ENGLAND AND WALES | 98-1030901 | |
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) |
122 LEADENHALL STREET, LONDON, ENGLAND | EC3V 4AN | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
Three Months Ended | Six Months Ended | ||||||||||||||
(millions, except per share data) | June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||
Revenue | |||||||||||||||
Commissions, fees and other | $ | 2,761 | $ | 2,800 | $ | 5,548 | $ | 5,642 | |||||||
Fiduciary investment income | 5 | 5 | 10 | 10 | |||||||||||
Total revenue | 2,766 | 2,805 | 5,558 | 5,652 | |||||||||||
Expenses | |||||||||||||||
Compensation and benefits | 1,688 | 1,653 | 3,337 | 3,336 | |||||||||||
Other general expenses | 673 | 875 | 1,366 | 1,598 | |||||||||||
Total operating expenses | 2,361 | 2,528 | 4,703 | 4,934 | |||||||||||
Operating income | 405 | 277 | 855 | 718 | |||||||||||
Interest income | 3 | 4 | 5 | 7 | |||||||||||
Interest expense | (73 | ) | (68 | ) | (142 | ) | (133 | ) | |||||||
Other income | — | 1 | 18 | 43 | |||||||||||
Income before income taxes | 335 | 214 | 736 | 635 | |||||||||||
Income taxes | 55 | 26 | 129 | 106 | |||||||||||
Net income | 280 | 188 | 607 | 529 | |||||||||||
Less: Net income attributable to noncontrolling interests | 8 | 10 | 20 | 23 | |||||||||||
Net income attributable to Aon shareholders | $ | 272 | $ | 178 | $ | 587 | $ | 506 | |||||||
Basic net income per share attributable to Aon shareholders | $ | 1.01 | $ | 0.63 | $ | 2.17 | $ | 1.78 | |||||||
Diluted net income per share attributable to Aon shareholders | $ | 1.01 | $ | 0.62 | $ | 2.16 | $ | 1.76 | |||||||
Cash dividends per share paid on ordinary shares | $ | 0.33 | $ | 0.30 | $ | 0.63 | $ | 0.55 | |||||||
Weighted average ordinary shares outstanding - basic | 268.0 | 284.5 | 269.9 | 284.3 | |||||||||||
Weighted average ordinary shares outstanding - diluted | 269.8 | 286.7 | 271.7 | 286.9 |
Three Months Ended | Six Months Ended | ||||||||||||||
(millions) | June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||
Net income | $ | 280 | $ | 188 | $ | 607 | $ | 529 | |||||||
Less: Net income attributable to noncontrolling interests | 8 | 10 | 20 | 23 | |||||||||||
Net income attributable to Aon shareholders | $ | 272 | $ | 178 | 587 | 506 | |||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Change in fair value of financial instruments | (4 | ) | (6 | ) | (11 | ) | (1 | ) | |||||||
Foreign currency translation adjustments | (59 | ) | 175 | (138 | ) | (147 | ) | ||||||||
Post-retirement benefit obligation | 51 | 21 | (150 | ) | 44 | ||||||||||
Total other comprehensive (loss) income | (12 | ) | 190 | (299 | ) | (104 | ) | ||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | — | (1 | ) | — | (2 | ) | |||||||||
Total other comprehensive (loss) income attributable to Aon shareholders | (12 | ) | 191 | (299 | ) | (102 | ) | ||||||||
Comprehensive income attributable to Aon shareholders | $ | 260 | $ | 369 | $ | 288 | $ | 404 |
(millions, except nominal value) | June 30, 2016 | December 31, 2015 | ||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 438 | $ | 384 | ||||
Short-term investments | 251 | 356 | ||||||
Receivables, net | 2,516 | 2,734 | ||||||
Fiduciary assets | 10,201 | 9,932 | ||||||
Other current assets | 395 | 329 | ||||||
Total Current Assets | 13,801 | 13,735 | ||||||
Goodwill | 8,473 | 8,448 | ||||||
Intangible assets, net | 2,107 | 2,180 | ||||||
Fixed assets, net | 751 | 765 | ||||||
Non-current deferred tax assets | 265 | 234 | ||||||
Prepaid pension | 720 | 1,033 | ||||||
Other non-current assets | 576 | 592 | ||||||
TOTAL ASSETS | $ | 26,693 | $ | 26,987 | ||||
LIABILITIES AND EQUITY | ||||||||
LIABILITIES | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 1,373 | $ | 1,772 | ||||
Short-term debt and current portion of long-term debt | 251 | 562 | ||||||
Fiduciary liabilities | 10,201 | 9,932 | ||||||
Other current liabilities | 872 | 819 | ||||||
Total Current Liabilities | 12,697 | 13,085 | ||||||
Long-term debt | 5,907 | 5,138 | ||||||
Non-current deferred tax liabilities | 39 | 37 | ||||||
Pension, other post-retirement and post-employment liabilities | 1,722 | 1,795 | ||||||
Other non-current liabilities | 767 | 769 | ||||||
TOTAL LIABILITIES | 21,132 | 20,824 | ||||||
EQUITY | ||||||||
Ordinary shares - $0.01 nominal value Authorized: 750 shares (issued: 2016 - 265.8; 2015 - 269.8) | 3 | 3 | ||||||
Additional paid-in capital | 5,434 | 5,409 | ||||||
Retained earnings | 3,784 | 4,117 | ||||||
Accumulated other comprehensive loss | (3,722 | ) | (3,423 | ) | ||||
TOTAL AON SHAREHOLDERS' EQUITY | 5,499 | 6,106 | ||||||
Noncontrolling interests | 62 | 57 | ||||||
TOTAL EQUITY | 5,561 | 6,163 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 26,693 | $ | 26,987 |
(millions) | Shares | Ordinary Shares and Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Non- controlling Interests | Total | |||||||||||||||||
Balance at December 31, 2015 | 269.8 | $ | 5,412 | $ | 4,117 | $ | (3,423 | ) | $ | 57 | $ | 6,163 | |||||||||||
Net income | — | — | 587 | — | 20 | 607 | |||||||||||||||||
Shares issued - employee benefit plans | 0.3 | 18 | (1 | ) | — | — | 17 | ||||||||||||||||
Shares issued - employee compensation | 3.4 | (163 | ) | — | — | — | (163 | ) | |||||||||||||||
Shares purchased | (7.7 | ) | — | (750 | ) | — | — | (750 | ) | ||||||||||||||
Tax benefit - employee benefit plans | — | 58 | — | — | — | 58 | |||||||||||||||||
Share-based compensation expense | — | 155 | — | — | — | 155 | |||||||||||||||||
Dividends to shareholders | — | — | (169 | ) | — | — | (169 | ) | |||||||||||||||
Net change in fair value of financial instruments | — | — | — | (11 | ) | — | (11 | ) | |||||||||||||||
Net foreign currency translation adjustments | — | — | — | (138 | ) | — | (138 | ) | |||||||||||||||
Net post-retirement benefit obligation | — | — | — | (150 | ) | — | (150 | ) | |||||||||||||||
Purchases of shares from noncontrolling interests | — | (43 | ) | — | — | (4 | ) | (47 | ) | ||||||||||||||
Dividends paid to noncontrolling interests on subsidiary common stock | — | — | — | — | (11 | ) | (11 | ) | |||||||||||||||
Balance at June 30, 2016 | 265.8 | $ | 5,437 | $ | 3,784 | $ | (3,722 | ) | $ | 62 | $ | 5,561 |
Six Months Ended | ||||||||
(millions) | June 30, 2016 | June 30, 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 607 | $ | 529 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Gain from sales of businesses and investments, net | (41 | ) | (20 | ) | ||||
Depreciation of fixed assets | 114 | 113 | ||||||
Amortization of intangible assets | 135 | 159 | ||||||
Share-based compensation expense | 155 | 164 | ||||||
Deferred income taxes | 15 | 16 | ||||||
Change in assets and liabilities: | ||||||||
Fiduciary receivables | 96 | (116 | ) | |||||
Short-term investments — funds held on behalf of clients | (449 | ) | 52 | |||||
Fiduciary liabilities | 353 | 64 | ||||||
Receivables, net | 175 | 59 | ||||||
Accounts payable and accrued liabilities | (389 | ) | (387 | ) | ||||
Current income taxes | (35 | ) | (152 | ) | ||||
Pension, other post-retirement and other post-employment liabilities | (28 | ) | (122 | ) | ||||
Other assets and liabilities | 56 | 219 | ||||||
CASH PROVIDED BY OPERATING ACTIVITIES | 764 | 578 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Proceeds from investments | 23 | 10 | ||||||
Purchases of investments | (29 | ) | (1 | ) | ||||
Net (purchases) sales of short-term investments — non-fiduciary | 106 | (97 | ) | |||||
Acquisition of businesses, net of cash acquired | (183 | ) | (23 | ) | ||||
Proceeds from sale of businesses | 103 | 52 | ||||||
Capital expenditures | (104 | ) | (142 | ) | ||||
CASH USED FOR INVESTING ACTIVITIES | (84 | ) | (201 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Share repurchase | (750 | ) | (550 | ) | ||||
Issuance of shares for employee benefit plans | (87 | ) | (161 | ) | ||||
Issuance of debt | 2,056 | 2,445 | ||||||
Repayment of debt | (1,632 | ) | (1,896 | ) | ||||
Cash dividends to shareholders | (169 | ) | (156 | ) | ||||
Noncontrolling interests and other financing activities | (62 | ) | (23 | ) | ||||
CASH USED FOR FINANCING ACTIVITIES | (644 | ) | (341 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 18 | (43 | ) | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 54 | (7 | ) | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 384 | 374 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 438 | $ | 367 | ||||
Supplemental disclosures: | ||||||||
Interest paid | $ | 144 | $ | 128 | ||||
Income taxes paid, net of refunds | $ | 89 | $ | 118 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Foreign currency remeasurement (loss) gain | $ | 1 | $ | (7 | ) | $ | (16 | ) | $ | 17 | |||||
Gain on disposal of business | 6 | 1 | 41 | 20 | |||||||||||
Equity earnings | 1 | 4 | 3 | 6 | |||||||||||
Income (loss) on financial instruments | (8 | ) | 3 | (10 | ) | — | |||||||||
Total | $ | — | $ | 1 | $ | 18 | $ | 43 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Balance at beginning of period | $ | 62 | $ | 70 | $ | 58 | $ | 74 | |||||||
Provision charged to Other general expenses | 6 | 3 | 12 | 11 | |||||||||||
Accounts written off, net of recoveries | (4 | ) | (13 | ) | (7 | ) | (22 | ) | |||||||
Foreign currency translation | — | 5 | 1 | 2 | |||||||||||
Balance at end of period | $ | 64 | $ | 65 | $ | 64 | $ | 65 |
June 30, 2016 | December 31, 2015 | ||||||
Taxes receivable | $ | 146 | $ | 94 | |||
Prepaid expenses | 152 | 130 | |||||
Deferred project costs | 94 | 92 | |||||
Other | 3 | 13 | |||||
Total | $ | 395 | $ | 329 |
June 30, 2016 | December 31, 2015 | ||||||
Deferred project costs | $ | 200 | $ | 210 | |||
Investments | 127 | 135 | |||||
Taxes receivable | 81 | 82 | |||||
Other | 168 | 165 | |||||
Total | $ | 576 | $ | 592 |
June 30, 2016 | December 31, 2015 | ||||||
Deferred revenue | $ | 433 | $ | 394 | |||
Taxes payable | 67 | 94 | |||||
Other | 372 | 331 | |||||
Total | $ | 872 | $ | 819 |
June 30, 2016 | December 31, 2015 | ||||||
Taxes payable | $ | 260 | $ | 223 | |||
Deferred revenue | 151 | 159 | |||||
Leases | 172 | 166 | |||||
Compensation and benefits | 59 | 59 | |||||
Other | 125 | 162 | |||||
Total | $ | 767 | $ | 769 |
Three months ended June 30, | Six Months Ended June 30, | ||||||
2016 | 2015 | 2016 | 2015 | ||||
Risk Solutions | 2 | 1 | 2 | 2 | |||
HR Solutions | — | 1 | 2 | 2 | |||
Total | 2 | 2 | 4 | 4 |
Six months ended June 30, | ||||||||
2016 | 2015 | |||||||
Consideration | $ | 190 | $ | 23 | ||||
Intangible assets: | ||||||||
Goodwill | $ | 110 | $ | 16 | ||||
Other intangible assets | 82 | 1 | ||||||
Total | $ | 192 | $ | 17 |
Three months ended June 30, | Six Months Ended June 30, | |||||||||
2016 | 2015 | 2016 | 2015 | |||||||
Risk Solutions | 2 | — | 3 | 1 | ||||||
HR Solutions | — | — | 1 | 1 | ||||||
Total | 2 | — | 4 | 2 |
Risk Solutions | HR Solutions | Total | |||||||||
Balance as of January 1, 2016 | $ | 5,593 | $ | 2,855 | $ | 8,448 | |||||
Goodwill related to current year acquisitions | 106 | 4 | 110 | ||||||||
Goodwill related to disposals | (7 | ) | (26 | ) | (33 | ) | |||||
Goodwill related to prior year acquisitions | 2 | — | 2 | ||||||||
Foreign currency translation | (40 | ) | (14 | ) | (54 | ) | |||||
Balance as of June 30, 2016 | $ | 5,654 | $ | 2,819 | $ | 8,473 |
June 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Intangible assets with indefinite lives: | |||||||||||||||||||||||
Tradenames | $ | 1,019 | $ | — | $ | 1,019 | $ | 1,019 | $ | — | $ | 1,019 | |||||||||||
Intangible assets with finite lives: | |||||||||||||||||||||||
Customer related and contract based | 2,923 | 1,899 | 1,024 | 2,886 | 1,809 | 1,077 | |||||||||||||||||
Technology and other | 542 | 478 | 64 | 541 | 457 | 84 | |||||||||||||||||
Total | $ | 4,484 | $ | 2,377 | $ | 2,107 | $ | 4,446 | $ | 2,266 | $ | 2,180 |
Risk Solutions | HR Solutions | Total | |||||||||
Remainder of 2016 | $ | 44 | $ | 103 | $ | 147 | |||||
2017 | 81 | 147 | 228 | ||||||||
2018 | 73 | 99 | 172 | ||||||||
2019 | 66 | 79 | 145 | ||||||||
2020 | 58 | 65 | 123 | ||||||||
Thereafter | 157 | 116 | 273 | ||||||||
Total | $ | 479 | $ | 609 | $ | 1,088 |
Three months ended June 30, | Six months ended June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Shares for basic earnings per share | 268.0 | 284.5 | 269.9 | 284.3 | |||||||
Common stock equivalents | 1.8 | 2.2 | 1.8 | 2.6 | |||||||
Shares for diluted earnings per share | 269.8 | 286.7 | 271.7 | 286.9 |
Change in Fair Value of Financial Instruments (1) | Foreign Currency Translation Adjustments | Post-Retirement Benefit Obligation (2) | Total | ||||||||||||
Balance at December 31, 2015 | $ | (25 | ) | $ | (771 | ) | $ | (2,627 | ) | $ | (3,423 | ) | |||
Other comprehensive (loss) income before reclassifications, net | (14 | ) | (138 | ) | (234 | ) | (386 | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss: | |||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 4 | — | 110 | 114 | |||||||||||
Tax benefit | (1 | ) | — | (26 | ) | (27 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive loss, net | 3 | — | 84 | 87 | |||||||||||
Net current period other comprehensive (loss) income | (11 | ) | (138 | ) | (150 | ) | (299 | ) | |||||||
Balance at June 30, 2016 | $ | (36 | ) | $ | (909 | ) | $ | (2,777 | ) | $ | (3,722 | ) |
Three months ended June 30, | |||||||||||||||||||||||
U.K. | U.S. | Other | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | |||||||||||
Interest cost | 43 | 50 | 28 | 33 | 7 | 9 | |||||||||||||||||
Expected return on plan assets, net of administration expenses | (65 | ) | (77 | ) | (39 | ) | (38 | ) | (12 | ) | (13 | ) | |||||||||||
Amortization of prior-service cost | 1 | — | 1 | — | — | — | |||||||||||||||||
Amortization of net actuarial loss | 9 | 10 | 12 | 13 | 3 | 3 | |||||||||||||||||
Net periodic (benefit) cost | (12 | ) | (17 | ) | 2 | 9 | (2 | ) | (1 | ) | |||||||||||||
Loss on pension settlement | 61 | — | — | — | — | — | |||||||||||||||||
Curtailment gain and other | — | — | — | — | — | — | |||||||||||||||||
Total net periodic cost (benefit) | $ | 49 | $ | (17 | ) | $ | 2 | $ | 9 | $ | (2 | ) | $ | (1 | ) | ||||||||
Six months ended June 30, | |||||||||||||||||||||||
U.K. | U.S. | Other | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | 2 | $ | — | $ | — | |||||||||||
Interest cost | 86 | 99 | 55 | 66 | 14 | 17 | |||||||||||||||||
Expected return on plan assets, net of administration expenses | (129 | ) | (152 | ) | (78 | ) | (77 | ) | (24 | ) | (25 | ) | |||||||||||
Amortization of prior-service cost | 1 | — | 1 | — | — | — | |||||||||||||||||
Amortization of net actuarial loss | 17 | 20 | 25 | 27 | 5 | 6 | |||||||||||||||||
Net periodic (benefit) cost | (25 | ) | (33 | ) | 3 | 18 | (5 | ) | (2 | ) | |||||||||||||
Loss on pension settlement | 61 | — | — | — | — | — | |||||||||||||||||
Curtailment gain and other | — | — | — | (1 | ) | — | — | ||||||||||||||||
Total net periodic cost (benefit) | $ | 36 | $ | (33 | ) | $ | 3 | $ | 17 | $ | (5 | ) | $ | (2 | ) |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Restricted share units ("RSUs") | $ | 44 | $ | 44 | $ | 105 | $ | 109 | |||||||
Performance share awards ("PSAs") | 25 | 28 | 45 | 49 | |||||||||||
Share options | — | — | — | — | |||||||||||
Employee share purchase plans | 2 | 2 | 6 | 6 | |||||||||||
Total share-based compensation expense | $ | 71 | $ | 74 | $ | 156 | $ | 164 |
