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Guarantee of Registered Securities

9 Months Ended

Sep. 30, 2012

18. Guarantee of Registered Securities

As described in Note 15, in connection with the Redomestication, on April 2, 2012, Aon plc (“Parent Guarantor”) entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation (“Subsidiary Issuer”) arising under issued and outstanding debt securities. Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. The debt securities that are subject to Rule 3-10 of Regulation S-X are the 7.375% debt securities due December 2012, the 3.50% senior notes due September 2015, the 3.125% senior notes due May 2016, the 5.00% senior notes due September 2020, the 8.205% junior subordinated deferrable interest debentures due January 2027 and the 6.25% senior notes due September 2040. All guarantees of Aon plc are full and unconditional. There are no subsidiaries of Aon plc that are guarantors of the debt.

The following tables set forth condensed consolidating statements of income for the three and nine months ended September 30, 2012 and 2011, condensed consolidating statements of comprehensive income for the three and nine months ended September 30, 2012 and 2011, condensed consolidating statements of financial position as of September 30, 2012 and December 31, 2011, and condensed consolidating statements of cash flows for the nine months ended September 30, 2012 and 2011 in accordance with Rule 3-10 of Regulation S-X. The condensed consolidating financial information includes the accounts of Aon plc, the accounts of Aon Corporation, and the combined accounts of the non-guarantor subsidiaries. The condensed consolidating financial statements are presented in all periods as a merger under common control, with Aon plc presented as the Parent Guarantor in all periods prior and subsequent to the Redomestication. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions.

Condensed Consolidating Statement of Income

	Three Months Ended September 30, 2012
							Other
	Parent			Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments			Consolidated

Revenue
Commissions, fees and other	$	—		$	—		$	2,726		$	—		$	2,726
Fiduciary investment income	—			—			11			—			11
Total revenue	—			—			2,737			—			2,737

Expenses
Compensation and benefits	34			(11		)	1,597			—			1,620
Other general expenses	19			6			753			—			778
Total operating expenses	53			(5		)	2,350			—			2,398
Operating (loss) income	(53		)	5			387			—			339
Interest income	—			—			1			—			1
Interest expense	—			(44		)	(13		)	—			(57		)
Intercompany interest (expense) income	(8		)	48			(40		)	—			—
Other income (expense)	—			10			(19		)	—			(9		)
(Loss) income from continuing operations before taxes	(61		)	19			316			—			274
Income tax (benefit) expense	(15		)	11			68			—			64
(Loss) income from continuing operations	(46		)	8			248			—			210

Loss from discontinued operations before taxes	—			—			—			—			—
Income taxes	—			—			—			—			—
Loss from discontinued operations	—			—			—			—			—

Equity in earnings of subsidiaries, net of tax	250			209			217			(676		)	—

Net income	204			217			465			(676		)	210
Less: Net income attributable to noncontrolling interests	—			—			6			—			6
Net income attributable to Aon shareholders	$	204		$	217		$	459		$	(676	)	$	204

Condensed Consolidating Statement of Income

	Three Months Ended September 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments			Consolidated

Revenue
Commissions, fees and other	$	—	$	—		$	2,708		$	—		$	2,708
Fiduciary investment income	—		—			15			—			15
Total revenue	—		—			2,723			—			2,723

Expenses
Compensation and benefits	—		(2		)	1,636			—			1,634
Other general expenses	—		20			741			—			761
Total operating expenses	—		18			2,377			—			2,395
Operating (loss) income	—		(18		)	346			—			328
Interest income	—		—			4			—			4
Interest expense	—		(40		)	(20		)	—			(60		)
Intercompany interest income (expense)	—		47			(47		)	—			—
Other income	—		—			20			—			20
(Loss) income from continuing operations before taxes	—		(11		)	303			—			292
Income tax (benefit) expense	—		(3		)	87			—			84
(Loss) income from continuing operations	—		(8		)	216			—			208

