$
|
523
|
|
|
$
|
1,165
|
|
|
|
|
|
|
|
|
||||||
Diluted net income (loss) per share attributable to Aon shareholders
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
2.55
|
|
|
$
|
2.14
|
|
|
$
|
4.69
|
|
Discontinued operations
|
|
0.03
|
|
|
(0.04
|
)
|
|
(0.01
|
)
|
|||
Net income
|
|
$
|
2.58
|
|
|
$
|
2.10
|
|
|
$
|
4.68
|
|
|
|
|
|
|
|
|
||||||
Weighted average ordinary shares outstanding - diluted
|
|
248.8
|
|
|
—
|
|
|
248.8
|
|
|||
Effective Tax Rates
(3)
|
|
|
|
|
|
|
||||||
Continuing Operations - U.S. GAAP
|
|
(4.8
|
)%
|
|
|
|
15.9
|
%
|
||||
Discontinued Operations - U.S. GAAP
|
|
14.7
|
%
|
|
|
|
49.3
|
%
|
|
|
Six Months Ended June 30, 2017
|
||||||||||
|
|
|
|
|
|
Non-GAAP
|
||||||
|
|
U.S. GAAP
|
|
Adjustments
|
|
Adjusted
|
||||||
Operating income from continuing operations
|
|
$
|
208
|
|
|
$
|
836
|
|
|
$
|
1,044
|
|
Interest income
|
|
10
|
|
|
—
|
|
|
10
|
|
|||
Interest expense
|
|
(141
|
)
|
|
—
|
|
|
(141
|
)
|
|||
Other income (expense)
|
|
2
|
|
|
—
|
|
|
2
|
|
|||
Income before income taxes from continuing operations
|
|
79
|
|
|
836
|
|
|
915
|
|
|||
Income taxes
(2)
|
|
(143
|
)
|
|
265
|
|
|
122
|
|
|||
Net income from continuing operations
|
|
222
|
|
|
571
|
|
|
793
|
|
|||
Income from discontinued operations, net of tax
(3)
|
|
861
|
|
|
(791
|
)
|
|
70
|
|
|||
Net income
|
|
1,083
|
|
|
(220
|
)
|
|
863
|
|
|||
Less: Net income attributable to noncontrolling interests
|
|
23
|
|
|
—
|
|
|
23
|
|
|||
Net income attributable to Aon shareholders
|
|
$
|
1,060
|
|
|
$
|
(220
|
)
|
|
$
|
840
|
|
|
|
|
|
|
|
|
||||||
Diluted net income (loss) per share attributable to Aon shareholders
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
0.75
|
|
|
$
|
2.15
|
|
|
$
|
2.90
|
|
Discontinued operations
|
|
3.24
|
|
|
(2.98
|
)
|
|
0.26
|
|
|||
Net income
|
|
$
|
3.99
|
|
|
$
|
(0.83
|
)
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
||||||
Weighted average ordinary shares outstanding - diluted
|
|
265.7
|
|
|
—
|
|
|
265.7
|
|
|||
Effective Tax Rates
(3)
|
|
|
|
|
|
|
||||||
Continuing Operations - U.S. GAAP
|
|
(181.0
|
)%
|
|
|
|
13.3
|
%
|
||||
Discontinued Operations - U.S. GAAP
|
|
58.1
|
%
|
|
|
|
25.9
|
%
|
(1)
|
Adjusted Other income (expense) excludes Pension settlement charges of
$16 million
for the three months ended
June 30, 2018
and
$23 million
for the six months ended
June 30, 2018
.
|
(2)
|
Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated Restructuring Plan expenses, legacy litigation, accelerated tradename amortization, impairment charges and non-cash pension settlement charges, which are adjusted at the related jurisdictional rates. In addition, tax expense excludes the tax impacts of the anticipated sale of the disposal group as well as adjustments to the provisional estimates of the impact of US Tax Reform recorded pursuant to SAB 118.
|
(3)
|
Adjusted income from discontinued operations, net of tax, excludes the gain on sale of discontinued operations of
$1 million
and
$9 million
for the
three and six
months ended
June 30, 2018
, respectively. Adjusted income from discontinued operations, net of tax, excludes the gain on sale of discontinued operations of
$798 million
and
$798 million
and
$0 million
and
$11 million
of intangible asset amortization for the
three and six
months ended
June 30, 2017
, respectively. The effective tax rate was further adjusted for the applicable tax impact associated with the gain on sale and intangible asset amortization, as applicable.