Six months ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Shares | Fair Value (1) | Shares | Fair Value (1) | ||||||||||
Non-vested at beginning of period | 7,169 | $ | 77 | 8,381 | $ | 63 | |||||||
Granted | 2,023 | 101 | 2,144 | 98 | |||||||||
Vested | (2,581 | ) | 70 | (3,037 | ) | 58 | |||||||
Forfeited | (213 | ) | 79 | (130 | ) | 67 | |||||||
Non-vested at end of period | 6,398 | 87 | 7,358 | 76 |
(1) | Represents per share weighted-average fair value of award at date of grant. |
2016 | 2015 | 2014 | |||||||||
Target PSAs granted during period | 783 | 993 | 816 | ||||||||
Weighted average fair value per share at date of grant | $ | 101 | $ | 96 | $ | 81 | |||||
Number of shares that would be issued based on current performance levels | 772 | 963 | 1,552 | ||||||||
Unamortized expense, based on current performance levels | $ | 71 | $ | 49 | $ | 21 |
Six months ended June 30, | |||||||||||||
2016 | 2015 | ||||||||||||
Shares | Weighted- Average Exercise Price | Shares | Weighted- Average Exercise Price | ||||||||||
Beginning outstanding | 837 | $ | 40 | 2,300 | $ | 32 | |||||||
Granted | — | — | — | — | |||||||||
Exercised | (271 | ) | 38 | (1,388 | ) | 27 | |||||||
Forfeited and expired | (5 | ) | 42 | (13 | ) | 39 | |||||||
Outstanding at end of period | 561 | 41 | 899 | 39 | |||||||||
Exercisable at end of period | 561 | 41 | 899 | 39 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Aggregate intrinsic value of stock options exercised | $ | 9 | $ | 6 | $ | 17 | $ | 100 | |||||||
Cash received from the exercise of stock options | 6 | 4 | 11 | 38 | |||||||||||
Tax benefit realized from the exercise of stock options | 2 | 1 | 4 | 35 |
Notional Amount | Derivative Assets (1) | Derivative Liabilities (2) | |||||||||||||||||||||
June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | ||||||||||||||||||
Foreign exchange contracts: | |||||||||||||||||||||||
Accounted for as hedges | $ | 808 | $ | 778 | $ | 16 | $ | 32 | $ | 12 | $ | 18 | |||||||||||
Not accounted for as hedges (3) | 201 | 280 | — | — | — | — | |||||||||||||||||
Total | $ | 1,009 | $ | 1,058 | $ | 16 | $ | 32 | $ | 12 | $ | 18 |
(1) | Included within Other current assets ($5 million at June 30, 2016 and $15 million at December 31, 2015) or Other non-current assets ($11 million at June 30, 2016 and $17 million at December 31, 2015). |
(2) | Included within Other current liabilities ($8 million at June 30, 2016 and $13 million at December 31, 2015) or Other non-current liabilities ($4 million at June 30, 2016 and $5 million at December 31, 2015). |
(3) | These contracts typically are for 30 day durations are executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date. |
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Financial Position | Net Amounts of Assets Presented in the Statement of Financial Position (1) | |||||||||||||||||||||
Derivatives accounted for as hedges: | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | |||||||||||||||||
Foreign exchange contracts | $ | 16 | $ | 32 | $ | (5 | ) | $ | (13 | ) | $ | 11 | $ | 19 |
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Statement of Financial Position | Net Amounts of Liabilities Presented in the Statement of Financial Position (1) | |||||||||||||||||||||
Derivatives accounted for as hedges: | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | |||||||||||||||||
Foreign exchange contracts | $ | 12 | $ | 18 | $ | (5 | ) | $ | (13 | ) | $ | 7 | $ | 5 |
Cash Flow Hedge - Foreign Exchange Contracts | Location of future reclassification from Accumulated Other Comprehensive Loss | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss: | ||||||||||||||||||
Three months ended June 30, | Compensation and Benefits | Other General Expenses | Interest Expense | Other Income (Expense) | Total | |||||||||||||||
2016 | $ | — | $ | (2 | ) | $ | — | $ | (6 | ) | $ | (8 | ) | |||||||
2015 | 1 | 3 | — | 10 | 14 |
Cash Flow Hedge - Foreign Exchange Contracts | Location of future reclassification from Accumulated Other Comprehensive Loss | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss: | ||||||||||||||||||
Six months ended June 30, | Compensation and Benefits | Other General Expenses | Interest Expense | Other Income (Expense) | Total | |||||||||||||||
2016 | $ | (2 | ) | $ | (5 | ) | $ | — | $ | (11 | ) | $ | (18 | ) | ||||||
2015 | 6 | 1 | — | 6 | 13 |
Cash Flow Hedge - Foreign Exchange Contracts | Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion): | |||||||||||||||||||
Three months ended June 30, | Compensation and Benefits | Other General Expenses | Interest Expense | Other Income | Total | |||||||||||||||
2016 | $ | — | $ | (1 | ) | $ | (1 | ) | $ | (2 | ) | $ | (4 | ) | ||||||
2015 | 1 | (1 | ) | (2 | ) | 5 | 3 |
Cash Flow Hedge - Foreign Exchange Contracts | Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion): | |||||||||||||||||||
Six months ended June 30, | Compensation and Benefits | Other General Expenses | Interest Expense | Other Income | Total | |||||||||||||||
2016 | $ | 1 | $ | (1 | ) | $ | (1 | ) | $ | (3 | ) | $ | (4 | ) | ||||||
2015 | 1 | (1 | ) | (4 | ) | (3 | ) | (7 | ) |
• | 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, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | |||||||||||||||
Money market funds (1) | $ | 1,483 | $ | 1,483 | $ | — | $ | — | |||||||
Other investments: | |||||||||||||||
Government bonds | 1 | — | 1 | — | |||||||||||
Equity investments | 10 | 6 | 4 | — | |||||||||||
Derivatives (2): | |||||||||||||||
Foreign exchange contracts | 16 | — | 16 | — | |||||||||||
Liabilities: | |||||||||||||||
Derivatives: | |||||||||||||||
Foreign exchange contracts | 12 | — | 12 | — |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2015 | 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) | $ | 1,396 | $ | 1,396 | $ | — | $ | — | |||||||
Other investments: | |||||||||||||||
Government bonds | 1 | — | 1 | — | |||||||||||
Equity investments | 10 | 6 | 4 | — | |||||||||||
Derivatives (2): | |||||||||||||||
Foreign exchange contracts | 32 | — | 32 | — | |||||||||||
Liabilities: | |||||||||||||||
Derivatives: | |||||||||||||||
Foreign exchange contracts | 18 | — | 18 | — |
June 30, 2016 | December 31, 2015 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Long-term debt | $ | 5,907 | $ | 6,448 | $ | 5,138 | $ | 5,386 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Risk Solutions | $ | 1,847 | $ | 1,833 | $ | 3,719 | $ | 3,728 | |||||||
HR Solutions | 931 | 979 | 1,861 | 1,949 | |||||||||||
Intersegment eliminations | (12 | ) | (7 | ) | (22 | ) | (25 | ) | |||||||
Total revenue | $ | 2,766 | $ | 2,805 | $ | 5,558 | $ | 5,652 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Retail brokerage | $ | 1,508 | $ | 1,498 | $ | 3,003 | $ | 3,011 | |||||||
Reinsurance brokerage | 334 | 330 | 706 | 707 | |||||||||||
Total Risk Solutions Segment | 1,842 | 1,828 | 3,709 | 3,718 | |||||||||||
Consulting services | 383 | 391 | 757 | 762 | |||||||||||
Outsourcing | 550 | 599 | 1,110 | 1,203 | |||||||||||
Intrasegment | (2 | ) | (11 | ) | (6 | ) | (16 | ) | |||||||
Total HR Solutions Segment | 931 | 979 | 1,861 | 1,949 | |||||||||||
Intersegment | (12 | ) | (7 | ) | (22 | ) | (25 | ) | |||||||
Total commissions, fees and other revenue | $ | 2,761 | $ | 2,800 | $ | 5,548 | $ | 5,642 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Risk Solutions | $ | 5 | $ | 5 | $ | 10 | $ | 10 | |||||||
HR Solutions | — | — | — | — | |||||||||||
Total fiduciary investment income | $ | 5 | $ | 5 | $ | 10 | $ | 10 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Risk Solutions | $ | 373 | $ | 279 | $ | 802 | $ | 691 | |||||||
HR Solutions | 75 | 39 | 142 | 115 | |||||||||||
Segment income before income taxes | 448 | 318 | 944 | 806 | |||||||||||
Unallocated expenses | (43 | ) | (41 | ) | (89 | ) | (88 | ) | |||||||
Interest income | 3 | 4 | 5 | 7 | |||||||||||
Interest expense | (73 | ) | (68 | ) | (142 | ) | (133 | ) | |||||||
Other income | — | 1 | 18 | 43 | |||||||||||
Income before income taxes | $ | 335 | $ | 214 | $ | 736 | $ | 635 |
Three months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Commissions, fees and other | $ | — | $ | — | $ | 2,761 | $ | — | $ | 2,761 | ||||||||||
Fiduciary investment income | — | — | 5 | — | 5 | |||||||||||||||
Total revenue | — | — | 2,766 | — | 2,766 | |||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 8 | 3 | 1,677 | — | 1,688 | |||||||||||||||
Other general expenses | (1 | ) | 2 | 672 | — | 673 | ||||||||||||||
Total operating expenses | 7 | 5 | 2,349 | — | 2,361 | |||||||||||||||
Operating (loss) income | (7 | ) | (5 | ) | 417 | — | 405 | |||||||||||||
Interest income | — | 4 | 5 | (6 | ) | 3 | ||||||||||||||
Interest expense | (49 | ) | (26 | ) | (4 | ) | 6 | (73 | ) | |||||||||||
Intercompany interest income (expense) | 3 | (137 | ) | 134 | — | — | ||||||||||||||
Intercompany other (expense) income | (57 | ) | (16 | ) | 73 | — | — | |||||||||||||
Other income (loss) | 2 | (4 | ) | 6 | (4 | ) | — | |||||||||||||
(Loss) income before taxes | (108 | ) | (184 | ) | 631 | (4 | ) | 335 | ||||||||||||
Income tax (benefit) expense | (21 | ) | (64 | ) | 140 | — | 55 | |||||||||||||
(Loss) income before equity in earnings of subsidiaries | (87 | ) | (120 | ) | 491 | (4 | ) | 280 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 363 | 236 | 116 | (715 | ) | — | ||||||||||||||
Net income | 276 | 116 | 607 | (719 | ) | 280 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 8 | — | 8 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 276 | $ | 116 | $ | 599 | $ | (719 | ) | $ | 272 |
Three months ended June 30, 2015 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Commissions, fees and other | $ | — | $ | — | $ | 2,800 | $ | — | $ | 2,800 | ||||||||||
Fiduciary investment income | — | — | 5 | — | 5 | |||||||||||||||
Total revenue | — | — | 2,805 | — | 2,805 | |||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 5 | 10 | 1,638 | — | 1,653 | |||||||||||||||
Other general expenses | (4 | ) | 2 | 877 | — | 875 | ||||||||||||||
Total operating expenses | 1 | 12 | 2,515 | — | 2,528 | |||||||||||||||
Operating (loss) income | (1 | ) | (12 | ) | 290 | — | 277 | |||||||||||||
Interest income | (5 | ) | 4 | 5 | — | 4 | ||||||||||||||
Interest expense | (29 | ) | (33 | ) | (6 | ) | — | (68 | ) | |||||||||||
Intercompany interest income (expense) | 119 | (116 | ) | (3 | ) | — | — | |||||||||||||
Intercompany other (expense) income | (56 | ) | (15 | ) | 71 | — | — | |||||||||||||
Other income | (1 | ) | — | 2 | — | 1 | ||||||||||||||
Income (loss) before taxes | 27 | (172 | ) | 359 | — | 214 | ||||||||||||||
Income tax expense (benefit) | 6 | (66 | ) | 86 | — | 26 | ||||||||||||||
Income (loss) before equity in earnings of subsidiaries | 21 | (106 | ) | 273 | — | 188 | ||||||||||||||
Equity in earnings of subsidiaries, net of tax | 157 | 170 | 64 | (391 | ) | — | ||||||||||||||
Net income | 178 | 64 | 337 | (391 | ) | 188 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 10 | — | 10 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 178 | $ | 64 | $ | 327 | $ | (391 | ) | $ | 178 |
Six months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Commissions, fees and other | $ | — | $ | — | $ | 5,548 | $ | — | $ | 5,548 | ||||||||||
Fiduciary investment income | — | — | 10 | — | 10 | |||||||||||||||
Total revenue | — | — | 5,558 | — | 5,558 | |||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 51 | 6 | 3,280 | — | 3,337 | |||||||||||||||
Other general expenses | 6 | 4 | 1,356 | — | 1,366 | |||||||||||||||
Total operating expenses | 57 | 10 | 4,636 | — | 4,703 | |||||||||||||||
Operating (loss) income | (57 | ) | (10 | ) | 922 | — | 855 | |||||||||||||
Interest income | — | 9 | 9 | (13 | ) | 5 | ||||||||||||||
Interest expense | (94 | ) | (54 | ) | (7 | ) | 13 | (142 | ) | |||||||||||
Intercompany interest income (expense) | 7 | (270 | ) | 263 | — | — | ||||||||||||||
Intercompany other (expense) income | (111 | ) | (15 | ) | 126 | — | — | |||||||||||||
Other income | 2 | (9 | ) | 29 | (4 | ) | 18 | |||||||||||||
(Loss) income before taxes | (253 | ) | (349 | ) | 1,342 | (4 | ) | 736 | ||||||||||||
Income tax (benefit) expense | (47 | ) | (126 | ) | 302 | — | 129 | |||||||||||||
(Loss) income before equity in earnings of subsidiaries | (206 | ) | (223 | ) | 1,040 | (4 | ) | 607 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 797 | 603 | 380 | (1,780 | ) | — | ||||||||||||||
Net income | 591 | 380 | 1,420 | (1,784 | ) | 607 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 20 | — | 20 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 591 | $ | 380 | $ | 1,400 | $ | (1,784 | ) | $ | 587 |
Six months ended June 30, 2015 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Commissions, fees and other | $ | — | $ | — | $ | 5,642 | $ | — | $ | 5,642 | ||||||||||
Fiduciary investment income | — | — | 10 | — | 10 | |||||||||||||||
Total revenue | — | — | 5,652 | — | 5,652 | |||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 57 | 21 | 3,258 | — | 3,336 | |||||||||||||||
Other general expenses | 9 | 4 | 1,585 | — | 1,598 | |||||||||||||||
Total operating expenses | 66 | 25 | 4,843 | — | 4,934 | |||||||||||||||
Operating (loss) income | (66 | ) | (25 | ) | 809 | — | 718 | |||||||||||||
Interest income | (9 | ) | 7 | 9 | — | 7 | ||||||||||||||
Interest expense | (54 | ) | (68 | ) | (11 | ) | — | (133 | ) | |||||||||||
Intercompany interest income (expense) | 239 | (221 | ) | (18 | ) | — | — | |||||||||||||
Intercompany other (expense) income | (106 | ) | (23 | ) | 129 | — | — | |||||||||||||
Other income | 1 | 8 | 34 | — | 43 | |||||||||||||||
Income (loss) before taxes | 5 | (322 | ) | 952 | — | 635 | ||||||||||||||
Income tax expense (benefit) | 1 | (117 | ) | 222 | — | 106 | ||||||||||||||
Income (loss) before equity in earnings of subsidiaries | 4 | (205 | ) | 730 | — | 529 | ||||||||||||||
Equity in earnings of subsidiaries, net of tax | 502 | 571 | 366 | (1,439 | ) | — | ||||||||||||||
Net income | 506 | 366 | 1,096 | (1,439 | ) | 529 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 23 | — | 23 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 506 | $ | 366 | $ | 1,073 | $ | (1,439 | ) | $ | 506 |
Three months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 276 | $ | 116 | $ | 607 | $ | (719 | ) | $ | 280 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 8 | — | 8 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 276 | $ | 116 | $ | 599 | $ | (719 | ) | $ | 272 | |||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | — | 2 | (6 | ) | — | (4 | ) | |||||||||||||
Foreign currency translation adjustments | (2 | ) | 10 | (71 | ) | 4 | (59 | ) | ||||||||||||
Post-retirement benefit obligation | — | 3 | 48 | — | 51 | |||||||||||||||
Total other comprehensive loss | (2 | ) | 15 | (29 | ) | 4 | (12 | ) | ||||||||||||
Equity in other comprehensive loss of subsidiaries, net of tax | (14 | ) | (31 | ) | (16 | ) | 61 | — | ||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | — | — | — | — | — | |||||||||||||||
Total other comprehensive loss attributable to Aon shareholders | (16 | ) | (16 | ) | (45 | ) | 65 | (12 | ) | |||||||||||
Comprehensive income attributable to Aon shareholders | $ | 260 | $ | 100 | $ | 554 | $ | (654 | ) | $ | 260 |
Three months ended June 30, 2015 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 178 | $ | 64 | $ | 337 | $ | (391 | ) | $ | 188 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 10 | — | 10 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 178 | $ | 64 | $ | 327 | $ | (391 | ) | $ | 178 | |||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | — | 2 | (8 | ) | — | (6 | ) | |||||||||||||