Income from discontinued operations before taxes	—		—			—			—			—
Income tax benefit	—		—			—			—			—
Income from discontinued operations	—		—			—			—			—

Equity in earnings of subsidiaries, net of tax	198		174			166			(538		)	—

Net income	198		166			382			(538		)	208
Less: Net income attributable to noncontrolling interests	—		—			10			—			10
Net income attributable to Aon shareholders	$	198	$	166		$	372		$	(538	)	$	198

Condensed Consolidating Statement of Income

	Nine Months Ended September 30, 2012
							Other
	Parent			Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments			Consolidated
Revenue
Commissions, fees and other	$	—		$	—		$	8,368		$	—		$	8,368
Fiduciary investment income	—			—			31			—			31
Total revenue	—			—			8,399			—			8,399

Expenses
Compensation and benefits	18			22			4,880			—			4,920
Other general expenses	21			26			2,297			—			2,344
Total operating expenses	39			48			7,177			—			7,264
Operating (loss) income	(39		)	(48		)	1,222			—			1,135
Interest income	—			1			5			—			6
Interest expense	—			(124		)	(49		)	—			(173		)
Intercompany interest (expense) income	(10		)	140			(130		)	—			—
Other income	—			12			(9		)	—			3
(Loss) income from continuing operations before taxes	(49		)	(19		)	1,039			—			971
Income tax (benefit) expense	—			(4		)	261			—			257
(Loss) income from continuing operations	(49		)	(15		)	778			—			714

Loss from discontinued operations before taxes	—			—			(1		)	—			(1		)
Income taxes	—			—			—			—			—
Loss from discontinued operations	—			—			(1		)	—			(1		)

Equity in earnings of subsidiaries, net of tax	737			662			647			(2,046		)	—

Net income	688			647			1,424			(2,046		)	713
Less: Net income attributable to noncontrolling interest	—			—			25			—			25
Net income attributable to Aon shareholders	$	688		$	647		$	1,399		$	(2,046	)	$	688

Condensed Consolidating Statement of Income

	Nine Months Ended September 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments			Consolidated

Revenue
Commissions, fees and other	$	—	$	—		$	8,255		$	—		$	8,255
Fiduciary investment income	—		2			36			—			38
Total revenue	—		2			8,291			—			8,293

Expenses
Compensation and Benefits	—		(7		)	4,850			—			4,843
Other general expenses	—		40			2,245			—			2,284
Total operating expenses	—		33			7,095			—			7,127
Operating (loss) income	—		(31		)	1,196			—			1,166
Interest income	—		4			10			—			14
Interest expense	—		(131		)	(55		)	—			(186		)
Intercompany interest income (expense)	—		135			(135		)	—			—
Other (expense) income	—		(27		)	33			—			6
(Loss) income from continuing operations before taxes	—		(50		)	1,049			—			1,000
Income tax (benefit) expense	—		(18		)	292			—			274
(Loss) income from continuing operations	—		(32		)	757			—			726

Income from discontinued operations before taxes	—		5			—			—			5
Income tax expense	—		1			—			—			1
Income from discontinued operations	—		4			—			—			4

Equity in earnings of subsidiaries, net of tax	702		628			600			(1,930		)	—

Net income	702		600			1,357			(1,930		)	730
Less: Net income attributable to noncontrolling interests	—		—			28			—			28
Net income attributable to Aon shareholders	$	702	$	600		$	1,329		$	(1,930	)	$	702

Condensed Consolidating Statement of Comprehensive Income

	Three Months Ended September 30, 2012
					Other
	Parent		Subsidiary		Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer		Subsidiaries			Adjustments			Consolidated