|
|
|
Six Months Ended
|
||||||
|
|
June 30, 2018
|
|
June 30, 2017
|
||||
Cash Provided by Continuing Operating Activities
|
|
$
|
413
|
|
|
$
|
436
|
|
Capital Expenditures Used for Continuing Operations
|
|
(111
|
)
|
|
(82
|
)
|
||
Free Cash Flow Provided By Continuing Operations
|
|
$
|
302
|
|
|
$
|
354
|
|
|
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
|
$
|
487
|
|
|
$
|
—
|
|
|
$
|
2,303
|
|
|
$
|
2,790
|
|
Money market funds
|
—
|
|
|
173
|
|
|
1,536
|
|
|
1,709
|
|
||||
Cash and short-term investments
|
487
|
|
|
173
|
|
|
3,839
|
|
|
4,499
|
|
||||
Fiduciary receivables
|
—
|
|
|
—
|
|
|
6,637
|
|
|
6,637
|
|
||||
Total
|
$
|
487
|
|
|
$
|
173
|
|
|
$
|
10,476
|
|
|
$
|
11,136
|
|
|
|
Six Months Ended
|
||||||
|
|
June 30,
2018 |
|
June 30,
2017 |
||||
Cash provided by operating activities - continuing operations
|
|
$
|
413
|
|
|
$
|
436
|
|
Cash provided by investing activities - continuing operations
|
|
$
|
179
|
|
|
$
|
1,508
|
|
Cash used for financing activities - continuing operations
|
|
$
|
(798
|
)
|
|
$
|
(1,770
|
)
|
Net cash flows from discontinued operations
|
|
$
|
—
|
|
|
$
|
45
|
|
Effect of exchange rates changes on cash and cash equivalents
|
|
$
|
(63
|
)
|
|
$
|
34
|
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
|
Inception to Date
|
|
Estimated Remaining Costs
|
|
Estimated Total Cost
(1)
|
||||||||||
Workforce reduction
|
|
$
|
33
|
|
|
$
|
66
|
|
|
$
|
365
|
|
|
$
|
55
|
|
|
$
|
420
|
|
Technology rationalization
(2)
|
|
8
|
|
|
18
|
|
|
51
|
|
|
79
|
|
|
130
|
|
|||||
Lease consolidation
(2)
|
|
10
|
|
|
13
|
|
|
21
|
|
|
39
|
|
|
60
|
|
|||||
Asset impairments
|
|
8
|
|
|
9
|
|
|
35
|
|
|
5
|
|
|
40
|
|
|||||
Other costs associated with restructuring and separation
(2) (3)
|
|
136
|
|
|
163
|
|
|
294
|
|
|
81
|
|
|
375
|
|
|||||
Total restructuring and related expenses
|
|
$
|
195
|
|
|
$
|
269
|
|
|
$
|
766
|
|
|
$
|
259
|
|
|
$
|
1,025
|
|
(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)
|
Total contract termination costs incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, for the three months ended
June 30, 2018
were
$0 million
,
$10 million
, and
$75 million
; for the
six
months ended
June 30, 2018
were
$1 million
,
$12 million
, and
$79 million
; and since inception of the Restructuring Plan were
$2 million
,
$20 million
, and
$82 million
. Total estimated contract termination costs expected to be incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, are
$15 million
,
$80 million
, and
$82 million
.
|
(3)
|
Other costs associated with the Restructuring Plan include those to separate the Divested Business, as well as moving costs and consulting and legal fees. These costs are generally recognized when incurred.
|
|
|
Restructuring Plan
|
||
Balance as of December 31, 2017
|
|
$
|
186
|
|
Expensed
|
|
260
|
|
|
Cash payments
|
|
(248
|
)
|
|
Foreign currency translation and other
|
|
(2
|
)
|
|
Balance as of June 30, 2018
|
|
$
|
196
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
2018
|
|
2017
(1)
|
|
2018
|
|
2017
(1)
|
||||||||
Shares repurchased
|
2.8
|
|
|
8.0
|
|
|
6.7
|
|
|
9.1
|
|
||||
Average price per share
|
$
|
141
|
|
|
$
|
129
|
|
|
$
|
141
|
|
|
$
|
127
|
|
Costs recorded to retained earnings:
|
|
|
|
|
|
|
|
||||||||
Total repurchase cost
|
$
|
400
|
|
|
$
|
1,030
|
|
|
$
|
950
|
|
|
$
|
1,154
|
|
Additional associated costs
|
2
|
|
|
5
|
|
|
5
|
|
|
6
|
|
||||
Total costs recorded to retained earnings
|
$
|
402
|
|
|
$
|
1,035
|
|
|
$
|
955
|
|
|
$
|
1,160
|
|
(1)
|
Included in the
8.0 million
shares and
9.1 million
shares repurchased during the three and six months ended
June 30, 2017
, respectively, were
0.5 million
shares that did not settle until July 2017. These shares were settled at an average price per share of
$133.24
and total cost of
$60 million
.