Foreign currency translation adjustments | — | 4 | 171 | — | 175 | |||||||||||||||
Post-retirement benefit obligation | — | 9 | 12 | — | 21 | |||||||||||||||
Total other comprehensive (loss) income | — | 15 | 175 | — | 190 | |||||||||||||||
Equity in other comprehensive income of subsidiaries, net of tax | 191 | 173 | 188 | (552 | ) | — | ||||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Total other comprehensive income attributable to Aon shareholders | 191 | 188 | 364 | (552 | ) | 191 | ||||||||||||||
Comprehensive income attributable to Aon Shareholders | $ | 369 | $ | 252 | $ | 691 | $ | (943 | ) | $ | 369 |
Six months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 591 | $ | 380 | $ | 1,420 | $ | (1,784 | ) | $ | 607 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 20 | — | 20 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 591 | $ | 380 | $ | 1,400 | $ | (1,784 | ) | $ | 587 | |||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | — | — | (11 | ) | — | (11 | ) | |||||||||||||
Foreign currency translation adjustments | (2 | ) | 21 | (161 | ) | 4 | (138 | ) | ||||||||||||
Post-retirement benefit obligation | — | 16 | (166 | ) | — | (150 | ) | |||||||||||||
Total other comprehensive loss | (2 | ) | 37 | (338 | ) | 4 | (299 | ) | ||||||||||||
Equity in other comprehensive loss of subsidiaries, net of tax | (301 | ) | (345 | ) | (308 | ) | 954 | — | ||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | — | — | — | — | — | |||||||||||||||
Total other comprehensive loss attributable to Aon shareholders | (303 | ) | (308 | ) | (646 | ) | 958 | (299 | ) | |||||||||||
Comprehensive income attributable to Aon shareholders | $ | 288 | $ | 72 | $ | 754 | $ | (826 | ) | $ | 288 |
Six months ended June 30, 2015 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 506 | $ | 366 | $ | 1,096 | $ | (1,439 | ) | $ | 529 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 23 | — | 23 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 506 | $ | 366 | $ | 1,073 | $ | (1,439 | ) | $ | 506 | |||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | — | 1 | (2 | ) | — | (1 | ) | |||||||||||||
Foreign currency translation adjustments | — | (19 | ) | (128 | ) | — | (147 | ) | ||||||||||||
Post-retirement benefit obligation | — | 17 | 27 | — | 44 | |||||||||||||||
Total other comprehensive (loss) income | — | (1 | ) | (103 | ) | — | (104 | ) | ||||||||||||
Equity in other comprehensive income of subsidiaries, net of tax | (102 | ) | (94 | ) | (95 | ) | 291 | — | ||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | — | — | (2 | ) | — | (2 | ) | |||||||||||||
Total other comprehensive income attributable to Aon shareholders | (102 | ) | (95 | ) | (196 | ) | 291 | (102 | ) | |||||||||||
Comprehensive income attributable to Aon Shareholders | $ | 404 | $ | 271 | $ | 877 | $ | (1,148 | ) | $ | 404 |
As of June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 1,349 | $ | 1,850 | $ | (2,761 | ) | $ | 438 | |||||||||
Short-term investments | — | 118 | 133 | — | 251 | |||||||||||||||
Receivables, net | — | 1 | 2,515 | — | 2,516 | |||||||||||||||
Fiduciary assets | — | — | 10,201 | — | 10,201 | |||||||||||||||
Intercompany receivables | 55 | 4,847 | 9,436 | (14,338 | ) | — | ||||||||||||||
Other current assets | — | 24 | 371 | — | 395 | |||||||||||||||
Total Current Assets | 55 | 6,339 | 24,506 | (17,099 | ) | 13,801 | ||||||||||||||
Goodwill | — | — | 8,473 | — | 8,473 | |||||||||||||||
Intangible assets, net | — | — | 2,107 | — | 2,107 | |||||||||||||||
Fixed assets, net | — | — | 751 | — | 751 | |||||||||||||||
Non-current deferred tax assets | 154 | 746 | 176 | (811 | ) | 265 | ||||||||||||||
Intercompany receivables | 378 | 262 | 8,711 | (9,351 | ) | — | ||||||||||||||
Prepaid pension | — | 6 | 714 | — | 720 | |||||||||||||||
Other non-current assets | — | 111 | 465 | — | 576 | |||||||||||||||
Investment in subsidiary | 12,315 | 16,914 | 277 | (29,506 | ) | — | ||||||||||||||
TOTAL ASSETS | $ | 12,902 | $ | 24,378 | $ | 46,180 | $ | (56,767 | ) | $ | 26,693 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 2,803 | $ | 45 | $ | 1,286 | $ | (2,761 | ) | $ | 1,373 | |||||||||
Short-term debt and current portion of long-term debt | 241 | — | 10 | — | 251 | |||||||||||||||
Fiduciary liabilities | — | — | 10,201 | — | 10,201 | |||||||||||||||
Intercompany payables | 147 | 12,357 | 1,834 | (14,338 | ) | — | ||||||||||||||
Other current liabilities | 1 | 60 | 811 | — | 872 | |||||||||||||||
Total Current Liabilities | 3,192 | 12,462 | 14,142 | (17,099 | ) | 12,697 | ||||||||||||||
Long-term debt | 4,205 | 1,413 | 289 | — | 5,907 | |||||||||||||||
Non-current deferred tax liabilities | — | — | 850 | (811 | ) | 39 | ||||||||||||||
Pension, other post-retirement and other post-employment liabilities | — | 1,284 | 438 | — | 1,722 | |||||||||||||||
Intercompany payables | — | 8,878 | 473 | (9,351 | ) | — | ||||||||||||||
Other non-current liabilities | 6 | 64 | 697 | — | 767 | |||||||||||||||
TOTAL LIABILITIES | 7,403 | 24,101 | 16,889 | (27,261 | ) | 21,132 | ||||||||||||||
TOTAL AON SHAREHOLDERS' EQUITY | 5,499 | 277 | 29,229 | (29,506 | ) | 5,499 | ||||||||||||||
Noncontrolling interests | — | — | 62 | — | 62 | |||||||||||||||
TOTAL EQUITY | 5,499 | 277 | 29,291 | (29,506 | ) | 5,561 | ||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 12,902 | $ | 24,378 | $ | 46,180 | $ | (56,767 | ) | $ | 26,693 |
As of December 31, 2015 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 2,083 | $ | 1,242 | $ | (2,941 | ) | $ | 384 | |||||||||
Short-term investments | — | 209 | 147 | — | 356 | |||||||||||||||
Receivables, net | 1 | — | 2,733 | — | 2,734 | |||||||||||||||
Fiduciary assets | — | — | 9,932 | — | 9,932 | |||||||||||||||
Intercompany receivables | 432 | 1,950 | 7,957 | (10,339 | ) | — | ||||||||||||||
Other current assets | — | 19 | 310 | — | 329 | |||||||||||||||
Total Current Assets | 433 | 4,261 | 22,321 | (13,280 | ) | 13,735 | ||||||||||||||
Goodwill | — | — | 8,448 | — | 8,448 | |||||||||||||||
Intangible assets, net | — | — | 2,180 | — | 2,180 | |||||||||||||||
Fixed assets, net | — | — | 765 | — | 765 | |||||||||||||||
Intercompany receivables | 375 | 526 | 8,633 | (9,534 | ) | — | ||||||||||||||
Non-current deferred tax assets | 154 | 756 | 141 | (817 | ) | 234 | ||||||||||||||
Prepaid pension | — | 6 | 1,027 | — | 1,033 | |||||||||||||||
Other non-current assets | — | 119 | 557 | (84 | ) | 592 | ||||||||||||||
Investment in subsidiary | 11,804 | 16,534 | 369 | (28,707 | ) | — | ||||||||||||||
TOTAL ASSETS | $ | 12,766 | $ | 22,202 | $ | 44,441 | $ | (52,422 | ) | $ | 26,987 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 2,988 | $ | 45 | $ | 1,680 | $ | (2,941 | ) | $ | 1,772 | |||||||||
Short-term debt and current portion of long-term debt | — | 550 | 12 | — | 562 | |||||||||||||||
Fiduciary liabilities | — | — | 9,932 | — | 9,932 | |||||||||||||||
Intercompany payables | 167 | 9,518 | 654 | (10,339 | ) | — | ||||||||||||||
Other current liabilities | 47 | 56 | 716 | — | 819 | |||||||||||||||
Total Current Liabilities | 3,202 | 10,169 | 12,994 | (13,280 | ) | 13,085 | ||||||||||||||
Long-term debt | 3,451 | 1,412 | 275 | — | 5,138 | |||||||||||||||
Non-current deferred tax liabilities | — | — | 855 | (818 | ) | 37 | ||||||||||||||
Pension, other post-retirement and other post-employment liabilities | — | 1,313 | 482 | — | 1,795 | |||||||||||||||
Intercompany payables | — | 8,799 | 735 | (9,534 | ) | — | ||||||||||||||
Other non-current liabilities | 7 | 140 | 705 | (83 | ) | 769 | ||||||||||||||
TOTAL LIABILITIES | 6,660 | 21,833 | 16,046 | (23,715 | ) | 20,824 | ||||||||||||||
TOTAL AON SHAREHOLDERS' EQUITY | 6,106 | 369 | 28,338 | (28,707 | ) | 6,106 | ||||||||||||||
Noncontrolling interests | — | — | 57 | — | 57 | |||||||||||||||
TOTAL EQUITY | 6,106 | 369 | 28,395 | (28,707 | ) | 6,163 | ||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 12,766 | $ | 22,202 | $ | 44,441 | $ | (52,422 | ) | $ | 26,987 |
Six months ended June 30, 2016 | ||||||||||||||||||||
Aon | Aon | Other Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES | $ | 237 | $ | (625 | ) | $ | 1,156 | $ | (4 | ) | $ | 764 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||||||
Proceeds from investments | — | 14 | 9 | — | 23 | |||||||||||||||
Purchases of investments | — | (13 | ) | (16 | ) | — | (29 | ) | ||||||||||||
Net (purchases) sales of short-term investments - non-fiduciary | — | 92 | 14 | — | 106 | |||||||||||||||
Acquisition of businesses, net of cash acquired | — | — | (183 | ) | — | (183 | ) | |||||||||||||
Proceeds from sale of businesses | — | — | 103 | — | 103 | |||||||||||||||
Capital expenditures | — | — | (104 | ) | — | (104 | ) | |||||||||||||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | — | 93 | (177 | ) | — | (84 | ) | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||||||
Share repurchase | (750 | ) | — | — | — | (750 | ) | |||||||||||||
Advances from (to) affiliates | (211 | ) | 348 | (321 | ) | 184 | — | |||||||||||||
Issuance of shares for employee benefit plans | (87 | ) | — | — | — | (87 | ) | |||||||||||||
Issuance of debt | 1,239 | 817 | — | — | 2,056 | |||||||||||||||
Repayment of debt | (259 | ) | (1,367 | ) | (6 | ) | — | (1,632 | ) | |||||||||||
Cash dividends to shareholders | (169 | ) | — | — | — | (169 | ) | |||||||||||||
Noncontrolling interests and other financing activities | — | — | (62 | ) | — | (62 | ) | |||||||||||||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | (237 | ) | (202 | ) | (389 | ) | 184 | (644 | ) | |||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | — | 18 | — | 18 | |||||||||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | — | (734 | ) | 608 | 180 | 54 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | — | 2,083 | 1,242 | (2,941 | ) | 384 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | — | $ | 1,349 | $ | 1,850 | $ | (2,761 | ) | $ | 438 |
Six months ended June 30, 2015 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | $ | 93 | $ | (368 | ) | $ | 853 | $ | — | $ | 578 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||||||
Proceeds from investments | — | — | 10 | — | 10 | |||||||||||||||
Purchases of investments | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Net (purchases) sales of short-term investments - non-fiduciary | — | 41 | (138 | ) | — | (97 | ) | |||||||||||||
Acquisition of businesses, net of cash acquired | — | — | (23 | ) | — | (23 | ) | |||||||||||||
Proceeds from sale of businesses | — | — | 52 | — | 52 | |||||||||||||||
Capital expenditures | — | — | (142 | ) | — | (142 | ) | |||||||||||||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | — | 40 | (241 | ) | — | (201 | ) | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||||||
Share repurchase | (550 | ) | — | — | — | (550 | ) | |||||||||||||
Advances from (to) affiliates | 172 | (134 | ) | (1,191 | ) | 1,153 | — | |||||||||||||
Issuance of shares for employee benefit plans | (161 | ) | — | — | — | (161 | ) | |||||||||||||
Issuance of debt | 712 | 1,732 | 1 | — | 2,445 | |||||||||||||||
Repayment of debt | (110 | ) | (1,776 | ) | (10 | ) | — | (1,896 | ) | |||||||||||
Cash dividends to shareholders | (156 | ) | — | — | — | (156 | ) | |||||||||||||
Noncontrolling interests and other financing activities | — | — | (23 | ) | — | (23 | ) | |||||||||||||
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES | (93 | ) | (178 | ) | (1,223 | ) | 1,153 | (341 | ) | |||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | — | (43 | ) | — | (43 | ) | |||||||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | — | (506 | ) | (654 | ) | 1,153 | (7 | ) | ||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | — | 2,727 | 1,361 | (3,714 | ) | 374 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | — | $ | 2,221 | $ | 707 | $ | (2,561 | ) | $ | 367 |
• | For the second quarter of 2016, revenue decreased $39 million, or 1%, to $2.8 billion compared to the prior year period due primarily to a 2% unfavorable impact from foreign currency exchange rates and a 2% decrease in commissions and fees related to net divestitures, partially offset by organic revenue growth of 3%. For the first six months ended June 30, 2016, revenue decreased 2% compared to the prior year period due primarily to a 3% unfavorable impact from foreign currency exchange rates and a 2% decrease in commissions and fees related to net divestitures, partially offset by organic revenue growth of 3%. In Risk Solutions, organic revenue growth in the second quarter and first six months of 2016 was driven by strong organic growth in Retail brokerage across both the Americas and International businesses, as well as modest growth in Reinsurance compared to the prior year periods. The HR Solutions segment for the second quarter and first six months of 2016 had modest organic growth in Consulting compared to the prior year periods. |
• | Operating expenses for the second quarter of 2016 were $2.4 billion, a decrease of $167 million, or 7%, compared to the prior year period. The decrease was primarily due to a $176 million decrease in expense related to certain legacy litigation settlements in the prior year quarter, a $52 million decrease in expenses related to net divestitures, a $49 million favorable impact from foreign currency translation, and an $11 million decrease in intangible asset amortization, partially offset by a $62 million increase in expense related to certain pension settlements and an increase in expense to support 3% organic revenue growth. Operating expenses for the first six months of 2016 decreased by $231 million compared to the prior year period primarily due to a $176 million decrease in expense related to certain legacy litigation settlements in the prior year period, a $131 million favorable impact from foreign currency exchange rates, a $93 million decrease in expenses related to acquisitions, net of divestitures, and a $24 million decrease in intangible asset amortization, partially offset by a $62 million increase in expense related to certain pension settlements, $20 million of transaction and portfolio repositioning related costs in HR Solutions associated with the sale of certain businesses, and an increase in expense to support the 3% organic growth. |
• | Operating margin increased to 14.6% in the second quarter 2016 from 9.9% in the prior year period. Operating Margin for the first six months of 2016 was 15.4% as compared to 12.7% for the same period in 2015. The increase in operating margin from the prior year period and first six months of 2016 was driven by organic revenue growth of 3%, return on investments, and a favorable impact from changes in foreign currency exchange rates, partially offset by an increase in expense. Operating margin for Risk Solutions increased 500 basis points from 15.2% in the second quarter 2015 to 20.2% in the second quarter 2016 and 310 basis points from 18.5% for the first six months of 2015 to 21.6% for the first six months of 2016. Operating margin for HR Solutions increased 410 basis points from 4.0% in the second quarter 2015 to 8.1% in the second quarter 2016 and 170 basis points from 5.9% for the first six months of 2015 to 7.6% for the first six months of 2016. |