Net income	$	204	$	217	$	465		$	(676	)	$	210
Less: Net income attributable to noncontrolling interests	—		—		6			—			6
Net income attributable to Aon shareholders	$	204	$	217	$	459		$	(676	)	$	204
Other comprehensive loss, net of tax:
Change in fair value of derivatives	—		1		14			—			15
Foreign currency translation adjustments	—		17		147			—			164
Post-retirement benefit obligation	—		9		(2		)	—			7
Total other comprehensive income (loss)	—		27		159			—			186
Equity in other comprehensive (loss) income of subsidiaries, net of tax	182		155		182			(519		)	—
Less: Other comprehensive loss attributable to noncontrolling interests	—		—		4			—			4
Total other comprehensive loss attributable to Aon shareholders	182		182		337			(519		)	182
Comprehensive income (loss) attributable to Aon shareholders	$	386	$	399	$	796		$	(1,195	)	$	386

Condensed Consolidating Statement of Comprehensive Income

	Three Months Ended September 30, 2011
							Other
	Parent			Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments			Consolidated

Net income	$	198		$	166		$	382		$	(538	)	$	208
Less: Net income attributable to noncontrolling interests	—			—			10			—			10
Net income attributable to Aon shareholders	$	198		$	166		$	372		$	(538	)	$	198
Other comprehensive income, net of tax:
Change in fair value of derivatives	—			—			(9		)	—			(9		)
Foreign currency translation adjustments	—			(5		)	(204		)	—			(209		)
Post-retirement benefit obligation	—			4			11			—			15
Total other comprehensive (loss) income	—			(1		)	(202		)	—			(203		)
Equity in other comprehensive income (loss) of subsidiaries, net of tax	(202		)	(201		)	(202		)	605			—
Less: Other comprehensive income attributable to noncontrolling interests	—			—			(1		)	—			(1		)
Total other comprehensive income attributable to Aon shareholders	(202		)	(202		)	(403		)	605			(202		)
Comprehensive income attributable to Aon Shareholders	$	(4	)	$	(36	)	$	(31	)	$	67		$	(4	)

Condensed Consolidating Statement of Comprehensive Income

	Nine Months Ended September 30, 2012
(millions)	Parent Guarantor		Subsidiary Issuer		Other Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income	$	688	$	647	$	1,424	$	(2,046	)	$	713
Less: Net income attributable to noncontrolling interests	—		—		25		—			25
Net income attributable to Aon shareholders	$	688	$	647	$	1,399	$	(2,046	)	$	688
Other comprehensive loss, net of tax:
Change in fair value of derivatives	—		1		4		—			5
Foreign currency translation adjustments	—		16		55		—			71
Post-retirement benefit obligation	—		24		22		—			46
Total other comprehensive income (loss)	—		41		81		—			122
Equity in other comprehensive (loss) income of subsidiaries, net of tax	120		78		119		(317		)	—
Less: Other comprehensive loss attributable to noncontrolling interests	—		—		2		—			2
Total other comprehensive loss attributable to Aon shareholders	120		119		198		(317		)	120
Comprehensive income attributable to Aon shareholders	$	808	$	766	$	1,597	$	(2,363	)	$	808

Condensed Consolidating Statement of Comprehensive Income

	Nine Months Ended September 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments			Consolidated

Net income	$	702	$	600		$	1,357		$	(1,930	)	$	730
Less: Net income attributable to noncontrolling interests	—		—			28			—			28
Net income attributable to Aon shareholders	$	702	$	600		$	1,329		$	(1,930	)	$	702
Other comprehensive income, net of tax:
Change in fair value of derivatives	—		(1		)	(13		)	—			(14		)
Foreign currency translation adjustments	—		(9		)	(3		)	—			(12		)
Post-retirement benefit obligation	—		13			29			—			42
Total other comprehensive (loss) income	—		3			13			—			16
Equity in other comprehensive income (loss) of subsidiaries, net of tax	17		12			15			(44		)	—
Less: Other comprehensive income attributable to noncontrolling interests	—		—			(1		)	—			(1		)
Total other comprehensive income attributable to Aon shareholders	17		15			29			(44		)	17
Comprehensive income attributable to Aon shareholders	$	719	$	615		$	1,358		$	(1,974	)	$	719