|
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total issuances
(1)
|
|
$
|
1,746
|
|
|
$
|
654
|
|
|
$
|
2,551
|
|
|
$
|
1,648
|
|
Total repayments
|
|
$
|
(1,321
|
)
|
|
$
|
(1,050
|
)
|
|
$
|
(1,732
|
)
|
|
$
|
(1,997
|
)
|
Net issuances
|
|
$
|
425
|
|
|
$
|
(396
|
)
|
|
$
|
819
|
|
|
$
|
(349
|
)
|
(1)
|
The proceeds of the commercial paper issuances were used primarily for short-term working capital needs.
|
|
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
|
•
|
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;
|
•
|
volatility in our tax rate due to a variety of different factors including U.S. federal income tax reform;
|
•
|
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 investment consulting and other advisory services, among others, that we currently provide, or will provide in the future, to clients;
|
•
|
our ability to continue, and the costs and risks 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;
|
•
|
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, including arrangements under the transition service agreement and legacy IT systems associated with the Divested Business; and
|
•
|
our ability to realize the expected benefits from our restructuring plan.
|
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)
|
||||||
4/1/18 - 4/30/18
|
|
716,285
|
|
|
$
|
141.87
|
|
|
716,285
|
|
|
$
|
4,768,497,989
|
|
5/1/18 - 5/31/18
|
|
1,458,981
|
|
|
$
|
141.51
|
|
|
1,458,981
|
|
|
$
|
4,562,037,700
|
|
6/1/18 - 6/30/18
|
|
656,960
|
|
|
$
|
139.92
|
|
|
656,960
|
|
|
$
|
4,470,117,657
|
|
|
|
2,832,226
|
|
|
$
|
141.23
|
|
|
2,832,226
|
|
|
$
|
4,470,117,657
|
|
(1)
|
Does not include commissions or other costs paid to repurchase shares.
|
(2)
|
The Repurchase Program was established in April 2012 with up to $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014 and February 2017 for a total of $15.0 billion in repurchase authorizations.
|
|
Aon plc
|
|
|
(Registrant)
|
|
|
|
|
July 27, 2018
|
By:
|
/s/ Michael Neller
|
|
Michael Neller
|
|
|
SENIOR VICE PRESIDENT AND
|
|
|
GLOBAL CONTROLLER
|
|
|
(Principal Accounting Officer and duly authorized officer of Registrant)
|
Exhibit Number
|
|
Description of Exhibit
|
12.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
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
|
|
|
Six Months Ended June 30
|
|
Years Ended December 31
|
||||||||||||||||||||
(millions except ratio)
|
|
2018
|
|
2017
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Income from continuing operations before income taxes and noncontrolling interests
|
|
$
|
631
|
|
|
$
|
79
|
|
|
$
|
685
|
|
|
$
|
1,401
|
|
|
$
|
1,428
|
|
|
$
|
1,559
|
|
Less: Equity in earnings on less than 50% owned entities
|
|
2
|
|
|
9
|
|
|
12
|
|
|
13
|
|
|
13
|
|
|
12
|
|
||||||
Add back fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on indebtedness
|
|
139
|
|
|
141
|
|
|
282
|
|
|
282
|
|
|
273
|
|
|
255
|
|
||||||
Interest on uncertain tax positions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Portion of rents representative of interest factor
|
|
20
|
|
|
16
|
|
|
33
|
|
|
28
|
|
|
33
|
|
|
40
|
|
||||||
Income as adjusted
|
|
$
|
788
|
|
|
$
|
227
|
|
|
$
|
988
|
|
|
$
|
1,698
|
|
|
$
|
1,721
|
|
|
$
|
1,846
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on indebtedness
|
|
$
|
139
|
|
|
$
|
141
|
|
|
$
|
282
|
|
|
$
|
282
|
|
|
$
|
273
|
|
|
$
|
255
|
|
Interest on uncertain tax positions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Portion of rents representative of interest factor
|
|
20
|
|
|
16
|
|
|
33
|
|
|
28
|
|
|
33
|
|
|
40
|
|
||||||
Total fixed charges
|
|
$
|
159
|
|
|
$
|
157
|
|
|
$
|
315
|
|
|
$
|
310
|
|
|
$
|
306
|
|
|
$
|
299
|
|
Ratio of earnings to fixed charges
|
|
5.0
|
|
|
1.4
|
|
|
3.1
|
|
|
5.5
|
|
|
5.6
|
|
|
6.2
|
|
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:
|
July 27, 2018
|
/s/ GREGORY C. CASE
|
|
|
Gregory C. Case
Chief Executive Officer
|
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:
|
July 27, 2018
|
/s/ CHRISTA DAVIES
|
|
|
Christa Davies
Chief Financial Officer
|
|
/s/ GREGORY C. CASE
|
|
Gregory C. Case
Chief Executive Officer
|
|
July 27, 2018
|
|
/s/ CHRISTA DAVIES
|
|
Christa Davies
Chief Financial Officer
|
|
July 27, 2018
|