• | Due to the factors set forth above, Net income attributable to Aon shareholders increased $94 million, or 53%, to $272 million for the second quarter 2016 compared to the second quarter 2015. During the first six months of 2016, Net income attributable to sharesholders increased $81 million or 16% , to 587 million in compared to the first six months of 2015. |
• | Cash flow provided by operating activities was $764 million for the first six months of 2016, an increase of $186 million from $578 million provided by operating activities in the first six months of 2015. The increase was driven by an increase in net income, a decrease in cash tax payments, a decline in cash paid for pension contributions, and underlying working capital improvements. |
• | Organic revenue growth, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Organic Revenue," was 3% for the second quarter and first six months of 2016, an increase over 2% organic growth in the prior year second quarter and first six months of 2015. In Risk Solutions, organic revenue growth was driven by strong growth in Retail brokerage across both the Americas and International businesses, as well as modest growth in Reinsurance organic revenue. HR Solutions had modest organic growth in Consulting. |
• | Adjusted operating margin, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Adjusted Operating Margin," was 19.3% for Aon overall, 24.9% for the Risk Solutions segment, and 12.8% for the HR Solutions segment for the second quarter 2016. Adjusted operating margin was 19.0% for Aon overall, 24.2% for the Risk Solutions segment, and 13.2% for the HR Solutions segment for the second quarter 2015. For the first six months of 2016, adjusted operating margin was 18.9% for Aon overall, 24.5% for the Risk Solutions segment, and 12.3% for the HR Solutions operating segment. For the first six months of 2015, adjusted operating margin was 18.6% for Aon overall, 23.7% for the Risk Solutions segment, and 13.2% for the HR Solutions segment. The increase in adjusted operating margin for the Risk Solutions segment in the second quarter and first six months of 2016 as compared to the prior year period primarily reflected organic revenue growth of 3%, a favorable impact from foreign currency exchange rates, and return on investments in data and analytics. In the HR Solutions segment in the second quarter of 2016, the operating margin decline was primarily driven by an increase in expense to support future growth, partially offset by organic revenue growth of 1%. For the first six months of 2016, the decrease in adjusted operating margin as compared to the prior year period was primarily driven by $20 million of transaction and portfolio repositioning related costs associated with the sale of certain businesses and increase in expense to support future growth, partially offset by organic growth of 2%. |
• | Adjusted diluted earnings per share from net income attributable to Aon's shareholders, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Adjusted Diluted Earnings per Share," was $1.39 per share in the second quarter and $2.75 per share in the first six months of 2016, compared to $1.31 per share in the second quarter and $2.67 per share in the first six months of 2015. |
• | Free cash flow, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Free Cash Flow," increased $224 million, or 51%, to $660 million from the prior year period, driven by a 32% increase in cash flow from operations and a decrease of $38 million in capital expenditures. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue: | |||||||||||||||
Commissions, fees and other | $ | 2,761 | $ | 2,800 | $ | 5,548 | $ | 5,642 | |||||||
Fiduciary investment income | 5 | 5 | 10 | 10 | |||||||||||
Total revenue | 2,766 | 2,805 | 5,558 | 5,652 | |||||||||||
Expenses: | |||||||||||||||
Compensation and benefits | 1,688 | 1,653 | 3,337 | 3,336 | |||||||||||
Other general expenses | 673 | 875 | 1,366 | 1,598 | |||||||||||
Total operating expenses | 2,361 | 2,528 | 4,703 | 4,934 | |||||||||||
Operating income | 405 | 277 | 855 | 718 | |||||||||||
Interest income | 3 | 4 | 5 | 7 | |||||||||||
Interest expense | (73 | ) | (68 | ) | (142 | ) | (133 | ) | |||||||
Other income | — | 1 | 18 | 43 | |||||||||||
Income before income taxes | 335 | 214 | 736 | 635 | |||||||||||
Income taxes | 55 | 26 | 129 | 106 | |||||||||||
Net income | 280 | 188 | 607 | 529 | |||||||||||
Less: Net income attributable to noncontrolling interests | 8 | 10 | 20 | 23 | |||||||||||
Net income attributable to Aon shareholders | $ | 272 | $ | 178 | $ | 587 | $ | 506 |
Three months ended June 30, 2016 | |||||||||||
Total Aon (1) | Risk Solutions | HR Solutions | |||||||||
Revenue — U.S. GAAP | $ | 2,766 | $ | 1,847 | $ | 931 | |||||
Operating income — U.S. GAAP | $ | 405 | $ | 373 | $ | 75 | |||||
Intangible asset amortization | 68 | 25 | 43 | ||||||||
Pension Settlement | 62 | 61 | 1 | ||||||||
Operating income — as adjusted | $ | 535 | $ | 459 | $ | 119 | |||||
Operating margins — U.S. GAAP | 14.6 | % | 20.2 | % | 8.1 | % | |||||
Operating margins — as adjusted | 19.3 | % | 24.9 | % | 12.8 | % | |||||
Six months ended June 30, 2016 | |||||||||||
Total Aon (1) | Risk Solutions | HR Solutions | |||||||||
Revenue — U.S. GAAP | $ | 5,558 | $ | 3,719 | $ | 1,861 | |||||
Operating income — U.S. GAAP | $ | 855 | $ | 802 | $ | 142 | |||||
Intangible asset amortization | 135 | 49 | 86 | ||||||||
Pension Settlement | 62 | 61 | 1 | ||||||||
Operating income — as adjusted | $ | 1,052 | $ | 912 | $ | 229 | |||||
Operating margins — U.S. GAAP | 15.4 | % | 21.6 | % | 7.6 | % | |||||
Operating margins — as adjusted | 18.9 | % | 24.5 | % | 12.3 | % |
Three months ended June 30, 2015 | |||||||||||
Total Aon (1) | Risk Solutions | HR Solutions | |||||||||
Revenue — U.S. GAAP | $ | 2,805 | $ | 1,833 | $ | 979 | |||||
Operating income — U.S. GAAP | $ | 277 | $ | 279 | $ | 39 | |||||
Intangible asset amortization | 79 | 28 | 51 | ||||||||
Legacy Litigation | 176 | 137 | 39 | ||||||||
Operating income — as adjusted | $ | 532 | $ | 444 | $ | 129 | |||||
Operating margins — U.S. GAAP | 9.9 | % | 15.2 | % | 4.0 | % | |||||
Operating margins — as adjusted | 19.0 | % | 24.2 | % | 13.2 | % | |||||
Six months ended June 30, 2015 | |||||||||||
Total Aon (1) | Risk Solutions | HR Solutions | |||||||||
Revenue — U.S. GAAP | $ | 5,652 | $ | 3,728 | $ | 1,949 | |||||
Operating income — U.S. GAAP | $ | 718 | $ | 691 | $ | 115 | |||||
Intangible asset amortization | 159 | 56 | 103 | ||||||||
Legacy Litigation | 176 | 137 | 39 | ||||||||
Operating income — as adjusted | $ | 1,053 | $ | 884 | $ | 257 | |||||
Operating margins — U.S. GAAP | 12.7 | % | 18.5 | % | 5.9 | % | |||||
Operating margins — as adjusted | 18.6 | % | 23.7 | % | 13.2 | % | |||||
(1) Includes unallocated expenses and the elimination of inter-segment revenue. |
Three months ended June 30, 2016 | |||||||||||
U.S. GAAP | Adjustments | As Adjusted | |||||||||
Operating income | $ | 405 | $ | 130 | $ | 535 | |||||
Interest income | 3 | — | 3 | ||||||||
Interest expense | (73 | ) | — | (73 | ) | ||||||
Other income | — | — | — | ||||||||
Income before income taxes | 335 | 130 | 465 | ||||||||
Income taxes | 55 | 26 | 81 | ||||||||
Net income | 280 | 104 | 384 | ||||||||
Less: Net income attributable to noncontrolling interests | 8 | — | 8 | ||||||||
Net income attributable to Aon shareholders | $ | 272 | $ | 104 | $ | 376 | |||||
Diluted earnings per share | $ | 1.01 | $ | 0.38 | $ | 1.39 | |||||
Weighted average ordinary shares outstanding — diluted | 269.8 | — | 269.8 | ||||||||
Six months ended June 30, 2016 | |||||||||||
U.S. GAAP | Adjustments | As Adjusted | |||||||||
Operating income | $ | 855 | $ | 197 | $ | 1,052 | |||||
Interest income | 5 | — | 5 | ||||||||
Interest expense | (142 | ) | — | (142 | ) | ||||||
Other income | 18 | — | 18 | ||||||||
Income before income taxes | 736 | 197 | 933 | ||||||||
Income taxes | 129 | 38 | 167 | ||||||||
Net income | 607 | 159 | 766 | ||||||||
Less: Net income attributable to noncontrolling interests | 20 | — | 20 | ||||||||
Net income attributable to Aon shareholders | $ | 587 | $ | 159 | $ | 746 | |||||
Diluted earnings per share | $ | 2.16 | $ | 0.59 | $ | 2.75 | |||||
Weighted average ordinary shares outstanding — diluted | 271.7 | — | 271.7 |
Three months ended June 30, 2015 | |||||||||||
U.S. GAAP | Adjustments | As Adjusted | |||||||||
Operating income | $ | 277 | $ | 255 | $ | 532 | |||||
Interest income | 4 | — | 4 | ||||||||
Interest expense | (68 | ) | — | (68 | ) | ||||||
Other income | 1 | — | 1 | ||||||||
Income before income taxes | 214 | 255 | 469 | ||||||||
Income taxes | 26 | 58 | 84 | ||||||||
Net income | 188 | 197 | 385 | ||||||||
Less: Net income attributable to noncontrolling interests | 10 | — | 10 | ||||||||
Net income attributable to Aon shareholders | $ | 178 | $ | 197 | $ | 375 | |||||
Diluted earnings per share | $ | 0.62 | $ | 0.69 | $ | 1.31 | |||||
Weighted average ordinary shares outstanding — diluted | 286.7 | — | 286.7 | ||||||||
Six months ended June 30, 2015 | |||||||||||
U.S. GAAP | Adjustments | As Adjusted | |||||||||
Operating income | $ | 718 | $ | 335 | $ | 1,053 | |||||
Interest income | 7 | — | 7 | ||||||||
Interest expense | (133 | ) | — | (133 | ) | ||||||
Other income | 43 | — | 43 | ||||||||
Income before income taxes | 635 | 335 | 970 | ||||||||
Income taxes | 106 | 74 | 180 | ||||||||
Net income | 529 | 261 | 790 | ||||||||
Less: Net income attributable to noncontrolling interests | 23 | — | 23 | ||||||||
Net income attributable to Aon shareholders | $ | 506 | $ | 261 | $ | 767 | |||||
Diluted earnings per share | $ | 1.76 | $ | 0.91 | $ | 2.67 | |||||
Weighted average ordinary shares outstanding — diluted | 286.9 | — | 286.9 |
Six months ended June 30, | |||||||
2016 | 2015 | ||||||
Cash provided by operating activities - U.S. GAAP | $ | 764 | $ | 578 | |||
Less: Capital expenditures | (104 | ) | (142 | ) | |||
Free cash flow | $ | 660 | $ | 436 |
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 | $ | 438 | $ | — | $ | 2,582 | $ | 3,020 | ||||||||
Money market funds | — | 251 | 1,232 | 1,483 | ||||||||||||
Other investments due within one year | — | — | — | — | ||||||||||||
Cash and short-term investments | 438 | 251 | 3,814 | 4,503 | ||||||||||||
Fiduciary receivables | — | — | 6,387 | 6,387 | ||||||||||||
Total | $ | 438 | $ | 251 | $ | 10,201 | $ | 10,890 |
For the twelve months ended June 30, | |||||
2016 | 2015 | ||||
Net income | 1,500 | 1,311 | |||
Interest expense | 282 | 265 | |||
Income taxes | 290 | 295 | |||
Depreciation of fixed assets | 230 | 233 | |||
Amortization of intangible assets | 290 | 338 | |||
Total EBITDA | 2,592 | 2,442 | |||
Total Debt | 6,158 | 6,061 | |||
Total debt-to-EBITDA ratio | 2.4 | 2.5 |
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 |
• | negative net foreign currency translation adjustments of $138 million, which are attributable to the strengthening of the U.S. dollar against certain foreign currencies, |
• | an increase of $150 million in net post-retirement benefit obligations, and |
• | net financial instrument losses of $11 million. |
• | Risk Solutions acts as an advisor and insurance and reinsurance broker, helping clients manage their risks, via consultation, as well as negotiation and placement of insurance risk with insurance carriers through our global distribution network. |
• | HR Solutions partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance by designing, implementing, communicating and administering a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(millions, except percentage data) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Revenue | $ | 1,847 | $ | 1,833 | $ | 3,719 | $ | 3,728 | |||||||
Operating income | 373 | 279 | 802 | 691 | |||||||||||
Operating margin | 20.2 | % | 15.2 | % | 21.6 | % | 18.5 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Retail brokerage: | |||||||||||||||
Americas | $ | 830 | $ | 837 | $ | 1,538 | $ | 1,550 | |||||||
International (1) | 678 | 661 | 1,465 | 1,461 | |||||||||||
Total retail brokerage | 1,508 | 1,498 | 3,003 | 3,011 | |||||||||||
Reinsurance brokerage | 334 | 330 | 706 | 707 | |||||||||||
Total | $ | 1,842 | $ | 1,828 | $ | 3,709 | $ | 3,718 |
Three months ended June 30, 2016 | Percent Change | Less: Currency Impact | Less: Acquisitions, Divestitures & Other | Organic Revenue | ||||||||
Retail brokerage: | ||||||||||||
Americas | (1 | )% | (3 | )% | — | % | 2 | % | ||||
International (1) | 3 | (2 | ) | (1 | ) | 6 | ||||||
Total retail brokerage | 1 | (3 | ) | — | 4 | |||||||
Reinsurance brokerage | 1 | — | — | 1 | ||||||||
Total | 1 | % | (2 | )% | — | % | 3 | % | ||||
Six months ended June 30, | Percent Change | Less: Currency Impact | Less: Acquisitions, Divestitures & Other | Organic Revenue | ||||||||
Retail brokerage: | ||||||||||||
Americas | (1 | )% | (3 | )% | (1 | )% | 3 | % | ||||
International (1) | — | (4 | ) | (1 | ) | 5 | ||||||
Total retail brokerage | — | (4 | ) | — | 4 | |||||||
Reinsurance brokerage | — | (1 | ) | — | 1 | |||||||
Total | — | % | (3 | )% | — | % | 3 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(millions, except percentage data) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Revenue | $ | 931 | $ | 979 | $ | 1,861 | $ | 1,949 | |||||||
Operating income | 75 | 39 | 142 | 115 | |||||||||||
Operating margin | 8.1 | % | 4.0 | % | 7.6 | % | 5.9 | % |
· | Retirement specializes in global actuarial services, defined contribution consulting, tax and ERISA consulting, and pension administration. |
· | Compensation focuses on compensatory advisory/counsel including: compensation planning design, executive reward strategies, salary survey and benchmarking, market share studies and sales force effectiveness, with special expertise in the financial services and technology industries. |
· | Strategic Human Capital delivers advice to complex global organizations on talent, change and organizational effectiveness issues, including talent strategy and acquisition, executive on-boarding, performance management, leadership assessment and development, communication strategy, workforce training and change management. |
· | Investment consulting advises public and private companies, other institutions and trustees on developing and maintaining investment programs across a broad range of plan types, including defined benefit plans, defined contribution plans, endowments and foundations. |
· | Benefits Administration applies our human resource expertise primarily through defined benefit (pension), defined contribution (401(k)), and health and welfare administrative services. Our model replaces the resource-intensive processes once required to administer benefit plans with more efficient, effective, and less costly solutions. |
· | Exchanges is building and operating healthcare exchanges that provide employers with a cost effective alternative to traditional employee and retiree healthcare, while helping individuals select the insurance that best meets their needs. |
· | Human Resource Business Processing Outsourcing ("HR BPO") provides market-leading solutions to manage employee data; administers benefits, payroll and other human resources processes; and records and manages talent, workforce and other core human resource process transactions as well as other complementary services such as flexible spending, dependent audit and participant advocacy. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Consulting services | $ | 383 | $ | 391 | $ | 757 | $ | 762 | |||||||