Condensed Consolidating Statement of Financial Position

	September 30, 2012
					Other
	Parent		Subsidiary		Non-Guarantor		Consolidating
(millions)	Guarantor		Issuer		Subsidiaries		Adjustments			Consolidated
ASSETS

Cash and cash equivalents	$	1	$	58	$	231	$	—		$	290
Short-term investments	16		261		441		—			718
Receivables, net	—		2		2,957		—			2,959
Fiduciary assets	—		—		11,343		—			11,343
Intercompany receivables	—		1,677		2,868		(4,545		)	—
Other current assets	—		41		351		—			392
Total Current Assets	17		2,039		18,191		(4,545		)	15,702
Goodwill	—		—		8,856		—			8,856
Intangible assets, net	—		—		3,040		—			3,040
Fixed assets, net	—		—		814		—			814
Investments	—		41		119		—			160
Intercompany receivables	—		2,240		2,171		(4,411		)	—
Other non-current assets	222		659		56		—			937
Investment in subsidiary	10,797		10,349		8,446		(29,592		)	—
TOTAL ASSETS	$	11,036	$	15,328	$	41,693	$	(38,548	)	$	29,509

LIABILITIES AND EQUITY

Fiduciary liabilities	$	—	$	—	$	11,343	$	—		$	11,343
Short-term debt and current portion of long-term debt	—		268		23		—			291
Accounts payable and accrued liabilities	4		86		1,429		—			1,519
Intercompany payables	34		1,779		1,782		(3,595		)	—
Other current liabilities	—		47		754		—			801
Total Current Liabilities	38		2,180		15,331		(3,595		)	13,954
Long-term debt	—		3,030		1,081		—			4,111
Pension, other post retirement and other post employment liabilities	—		1,167		590		—			1,757
Intercompany payables	2,690		359		2,311		(5,360		)	—
Other non-current liabilities	3		146		1,177		—			1,326
TOTAL LIABILITIES	2,731		6,882		20,490		(8,955		)	21,148

TOTAL AON SHAREHOLDERS’ EQUITY	8,305		8,446		21,146		(29,592		)	8,305
Noncontrolling interests	—		—		56		—			56
TOTAL EQUITY	8,305		8,446		21,202		(29,592		)	8,361

TOTAL LIABILITIES AND EQUITY	$	11,036	$	15,328	$	41,692	$	(38,547	)	$	29,509

Condensed Consolidating Statement of Financial Position

	Dec. 31, 2011
						Other
	Parent		Subsidiary			Non-Guarantor		Consolidating
(millions)	Guarantor		Issuer			Subsidiaries		Adjustments			Consolidated
ASSETS

Cash and cash equivalents	$	—	$	(21	)	$	293	$	—		$	272
Short-term investments	—		321			464		—			785
Receivables, net	—		2			3,181		—			3,183
Fiduciary assets	—		—			10,838		—			10,838
Intercompany receivables	3		610			539		(1,152		)	—
Other current assets	—		57			378		(8		)	427
Total Current Assets	3		969			15,693		(1,160		)	15,505
Goodwill	—		—			8,770		—			8,770
Intangible assets, net	—		—			3,276		—			3,276
Fixed assets, net	—		—			783		—			783
Investments	—		39			200		—			239
Intercompany receivables	—		2,133			2,202		(4,335		)	—
Other non-current assets	—		900			781		(702		)	979
Investment in subsidiary	10,183		9,269			7,714		(27,166		)	—
TOTAL ASSETS	$	10,186	$	13,310		$	39,419	$	(33,363	)	$	29,552