Outsourcing | 550 | 599 | 1,110 | 1,203 | |||||||||||
Intrasegment | (2 | ) | (11 | ) | (6 | ) | (16 | ) | |||||||
Total | $ | 931 | $ | 979 | $ | 1,861 | $ | 1,949 |
Three months ended June 30, 2016 | Percent Change | Less: Currency Impact | Less: Acquisitions, Divestitures & Other | Organic Revenue | ||||||||
Consulting services | (2 | )% | (2 | )% | (1 | )% | 1 | % | ||||
Outsourcing | (8 | ) | (1 | ) | (7 | ) | — | |||||
Total | (5 | )% | (1 | )% | (5 | )% | 1 | % | ||||
Six months ended June 30, | Percent Change | Less: Currency Impact | Less: Acquisitions, Divestitures & Other | Organic Revenue | ||||||||
Consulting services | (1 | )% | (2 | )% | (1 | )% | 2 | % | ||||
Outsourcing | (8 | ) | (1 | ) | (7 | ) | — | |||||
Total | (5 | )% | (2 | )% | (5 | )% | 2 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Operating income (loss): | |||||||||||||||
Risk Solutions | $ | 373 | $ | 279 | $ | 802 | $ | 691 | |||||||
HR Solutions | 75 | 39 | 142 | 115 | |||||||||||
Unallocated | (43 | ) | (41 | ) | (89 | ) | (88 | ) | |||||||
Operating income | 405 | 277 | 855 | 718 | |||||||||||
Interest income | 3 | 4 | 5 | 7 | |||||||||||
Interest expense | (73 | ) | (68 | ) | (142 | ) | (133 | ) | |||||||
Other income | — | 1 | 18 | 43 | |||||||||||
Income before income taxes | $ | 335 | $ | 214 | $ | 736 | $ | 635 |
• | 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, including negative yield in some jurisdictions, that could influence revenue and expense; |
• | 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; |
• | rating agency actions that could affect our ability to borrow funds; |
• | the effect of the change in global headquarters and jurisdiction of incorporation, including differences in the anticipated benefits; |
• | changes in estimates or assumptions on our financial statements; |
• | limits on our subsidiaries to make dividend and other payments to us; |
• | the impact of lawsuits and other contingent liabilities and loss contingencies arising from errors and omissions and other claims against us; |
• | the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which we operate, particularly given the global scope of our businesses and the possibility of conflicting regulatory requirements across jurisdictions in which we do business; |
• | the impact of any investigations brought by regulatory authorities in the U.S., U.K. and other countries; |
• | the impact of any inquiries relating to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws and with U.S. and non-U.S. trade sanctions regimes; |
• | failure to protect intellectual property rights or allegations that we infringe on the intellectual property rights of others; |
• | the effects of English law on our operating flexibility and the enforcement of judgments against us; |
• | the failure to retain and attract qualified personnel; |
• | international risks associated with our global operations; |
• | the effect of natural or man-made disasters; |
• | the potential of a system or network breach or disruption resulting in operational interruption or improper disclosure of personal data; |
• | our ability to develop and implement new technology; |
• | damage to our reputation among clients, markets or third parties; |
• | the actions taken by third parties that perform aspects of our business operations and client services; |
• | the extent to which we manage certain risks created in connection with the various services, including fiduciary and investments and other advisory services and business process outsourcing services, among others, that we currently provide, or will provide in the future, to clients; |
• | our ability to grow, develop and integrate companies that it acquires 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; and |
• | our ability to implement initiatives intended to yield cost savings and the ability to achieve those cost savings. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||
4/1/16 - 4/30/16 | — | $ | — | — | $ | 3,324,314,629 | ||||||||
5/1/16 - 5/31/16 | — | — | — | 3,324,314,629 | ||||||||||
6/1/16 - 6/30/16 | — | — | — | 3,324,314,629 | ||||||||||
Total | — | — | $ | 3,324,314,629 |
Aon plc | ||
(Registrant) | ||
July 29, 2016 | By: | /s/ Laurel Meissner |
LAUREL MEISSNER | ||
SENIOR VICE PRESIDENT AND | ||
GLOBAL CONTROLLER | ||
(Principal Accounting Officer and duly authorized officer of Registrant) |
Exhibit Number | Description of Exhibit | |
10.1 | International Assignment Letter with Gregory C. Case, effective July 1, 2016. | |
10.2 | International Assignment Letter with Christa Davies, effective July 1, 2016. | |
10.3 | International Assignment Letter with Stephen P. McGill, effective July 1, 2016. | |
10.4 | International Assignment Letter with Peter Lieb, effective July 1, 2016. | |
12.1 | Statement regarding Computation of Ratio of Earnings to Fixed Charges. | |
31.1 | Certification of CEO. | |
31.2 | Certification of CFO. | |
32.1 | Certification of CEO Pursuant to section 1350 of Title 18 of the United States Code. | |
32.2 | Certification of CFO Pursuant to section 1350 of Title 18 of the United States Code. | |
101 | Interactive Data Files. The following materials are filed electronically with this Quarterly Report on Form 10-Q: | |
101.INS XBRL Report Instance Document | ||
101.SCH XBRL Taxonomy Extension Schema Document | ||
101.CAL XBRL Taxonomy Calculation Linkbase Document | ||
101.DEF XBRL Taxonomy Definition Linkbase Document | ||
101.PRE XBRL Taxonomy Presentation Linkbase Document | ||
101.LAB XBRL Taxonomy Calculation Linkbase Document |
1. | Introduction |
2. | International Assignment Duration |
3. | Immigration |
4. | Changes to Compensation Arrangements |
4.1 | Foreign Service Allowance |
4.2 | Housing Allowance |
4.3 | Cost of Living Allowance |
4.4 | Tax Preparation Services |
5. | Hours of Work and Holidays |
6. | Repayment Agreement |
7. | Termination of Employment |
• | Your cost of living allowance will continue until the Termination Date. |
• | Your housing allowance will continue until the later to occur of (1) the Termination Date or (2) the date of termination or expiration of any agreement, commitment or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment, or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment, or arrangement following the Termination Date (but without obligation for you to incur cost in doing so). |
• | Your enhanced tax preparation and financial planning benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards and benefits received under or contemplated by your Employment Agreement or this Letter before or after your Termination Date) and such benefits will be considered earned and vested on the Termination Date. |
8. | Completion of International Assignment |
9. | Repatriation Assistance |
10. | Third Party Beneficiary |
11. | No Waiver |
12. | Withholding and Deductions |
13. | Code Section 409A |
14. | Governing Law |
1. | Introduction |
2. | International Assignment Duration |
3. | Immigration |
4. | Changes to Compensation Arrangements |
4.1 | Foreign Service Allowance |
4.2 | Housing Allowance |
4.3 | Cost of Living Allowance |
4.4 | School Tuition Allowance |
4.5 | Car Allowance |
4.6 | Income Taxes Payable in the U.K. (Equalization Tax) |
4.7 | Tax Preparation Services |
5. | Hours of Work and Holidays |
6. | Repayment Agreement |
7. | Termination of Employment |
• | Your cost of living allowance (and all tax gross-ups thereon) will continue until the Termination Date. |
• | Your housing and car allowances (and all tax gross-ups thereon) will continue until the later to occur of (1) the Termination Date, or (2) the date of termination or expiration of any agreement, commitment, or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment or arrangement following the Termination Date (but without obligation for you to incur cost in doing so). |
• | Your enhanced tax preparation, financial planning benefits (and all tax gross-ups thereon), and tax equalization benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards, and benefits received under or contemplated by your Employment Agreement, the Executive Committee Combined Severance and Change in Control Plan (as amended from time to time), or this Letter before or after the Termination Date), and such benefits will be considered earned and vested on the Termination Date. |
8. | Completion of International Assignment |
9. | Repatriation Assistance |
10. | Third Party Beneficiary |
11. | No Waiver |
12. | Withholding and Deductions |
13. | Code Section 409A |
14. | Governing Law |
1. | Introduction |
2. | International Assignment Duration |
3. | Immigration |
4. | Changes to Compensation Arrangements |
4.1 | Cost of Living Allowance |
4.2 | Car Allowance |
4.3 | Income Taxes Payable in the U.K. (Equalization Tax) |
4.4 | Tax Preparation Services |
5. | Hours of Work and Holidays |
6. | Repayment Agreement |
7. | Termination of Employment |
• | Your cost of living allowance (and all tax gross-ups thereon) will continue until the Termination Date. |
• | Your car allowance (and all tax gross-ups thereon) will continue until the later to occur of (1) the Termination Date or (2) the date of termination or expiration of any agreement, commitment or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment, or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment, or arrangement following the Termination Date (but without obligation for you to incur cost in doing so). |
• | Your enhanced tax preparation, financial planning benefits (and all tax gross-ups thereon), and tax equalization benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards, and benefits received under or contemplated by your Employment Agreement, the Executive Committee Combined Severance and Change in Control Plan (as amended from time to time), or this Letter before or after the Termination Date), and such benefits will be considered earned and vested on the Termination Date. |
8. | Completion of International Assignment |
9. | Repatriation Assistance |
10. | Third Party Beneficiary |
11. | No Waiver |
12. | Withholding and Deductions |
13. | Code Section 409A |
14. | Governing Law |
1. | Introduction |
2. | International Assignment Duration |
3. | Immigration |
4. | Changes to Compensation Arrangements |
4.1 | Foreign Service Allowance |
4.2 | Housing Allowance |
4.3 | Cost of Living Allowance |
4.4 | Car Allowance |
4.5 | Home Leave Allowance |
4.6 | Income Taxes Payable in the U.K. (Equalization Tax) |
4.7 | Tax Preparation Services |
5. | Hours of Work and Holidays |
6. | Repayment Agreement |
7. | Termination of Employment |
• | Your cost of living and home leave allowances (and all tax gross-ups thereon) will continue until the Termination Date. |
• | Your housing and car allowances (and all tax gross-ups thereon) will continue until the later to occur of (1) the Termination Date or (2) the date of termination or expiration of any agreement, commitment or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment, or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment, or arrangement following the Termination Date (but without obligation for you to incur cost in doing so). |
• | Your enhanced tax preparation, financial planning benefits (and all tax gross-ups thereon), and tax equalization benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards, and benefits received under or contemplated by your Employment Agreement, the Executive Committee Combined Severance and Change in Control Plan (as amended from time to time), or this Letter before or after the Termination Date), and such benefits will be considered earned and vested on the Termination Date. |
8. | Completion of International Assignment |
9. | Repatriation Assistance |
10. | Third Party Beneficiary |
11. | No Waiver |
12. | Withholding and Deductions |
13. | Code Section 409A |
14. | Governing Law |
Six Months Ended June 30, | Years Ended December 31, | |||||||||||||||||||||||
(millions except ratio) | 2016 | 2015 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||
Income from continuing operations before income taxes and noncontrolling interests (1) | $ | 736 | $ | 635 | $ | 1,689 | $ | 1,765 | $ | 1,538 | $ | 1,380 | ||||||||||||
Less: Equity in earnings on less than 50% owned entities | 3 | 6 | 13 | 12 | 20 | 13 | ||||||||||||||||||
Add back fixed charges: | ||||||||||||||||||||||||
Interest on indebtedness | 142 | 133 | 273 | 255 | 210 | 228 | ||||||||||||||||||
Interest on uncertain tax positions | — | (2 | ) | — | 4 | 5 | 5 | |||||||||||||||||
Portion of rents representative of interest factor | 17 | 22 | 45 | 50 | 52 | 42 | ||||||||||||||||||
Income as adjusted | $ | 892 | $ | 782 | $ | 1,994 | $ | 2,062 | $ | 1,785 | $ | 1,642 | ||||||||||||
Fixed charges: | ||||||||||||||||||||||||
Interest on indebtedness | $ | 142 | $ | 133 | $ | 273 | $ | 255 | $ | 210 | $ | 228 | ||||||||||||
Interest on uncertain tax positions | — | (2 | ) | — | 4 | 5 | 5 | |||||||||||||||||
Portion of rents representative of interest factor | 17 | 22 | 45 | 50 | 52 | 42 | ||||||||||||||||||
Total fixed charges | $ | 159 | $ | 153 | $ | 318 | $ | 309 | $ | 267 | $ | 275 | ||||||||||||
Ratio of earnings to fixed charges | 5.6 | 5.1 | 6.3 | 6.7 | 6.7 | 6.0 |
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 29, 2016 | /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 29, 2016 | /s/ CHRISTA DAVIES |
Christa Davies Chief Financial Officer |
/s/ GREGORY C. CASE | |
Gregory C. Case Chief Executive Officer | |
July 29, 2016 |
/s/ CHRISTA DAVIES | |
Christa Davies Chief Financial Officer | |
July 29, 2016 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 21, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | Aon plc | |
Entity Central Index Key | 0000315293 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 265,587,217 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 280 | $ 188 | $ 607 | $ 529 |
Less: Net income attributable to noncontrolling interests | 8 | 10 | 20 | 23 |
Net income attributable to Aon shareholders | 272 | 178 | 587 | 506 |
Other comprehensive (loss) income, net of tax: | ||||
Change in fair value of financial instruments | (4) | (6) | (11) | (1) |
Foreign currency translation adjustments | (59) | 175 | (138) | (147) |
Post-retirement benefit obligation | 51 | 21 | (150) | 44 |
Total other comprehensive (loss) income | (12) | 190 | (299) | (104) |
Other Comprehensive Income (Loss), Net of Tax | (12) | 190 | (299) | (104) |
Less: Other comprehensive loss attributable to noncontrolling interests | 0 | (1) | 0 | (2) |
Total other comprehensive (loss) income attributable to Aon shareholders | (12) | 191 | (299) | (102) |
Comprehensive income attributable to Aon shareholders | $ 260 | $ 369 | $ 288 | $ 404 |
Condensed Consolidated Statements of Financial Position (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, nominal or par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 750,000,000 | 750,000,000 |
Common stock, issued shares | 265,800,000 | 269,800,000 |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements and Notes thereto have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The Condensed Consolidated Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries ("Aon" or the "Company"). All intercompany accounts and transactions have been eliminated. The Condensed Consolidated Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company's consolidated financial position, results of operations and cash flows for all periods presented. Certain information and disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The results for the three and six months ended June 30, 2016 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2016. Reclassification Certain amounts in prior years' Condensed Consolidated Financial Statements and related notes have been reclassified to conform to the 2016 presentation. Upon vesting of certain share-based payment arrangements, employees may elect to use a portion of the shares to satisfy tax withholding requirements, in which case Aon makes a payment to the taxing authority on the employee’s behalf and remits the remaining shares to the employee. Prior to the fourth quarter of 2015, the Company presented amounts due to taxing authorities within Cash Flows From Operating Activities in the Condensed Consolidated Statements of Cash Flows. These amounts are now included in “Issuance of shares for employee benefit plans” within Cash Flows From Financing Activities. The Company believes this presentation provides greater clarity into the operating and financing activities of the Company as the substance and accounting for these transactions is that of a share repurchase. It also aligns the Company’s presentation to be consistent with industry practice and share-based compensation guidance issued by the Financial Accounting Standards Board (the "FASB") in March 2016. The amount reported in Issuance of shares for employee benefit plans was $213 million for the six months ended June 30, 2015. This amount, which was reclassified from Accounts payable and accrued liabilities and Other assets and liabilities, was $150 million and $63 million, respectively, for the six months ended June 30, 2015. Changes to the presentation of the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 were made related to certain line items within financing activities. In 2016, Purchases of shares from noncontrolling interests and Dividends paid to noncontrolling interests have been aggregated in a new line item titled “Noncontrolling interests and other financing activities” within financing activities. The balances held in these line items for the six months ended June 30, 2015 was $(5) million and $(18) million, respectively. Additionally, Restructuring reserves have been retrospectively reclassified to Other asset and liabilities. The balance held in Restructuring reserves for the six months ended June 30, 2015, was $(19) million. Use of Estimates The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management's best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the financial statements in future periods. |
Accounting Principles and Practices |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Accounting Principles and Practices | Accounting Principles and Practices New Accounting Pronouncements Credit Losses In June 2016, the FASB issued new accounting guidance on the measurement of credit losses on financial instruments. The new guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. Aon is currently evaluating the impact that the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption. Share-based Compensation In March 2016, the FASB issued new accounting guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement and treated as discrete items in the reporting period. Further, excess tax benefits are required to be classified along with other income tax cash flows as an operating activity. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The guidance is effective for Aon in the first quarter of 2017 and early adoption is permitted. Aon is currently evaluating the impact that the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption. Leases In February 2016, the FASB issued new accounting guidance on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from currently effective U.S. GAAP. The new standard will be effective for the Company in the first quarter of 2019, with early application permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. Aon is currently evaluating the impact the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption. Financial Assets and Liabilities In January 2016, the FASB issued new accounting guidance on recognition and measurement of financial assets and financial liabilities. The amendments in the new guidance make targeted improvements, which include the requirement to measure equity investments with readily determinable fair values at fair value through net income, simplification of the impairment assessment for equity investments without readily determinable fair values, adjustments to existing and additional disclosure requirements, and additional tax considerations. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the guidance. The guidance is effective for the Company in the first quarter of 2018 and early adoption is permitted. Aon is currently evaluating the impact that the standard will have on the its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption. Presentation of Deferred Taxes In November 2015, the FASB issued new accounting guidance on the balance sheet presentation of deferred taxes, which requires that deferred tax liabilities and assets be classified as non-current. Aon early adopted this guidance in the second quarter of 2016 and retrospectively applied its requirements to all periods presented. For the year ended December 31, 2015, Aon reclassified its current deferred tax positions to non-current and netted the new balances by jurisdiction, which increased Non-current deferred tax assets by $92 million and decreased Non-current deferred tax liabilities by $139 million on the Condensed Consolidated Statement of Financial Position. Debt Issuance Costs In April 2015, the FASB issued new accounting guidance on the presentation of debt issuance costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This guidance will also be applied to Aon's debt issuance costs related to its line-of-credit arrangements. This guidance was effective for Aon in the first quarter of 2016, which required retrospective application to prior year comparable periods. For the year ended December 31, 2015, Aon reclassified $4 million from Other current assets and $33 million from Other non-current assets to Long-term debt on the Condensed Consolidated Statement of Financial Position. Consolidations In February 2015, the FASB issued new accounting guidance on consolidations, which will eliminate the deferral granted to investment companies from applying the variable interest entities guidance and make targeted amendments to the current consolidation guidance. The new guidance applies to all entities involved with limited partnerships or similar entities and requires re-evaluation of these entities under the revised guidance, which could change previous consolidation conclusions. The guidance was effective for the Company in the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements. Revenue Recognition In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers, which, when effective, will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The guidance is effective for the Company in the first quarter of 2018 and early adoption is permitted beginning the first quarter of 2017. The guidance permits two methods of transition upon adoption: full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing a comparable view across all periods presented. Under the modified retrospective method, prior periods would not be restated. Rather, revenues and other disclosures for pre-2018 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. Aon is currently evaluating the impact that the standard will have on the Company's Condensed Consolidated Financial Statements. The Company is also determining the appropriate method of transition to the guidance, but expects to adopt upon the effective date of January 1, 2018. |
Cash and Cash Equivalents and Short-term Investments |
6 Months Ended |
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Jun. 30, 2016 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
Cash and Cash Equivalents and Short-term Investments | Cash and Cash Equivalents and Short-term Investments Cash and cash equivalents include cash balances and all highly liquid debt instruments with initial maturities of three months or less. Short-term investments include certificates of deposit, money market funds and highly liquid debt instruments purchased with initial maturities in excess of three months but less than one year and are carried at amortized cost, respectively, which approximates fair value. At June 30, 2016, Cash and cash equivalents and Short-term investments were $689 million compared to $740 million at December 31, 2015. Of the total balances, $87 million and $105 million was restricted as to its use at June 30, 2016 and December 31, 2015, respectively. Included within the June 30, 2016 and December 31, 2015 balances, respectively, were £43.4 million ($59.4 million at June 30, 2016 exchange rates) and £43.3 million ($64.6 million at December 31, 2015 exchange rates) of operating funds required to be held by the Company in the U.K. by the Financial Conduct Authority, a U.K.-based regulator, which were included in Short-term investments. |
Other Financial Data |
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Other Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data | Other Financial Data Condensed Consolidated Statements of Income Information Other Income Other income consists of the following (in millions):
Condensed Consolidated Statements of Financial Position Information Allowance for Doubtful Accounts An analysis of the Allowance for doubtful accounts is as follows (in millions):
Other Current Assets The components of Other current assets are as follows (in millions):
Other Non-Current Assets The components of Other non-current assets are as follows (in millions):
Other Current Liabilities The components of Other current liabilities are as follows (in millions):
Other Non-Current Liabilities The components of Other non-current liabilities are as follows (in millions):
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Acquisitions and Dispositions of Businesses |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Dispositions of Businesses | Acquisitions and Dispositions of Businesses Acquisitions The number of acquisitions completed within each reportable segment is as follows:
The following table includes the aggregate consideration transferred and the preliminary value of intangible assets recorded as a result of the Company's acquisitions (in millions):
The results of operations of these acquisitions are included in the Condensed Consolidated Financial Statements as of the acquisition date. The results of operations of the Company would not have been materially different if these acquisitions had been reported from the beginning of the period in which they were acquired. Dispositions The number of dispositions completed within each reportable segment is as follows:
Total pretax gains, net of losses, recognized were $6 million and $1 million, respectively, for the three months ended June 30, 2016 and June 30, 2015. Total pretax gains, net of losses, recognized were $41 million and $20 million, respectively for the six months ended June 30, 2016 and June 30, 2015. Gains and losses recognized as a result of a disposition are included in Other income in the Condensed Consolidated Statements of Income. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The changes in the net carrying amount of goodwill by reportable segment for the six months ended June 30, 2016 are as follows (in millions):
Other intangible assets by asset class are as follows (in millions):
Amortization expense from finite lived intangible assets was $68 million and $135 million, respectively, for the three and six months ended June 30, 2016. Amortization expense from finite lived intangible assets was $79 million and $159 million, respectively, for the three and six months ended June 30, 2015. The estimated future amortization for finite lived intangible assets as of June 30, 2016 is as follows (in millions):
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Debt |
6 Months Ended |
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Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Revolving Credit Facilities As of June 30, 2016, Aon plc had two primary committed credit facilities outstanding: its $400 million U.S. credit facility expiring in March 2017 (the "2017 Facility") and its $900 million multi-currency U.S. credit facility expiring in February 2021 (the "2021 Facility"). Each of these facilities includes customary representations, warranties and covenants, including financial covenants that require Aon plc to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At June 30, 2016, Aon plc did not have borrowings under either the 2017 Facility or the 2021 Facility, and was in compliance with all covenants contained therein during the six months ended June 30, 2016. Commercial Paper Aon Corporation, a wholly-owned subsidiary of Aon plc, has established a U.S. commercial paper program, which provides for commercial paper to be issued in an aggregate principal amount of up to $900 million, and a European multi-currency commercial paper program, which provides for commercial paper to be issued in an aggregate principal amount of up to €300 million. The U.S. commercial paper program is fully and unconditionally guaranteed by Aon plc and the European commercial paper program is fully and unconditionally guaranteed by Aon Corporation. In the aggregate, the Company had $241 million and $50 million of commercial paper outstanding at June 30, 2016 and December 31, 2015, respectively, which is included in Short-term debt and current portion of long-term debt in the Company's Condensed Consolidated Statements of Financial Position. The weighted average commercial paper outstanding for the three and six months ended June 30, 2016, respectively, was $304 million and $240 million. The weighted average interest rate of the commercial paper outstanding for the three and six months ended June 30, 2016 was 0.59% and 0.41%, respectively. Notes On March 1, 2016, Aon plc issued $750 million of 3.875% Senior Notes due December 2025. The Company used the proceeds of the issuance for general corporate purposes. On May 27, 2016, $500 million of 3.125% Senior Notes issued by Aon Corporation matured and were repaid in full. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate on net income was 16.4% and 17.5% for the three and six months ended June 30, 2016, respectively. The effective tax rate on net income was 12.2% and 16.8% for the three and six months ended June 30, 2015, respectively. The effective tax rate in the second quarter of 2016 was impacted by changes in the geographical distribution of income and certain discrete items. The effective tax rate in the second quarter of 2015 was impacted by the reduction in U.S. income resulting from expenses relating to legacy legal settlements. |
Shareholders' Equity |