LIABILITIES AND EQUITY

Fiduciary liabilities	$	—	$	—		$	10,838	$	—		$	10,838
Short-term debt and current portion of long-term debt	—		318			19		—			337
Accounts payable and accrued liabilities	—		78			1,758		(4		)	1,832
Intercompany payables	—		206			609		(815		)	—
Other current liabilities	—		5			752		(4		)	753
Total Current Liabilities	—		607			13,976		(823		)	13,760
Long-term debt	—		3,063			1,092		—			4,155
Pension, other post retirement and other post employment liabilities	—		1,407			785		—			2,192
Intercompany payables	2,108		378			2,186		(4,672		)	—
Other non-current liabilities	—		141			1,886		(702		)	1,325
TOTAL LIABILITIES	2,108		5,596			19,925		(6,197		)	21,432

TOTAL AON SHAREHOLDERS’ EQUITY	8,078		7,714			19,452		(27,166		)	8,078
Noncontrolling interests	—		—			42		—			42
TOTAL EQUITY	8,078		7,714			19,494		(27,166		)	8,120

TOTAL LIABILITIES AND EQUITY	$	10,186	$	13,310		$	39,419	$	(33,363	)	$	29,552

Condensed Consolidating Statement of Cash Flows

	Nine Months Ended September 30, 2012
	Parent			Subsidiary			Other Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES

CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	$	(46	)	$	(189	)	$	1,102		$	—	$	867

CASH FLOWS FROM INVESTING ACTIVITIES
Sales of long-term investments	—			79			92			—		171
Purchase of long-term investments	—			(9		)	—			—		(9		)
Net sales of short-term investments - non-fiduciary	(16		)	61			21			—		66
Acquisition of businesses, net of cash acquired	—			(55		)	(42		)	—		(97		)
Proceeds from sale of businesses	—			—			2			—		2
Capital expenditures	—			—			(201		)	—		(201		)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	(16		)	76			(128		)	—		(68		)

CASH FLOWS FROM FINANCING ACTIVITIES
Share repurchase	(525		)	(100		)	—			—		(625		)
Advances from (to) affiliates	648			376			(1,024		)	—		—
Issuance of shares for employee benefit plans	44			49			—			—		93
Issuance of debt	—			332			1			—		333
Repayment of debt	—			(416		)	(11		)	—		(427		)
Cash dividends to shareholders	(104		)	(49		)	—			—		(153		)
Purchase of shares from noncontrolling interests	—			—			—			—		—
Dividends paid to noncontrolling interests	—			—			(17		)	—		(17		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	63			192			(1,051		)	—		(796		)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			15			—		15
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	1			79			(62		)	—		18
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	—			(21		)	293			—		272
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1		$	58		$	231		$	—	$	290

Condensed Consolidating Statement of Cash Flows

	Nine Months Ended September 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES

CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	$	—	$	(137	)	$	924		$	—	$	787

CASH FLOWS FROM INVESTING ACTIVITIES
Sales of long-term investments	—		52			51			—		103
Purchase of long-term investments	—		(17		)	(11		)	—		(28		)
Net sales of short-term investments - non-fiduciary			329			(153		)			176
Acquisition of businesses, net of cash acquired	—		(10		)	(92		)	—		(102		)
Proceeds from sale of businesses	—		5			4			—		9
Capital expenditures	—		—			(151		)	—		(151		)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—		359			(352		)	—		7

CASH FLOWS FROM FINANCING ACTIVITIES
Share repurchase	—		(828		)	—			—		(828		)
Advances from (to) affiliates	—		487			(487		)	—		—
Issuance of shares for employee benefit plans	—		165			—			—		165
Issuance of debt	—		1,190			382			—		1,572
Repayment of debt	—		(1,126		)	(397		)	—		(1,523		)
Cash dividends to shareholders	—		(150		)	—			—		(150		)
Purchase of shares from noncontrolling interests	—		—			(24		)	—		(24		)
Dividends paid to noncontrolling interests	—		—			(21		)	—		(21		)
CASH USED FOR FINANCING ACTIVITIES	—		(262		)	(547		)	—		(809		)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—		—			(36		)	—		(36		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	—		(40		)	(11		)	—		(51		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	—		14			332			—		346
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	—	$	(26	)	$	321		$	—	$	295