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Shareholders' Equity | Shareholders' Equity Ordinary Shares In April 2012, the Company's Board of Directors authorized a share repurchase program under which up to $5.0 billion of Class A Ordinary Shares may be repurchased (the "2012 Share Repurchase Program"). In November 2014, the Company's Board of Directors authorized a new $5.0 billion share repurchase program in addition to the existing program (the "2014 Share Repurchase Program" and, together, the "Repurchase Programs"). Under each program, shares may be repurchased through the open market or in privately negotiated transactions, from time to time, based on prevailing market conditions, and will be funded from available capital. In the three months ended June 30, 2016, the Company did not repurchase shares under the Repurchase Programs. During the six months ended June 30, 2016, the Company repurchased 7.7 million shares at an average price per share of $97.92 for a total cost of approximately $750 million under the Repurchase Programs. Included in the 7.7 million shares repurchased was 0.6 million shares repurchased in March 2016 which did not settle until April 2016. These shares were settled at an average price per share of $103.58 and a total cost of approximately $65 million. In the three months ended June 30, 2015, the Company repurchased 3.0 million shares at an average price per share of $100.92 for a total cost of approximately $300 million. During the six months ended June 30, 2015, we repurchased 5.5 million shares at an average price per share of $100.57 for a total cost of $550 million. In August 2015, the $5 billion of Class A Ordinary Shares authorized under the 2012 Share Repurchase Program was exhausted. At June 30, 2016, the remaining authorized amount for share repurchase under the 2014 Share Repurchase Program was $3.3 billion. Under the Repurchase Programs, the Company has repurchased a total of 85.7 million shares for an aggregate cost of approximately $6.7 billion. Net Income Per Share Weighted average shares outstanding are as follows (in millions):
Certain ordinary share equivalents may be excluded from the computation of diluted net income per share if their inclusion would be antidilutive. There were no shares and 0.3 million shares excluded from the calculation for the three and six months ended June 30, 2016 and no shares excluded from the calculation for the three and six months ended June 30, 2015. Accumulated Other Comprehensive Loss Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):
______________________________________________ (1) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income, Other general expenses, and Compensation and benefits. See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity. (2) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Compensation and benefits. In March 2016, the Company entered into an insurance contract which covers a portion of the assets within select U.K. pension schemes. The transaction resulted in a decrease in Prepaid pension assets and Accumulated other comprehensive income of $267 million as the fair value in the insurance policies was deemed to be the present value of the current obligation. |
Employee Benefits |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefits | Employee Benefits The following table provides the components of the net periodic (benefit) cost recognized in the Condensed Consolidated Statements of Income in Compensation and benefits for Aon's material U.K., U.S., and other significant international pension plans located in the Netherlands and Canada (in millions):
Beginning in 2016, the Company has elected to utilize a full yield curve approach in the estimation of the service and interest cost components of net periodic pension and post-retirement benefit cost for Aon's major pension and other post-retirement benefit plans by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. In 2015 and prior years, the Company estimated these components of net periodic pension and post-retirement benefit cost by applying a single weighted-average discount rate, derived from the yield curve used to measure the benefit obligation at the beginning of the period. The Company made this change to improve the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of service and interest costs. This change does not affect the measurement of the projected benefit obligation as the change in the service cost and interest cost is completely offset in the actuarial (gain) loss recorded in other comprehensive income. The Company accounted for this change as a change in estimate and, accordingly, will account for it prospectively. In March 2016, the Company announced a plan to offer a voluntary one-time lump sum payment option to certain eligible former employees under one of the Company’s U.K. pension plans, that if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during the second quarter of 2016. In total, lump sum payments from plan assets of £116 million ($159 million using June 30, 2016 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the second quarter of 2016, which in aggregate resulted in a net reduction to the projected benefit obligation of £103 million ($141 million using June 30, 2016 exchange rates) as well as a non-cash settlement charge of £42 million ($61 million using average June 2016 exchange rate), in the second quarter of 2016. Contributions The Company expects to contribute approximately $79 million, $54 million, and $17 million, based on exchange rates as of December 31, 2015, to its significant U.K., U.S., and other significant international pension plans, respectively, during 2016. During the three months ended June 30, 2016, contributions of $17 million, $6 million, and $3 million were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively. During the six months ended June 30, 2016, contributions of $34 million, $19 million, and $10 million were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively. During the three months ended June 30, 2015, contributions of $15 million, $28 million, and $4 million were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively. During the six months ended June 30, 2015, contributions of $34 million, $62 million, and $8 million were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively. |
Share-Based Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Plans | Share-Based Compensation Plans The following table summarizes share-based compensation expense recognized in the Condensed Consolidated Statements of Income in Compensation and benefits (in millions):
Restricted Share Units A summary of the status of the Company's RSUs is as follows (shares in thousands):
Performance Share Awards The vesting of PSAs is contingent upon meeting a cumulative level of earnings per share performance over a three-year period. The performance conditions are not considered in the determination of the grant date fair value for these awards. The fair value of PSAs is based upon the market price of an Aon ordinary share at the date of grant. Compensation expense is recognized over the performance period based on management's estimate of the number of awards expected to vest. Compensation expense is adjusted to reflect the actual number of shares issued at the end of the programs. The actual issue of shares may range from 0-200% of the target number of PSAs granted, based on the terms of the plan and level of achievement of the related performance target. Dividend equivalents are not paid on PSAs. Information as of June 30, 2016 regarding the Company's target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the six months ended June 30, 2016 and the years ended December 31, 2015 and 2014, respectively, is as follows (shares in thousands, dollars in millions, except fair value):
Share Options The Company did not grant any share options during either the six months ended June 30, 2016 or the six months ended June 30, 2015. A summary of the status of the Company's share options and related information is as follows (shares in thousands):
The weighted average remaining contractual life, in years, of outstanding options was 2.4 years and 2.7 years at June 30, 2016 and 2015, respectively. The aggregate intrinsic value represents the total pretax intrinsic value, based on options with an exercise price less than the Company's closing share price of $109.23 as of June 30, 2016, which would have been received by the option holders had those option holders exercised their options as of that date. At June 30, 2016, the aggregate intrinsic value of options outstanding, all of which were exercisable, was $38 million. Other information related to the Company's share options is as follows (in millions):
Unamortized deferred compensation expense, which includes both options and RSUs, amounted to $460 million as of June 30, 2016, with a remaining weighted-average amortization period of approximately 2.0 years. |
Derivatives and Hedging |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging | Derivatives and Hedging The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, enters into monetary intercompany transfers denominated in a currency that differs from its functional currency, or enters into other transactions that are denominated in a currency other than its functional currency. The Company uses foreign exchange derivatives, typically forward contracts, options and cross currency swaps, to reduce its overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income. The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company's global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30 day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income in the Condensed Consolidated Statements of Income. The notional and fair values of derivative instruments are as follows (in millions):
______________________________________________
Offsetting of financial assets and derivatives assets are as follows (in millions):
______________________________________________ (1) Included within Other current assets ($2 million at June 30, 2016 and $6 million at December 31, 2015) or Other non-current assets ($9 million at June 30, 2016 and $13 million at December 31, 2015). Offsetting of financial liabilities and derivative liabilities are as follows (in millions):
______________________________________________ (1) Included within Other current liabilities ($5 million at June 30, 2016 and $4 million at December 31, 2015) or Other non-current liabilities ($2 million at June 30, 2016 and $1 million at December 31, 2015). The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2016 and 2015 are as follows (in millions):
The Company estimates that approximately $15 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified into earnings in the next twelve months. The amount of gain (loss) recognized in income on the ineffective portion of derivatives for the three and six months ended June 30, 2016 and 2015 was not material. During the three and six months ended June 30, 2016, the Company recorded a loss of $2 million and $1 million, respectively, in Other income for foreign exchange derivatives not designated or qualifying as hedges. During the three and six months ended June 30, 2015, the Company recorded a gain of $2 million and $9 million, respectively, in Other income for foreign exchange derivatives not designated or qualifying as hedges. Net Investments in Foreign Operations Risk Management The Company uses non-derivative financial instruments to protect the value of its investments in a number of foreign subsidiaries. Beginning in June 2016, the Company designated its Euro-denominated commercial paper issuances as a non-derivative hedge of a net investment in its European operations. The change in the carrying value of the designated portion of the Euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive income (loss), offsetting the foreign currency translation adjustment of the hedged net investments that is also recorded in Accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from Accumulated other comprehensive income (loss) into earnings during the period of change. As of June 30, 2016, the Company has €217 million ($241 million at June 30, 2016 exchange rates) of outstanding Euro-denominated commercial paper designated as a hedge of its net investment in its European operations. The weighted average commercial paper outstanding for June 2016 was €55 million. The associated gain recognized in Accumulated other comprehensive income (loss) related to the net investment hedge was $4 million. The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive income (loss) to earnings during the three or six months ended June 30, 2016. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three or six months ended June 30, 2016. |
Fair Value Measurements and Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments Accounting standards establish a three tier fair value hierarchy that prioritizes the inputs used in measuring fair values as follows:
The following methods and assumptions are used to estimate the fair values of the Company's financial instruments: Money market funds are carried at cost as an approximation of fair value. Based on market convention, the Company considers cost a practical and expedient measure of fair value. Equity investments consist of domestic and international equity securities valued using the closing stock price on a national securities exchange. The Company reviews the listing of Level 1 equity securities in the portfolio and agrees the closing stock prices to a national securities exchange, and on a sample basis, independently verifies the observable inputs for Level 2 equity securities. Fixed income investments consist of corporate and government bonds. Corporate and government bonds are valued by pricing vendors who estimate fair value using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves and credit risk. The Company obtains a detailed understanding of the models, inputs, and assumptions used in developing prices provided by its vendors. This understanding includes discussions with valuation resources at the vendor. During these discussions, the Company uses a fair value measurement questionnaire, which is part of the Company's internal controls over financial reporting, to obtain the information necessary to assert the model, inputs and assumptions used to comply with U.S. GAAP, including disclosure requirements. The Company also obtains observable inputs from the pricing vendor and independently verifies the observable inputs, as well as assesses assumptions used for reasonableness based on relevant market conditions and internal Company guidelines. If an assumption is deemed unreasonable, based on the Company's guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and have historically not been material to the fair value estimates used in the Condensed Consolidated Financial Statements. Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities. Debt is carried at outstanding principal balance, less any unamortized discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements. The following tables present the categorization of the Company's assets and liabilities that are measured at fair value on a recurring basis at June 30, 2016 and December 31, 2015 (in millions):
______________________________________________ (1) Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. (2) See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity.
______________________________________________ (1) Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. (2) See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity. There were no transfers of assets or liabilities between fair value hierarchy levels in either the three or six months ended June 30, 2016 or 2015. The Company recognized no realized or unrealized gains or losses in the Condensed Consolidated Statements of Income during either the three or six months ended June 30, 2016 or 2015, related to assets and liabilities measured at fair value using unobservable inputs. The fair value of Long-term debt is classified as Level 2 of the fair value hierarchy. The following table discloses the Company's financial instruments where the carrying amounts and fair values differ (in millions):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Aon and its subsidiaries are subject to numerous claims, tax assessments, lawsuits and proceedings that arise in the ordinary course of business, which frequently include errors and omissions ("E&O") claims. The damages claimed in these matters are or may be substantial, including, in many instances, claims for punitive, treble or extraordinary damages. While Aon maintains meaningful E&O insurance and other insurance programs to provide protection against certain losses that arise in such matters, Aon has exhausted or materially depleted its coverage under some of the policies that protect the Company and, consequently, is self-insured or materially self-insured for some claims. Accruals for these exposures, and related insurance receivables, when applicable, are included in the Condensed Consolidated Statements of Financial Position and have been recognized in Other general expenses in the Condensed Consolidated Statements of Income to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Matters that are not probable and reasonably estimable are not accrued for in the financial statements. We have included in the matters described below certain matters in which (1) loss is probable, (2) loss is reasonably possible; that is, more than remote but not probable, or (3) there exists the reasonable possibility of loss greater than the accrued amount. In addition, we may from time to time disclose matters for which the probability of loss could be remote but the claim amounts associated with such matters are potentially significant. The reasonably possible range of loss for the matters described below, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.3 billion, exclusive of any insurance coverage. These estimates are based on currently available information. As available information changes, the matters for which Aon is able to estimate may change, and the estimates themselves may change. In addition, many estimates involve significant judgment and uncertainty. For example, at the time of making an estimate, Aon may only have limited information about the facts underlying the claim, and predictions and assumptions about future court rulings and outcomes may prove to be inaccurate. Although management at present believes that the ultimate outcome of all matters described below, individually or in the aggregate, will not have a material adverse effect on the consolidated financial position of Aon, legal proceedings are subject to inherent uncertainties and unfavorable rulings or other events. Unfavorable resolutions could include substantial monetary or punitive damages imposed on Aon or its subsidiaries. If unfavorable outcomes of these matters were to occur, future results of operations or cash flows for any particular quarterly or annual period could be materially adversely affected. Current Matters A retail insurance brokerage subsidiary of Aon was sued on September 14, 2010 in the Chancery Court for Davidson County, Tennessee, Twentieth Judicial District, at Nashville by a client, Opry Mills Mall Limited Partnership ("Opry Mills") that sustained flood damage to its property in May 2010. The lawsuit seeks $200 million in coverage from numerous insurers with whom this Aon subsidiary placed the client's property insurance coverage. The insurers contend that only $50 million in coverage (which has already been paid) is available for the loss because the flood event occurred on property in a high hazard flood zone. Opry Mills is seeking full coverage from the insurers for the loss and has sued this Aon subsidiary in the alternative for the same $150 million difference on various theories of professional liability if the court determines there is not full coverage. In addition, Opry Mills seeks prejudgment interest, attorneys' fees and enhanced damages which could substantially increase Aon's exposure. In March 2015, the trial court granted partial summary judgment in favor of plaintiffs and against the insurers, holding generally that the plaintiffs are entitled to $200 million in coverage under the language of the policies. In August 2015, a jury returned a verdict in favor of Opry Mills and against the insurers in the amount of $204 million. Aon understands that the insurers intend to appeal both of these trial court decisions. Aon believes it has meritorious defenses and intends to vigorously defend itself against these claims. A pensions consulting and administration subsidiary of Hewitt before its acquisition by Aon provided advisory services to the Trustees of the Philips UK pension fund and the relevant employer of fund beneficiaries. On January 2, 2014, Philips Pension Trustees Limited and Philips Electronics UK Limited (together, "Philips") sued Aon in the High Court, Chancery Division, London alleging negligence and breach of duty. The proceedings assert Philips' right to claim damages related to Philips' use of a credit default swap hedging strategy pursuant to the supply of the advisory services, which is said to have resulted in substantial damages to Philips. Philips sought approximately £189 million ($259 million at June 30, 2016 exchange rates), plus interest and costs. In June 2015, the High Court ordered Philips to clarify several aspects of its claim. In its clarification, Philips increased the amount of its claim to £290 million ($397 million at June 30, 2016 exchange rates), plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these allegations. On June 1, 2007, the International Road Transport Union ("IRU") sued Aon in the Geneva Tribunal of First Instance in Switzerland. IRU alleges, among other things, that, between 1995 and 2004, a business acquired by Aon and, later, an Aon subsidiary (1) accepted commissions for certain insurance placements that violated a fee agreement entered between the parties and (2) negligently failed to ask certain insurance carriers to contribute to the IRU's risk management costs. IRU sought damages of approximately CHF 46 million ($47 million at June 30, 2016 exchange rates) and $3 million, plus legal fees and interest of approximately $30 million. On December 2, 2014, the Geneva Tribunal of First Instance entered a judgment that accepted some, and rejected other, of IRU's claims. The judgment awarded IRU CHF 16.8 million ($17 million at June 30, 2016 exchange rates) and $3.1 million, plus interest and adverse costs. The entire amount of the judgment, including interest through December 31, 2014, totaled CHF 27.9 million ($29 million at June 30, 2016 exchange rates) and $5 million. On January 26, 2015, in return for IRU agreeing not to appeal the bulk of its dismissed claims, the Aon subsidiary agreed not to appeal a part of the judgment and to pay IRU CHF 12.8 million ($13 million at June 30, 2016 exchange rates) and $4.7 million without Aon admitting liability. The Aon subsidiary appealed those aspects of the judgment it retained the right to appeal. IRU did not appeal. The Geneva Appellate Court affirmed the judgment of the Geneva Tribunal of First Instance. The Geneva Appellate Court’s judgment can be appealed to the Swiss Supreme Court. The Aon subsidiary's maximum liability on appeal is limited to CHF 8.7 million ($9 million at June 30, 2016 exchange rates) and $115,000 (plus interest and costs) beyond what the subsidiary has already paid. A pensions consulting and administration subsidiary of Aon provided advisory services to the Trustees of the Gleeds pension fund in the United Kingdom and, on occasion, to the relevant employer of the fund. In April 2014, the High Court, Chancery Division, London found that certain governing documents of the fund that sought to alter the fund's benefit structure and that had been drafted by Aon were procedurally defective and therefore invalid. No lawsuit naming Aon as a party has been filed, although a tolling agreement has been entered. The High Court decision says that the additional liabilities in the pension fund resulting from the alleged defect in governing documents amount to approximately £45 million ($62 million at June 30, 2016 exchange rates). In December 2014, the Court of Appeal granted the employer leave to appeal the High Court decision. The Court of Appeal hearing was set for October 2015, but has been postponed to permit the parties to discuss possible settlement. Aon believes that it has meritorious defenses and intends to vigorously defend itself against this potential claim. On June 29, 2015, Lyttelton Port Company Limited ("LPC") sued Aon New Zealand in the Christchurch Registry of the High Court of New Zealand. LPC alleges, among other things, that Aon was negligent and in breach of contract in arranging LPC’s property insurance program for the period covering June 30, 2010 to June 30, 2011. LPC contends that acts and omissions by Aon caused LPC to recover less than it otherwise would have from insurers for losses suffered in the 2010/2011 Canterbury Earthquakes. LPC claims damages of approximately NZD 184 million ($131 million at June 30, 2016 exchange rates) plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims. In addition, from time to time, Aon's clients may bring claims and take legal action pertaining to the performance of fiduciary responsibilities. Whether client claims and legal action related to the Company's performance of fiduciary responsibilities are founded or unfounded, if such claims and legal actions are resolved in a manner unfavorable to the Company, they may adversely affect Aon's financial results and materially impair the market perception of the Company and that of its products and services. Guarantees and Indemnifications In connection with the redomicile of Aon's headquarters (the "Redomestication"), the Company on April 2, 2012 entered into various agreements pursuant to which it agreed to guarantee the obligations of its subsidiaries arising under issued and outstanding debt securities. Those agreements included the (1) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc, and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee") (amending and restating the Indenture, dated as of September 10, 2010, between Aon Corporation and the Trustee), (2) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of December 16, 2002, between Aon Corporation and the Trustee), (3) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of January 13, 1997, as supplemented by the First Supplemental Indenture, dated as of January 13, 1997), and (4) First Supplemental Indenture, dated as of April 2, 2012, among Aon Finance N.S. 1, ULC, as issuer, Aon Corporation, as guarantor, Aon plc, as guarantor, and Computershare Trust Company of Canada, as trustee. The Company provides a variety of guarantees and indemnifications to its customers and others. The maximum potential amount of future payments represents the notional amounts that could become payable under the guarantees and indemnifications if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or other methods. These amounts may bear no relationship to the expected future payments, if any, for these guarantees and indemnifications. Any anticipated amounts payable are included in the Company's Condensed Consolidated Financial Statements, and are recorded at fair value. The Company expects that, as prudent business interests dictate, additional guarantees and indemnifications may be issued from time to time. Letters of Credit The Company had total letters of credit ("LOCs") outstanding of approximately $82 million at June 30, 2016, compared to $58 million at December 31, 2015. These letters of credit cover the beneficiaries related to certain of Aon's U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for the Company's own workers compensation program. The Company has also issued LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at its international subsidiaries. Commitments The Company has provided commitments to fund certain limited partnerships in which it has an interest in the event that the general partners request funding. Some of these commitments have specific expiration dates and the maximum potential funding under these commitments was $12 million at June 30, 2016 and December 31, 2015. During the three and six months ended June 30, 2016, no significant commitments were funded. Premium Payments The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $89 million at June 30, 2016 compared to $104 million at December 31, 2015. |
Segment Information |
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Segment Information | Segment Information The Company has two reportable segments: Risk Solutions and HR Solutions. Unallocated income and expenses, when combined with the operating segments and after the elimination of intersegment revenues and expenses, equal the amounts in the Condensed Consolidated Financial Statements. Reportable operating segments have been determined using a management approach, which is consistent with the basis and manner in which Aon's chief operating decision-maker ("CODM") uses financial information for the purposes of allocating resources and evaluating performance. The CODM assesses performance based on operating income and generally accounts for inter-segment revenue as if the revenue were from third parties and at what management believes are current market prices. The Company does not present net assets by segment as this information is not reviewed by the CODM. Risk Solutions acts as an advisor and insurance and reinsurance broker, helping clients manage their risks, via consultation, as well as negotiation and placement of insurance risk with insurance carriers through Aon's global distribution network. HR Solutions partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance by designing, implementing, communicating and administering a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. Aon's total revenue is as follows (in millions):
Commissions, fees and other revenues by product are as follows (in millions):
Fiduciary investment income by segment is as follows (in millions):
A reconciliation of segment operating income before tax to income before income taxes is as follows (in millions):
Unallocated expenses include administrative or other costs not attributable to the operating segments, such as corporate governance costs. Interest income represents income earned primarily on operating cash balances and certain income producing securities. Interest expense represents the cost of debt obligations. Other income consists of equity earnings, realized gains or losses on the sale of investments, gains or losses on the disposal of businesses, gains or losses on derivatives, and gains or losses on foreign currency transactions. |
Guarantee of Registered Securities |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantee of Registered Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantee of Registered Securities | Guarantee of Registered Securities As described in Note 14, in connection with the Redomestication, Aon plc entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, including the 5.00% Notes due September 2020, the 8.205% Notes due January 2027 and the 6.25% Notes due September 2040. Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. All guarantees of Aon plc are full and unconditional. There are no other subsidiaries of Aon plc that are guarantors of the debt. In addition, Aon Corporation entered into an agreement pursuant to which it agreed to guarantee the obligations of Aon plc arising under the 4.250% Notes due 2042 exchanged for Aon Corporation's outstanding 8.205% Notes due January 2027 and also agreed to guarantee the obligations of Aon plc arising under the 2.8% Notes due 2021, the 4.45% Notes due 2043, the 4.00% Notes due November 2023, the 2.875% Notes due May 2026, the 3.50% Notes due June 2024, the 4.60% Notes due June 2044, the 4.75% Notes due May 2045, and the 3.875% Notes due December 2025. In each case, the guarantee of Aon Corporation is full and unconditional. There are no subsidiaries of Aon plc, other than Aon Corporation, that are guarantors of the 4.250% Notes due 2042, the 4.45% Notes due 2043, the 4.00% Notes due 2023, the 2.875% Notes due 2026, the 3.50% Notes due 2024, the 4.60% Notes due 2044, or the 4.75% Notes due 2045. As a result of the existence of these guarantees, the Company is required by Rule 3-10 of Regulation S-X to present the financial information set forth in this footnote. The following tables set forth condensed consolidating statements of income for the three and six months ended June 30, 2016 and 2015, condensed consolidating statements of comprehensive income for the three and six months ended June 30, 2016 and 2015, condensed consolidating statements of financial position as of June 30, 2016 and December 31, 2015, and condensed consolidating statements of cash flows for the six months ended June 30, 2016 and 2015 in accordance with Rule 3-10 of Regulation S-X. The condensed consolidating financial information includes the accounts of Aon plc, the accounts of Aon Corporation, and the combined accounts of the non-guarantor subsidiaries. The condensed consolidating financial statements are presented in all periods as a merger under common control, with Aon plc presented as the parent company in all periods prior and subsequent to the Redomestication. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions. In January 2015, Aon plc transferred its ownership of all of its directly held subsidiaries to Aon Global Holdings Limited, an intermediate holding company. The financial results of Aon Global Holdings Limited are included in the Other Non-Guarantor Subsidiaries column of the Condensed Consolidating Financial Statements. The Company has reflected the transfer of Aon Corporation from Aon plc to Aon Global Holdings Limited below for all periods presented. Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Cash Flows
Condensed Consolidating Statement of Cash Flows
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Other Financial Data (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Income (Expense) | Other income consists of the following (in millions):
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Schedule of Allowance for Doubtful Accounts | An analysis of the Allowance for doubtful accounts is as follows (in millions):
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Schedule of Other Current Assets | The components of Other current assets are as follows (in millions):
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Schedule of Other Non-current Assets | The components of Other non-current assets are as follows (in millions):
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Schedule of Other Current Liabilities | The components of Other current liabilities are as follows (in millions):
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Schedule of Other Non-current Liabilities | The components of Other non-current liabilities are as follows (in millions):
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Acquisitions and Dispositions of Businesses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consideration transferred and preliminary value of intangible assets | The number of acquisitions completed within each reportable segment is as follows:
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table includes the aggregate consideration transferred and the preliminary value of intangible assets recorded as a result of the Company's acquisitions (in millions):
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Disposal Groups, Including Discontinued Operations | The number of dispositions completed within each reportable segment is as follows:
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Goodwill and Other Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the net carrying amount of goodwill by operating segment | The changes in the net carrying amount of goodwill by reportable segment for the six months ended June 30, 2016 are as follows (in millions):
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Schedule of other intangible assets by asset class | Other intangible assets by asset class are as follows (in millions):
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Schedule of estimated future amortization expense on intangible assets | The estimated future amortization for finite lived intangible assets as of June 30, 2016 is as follows (in millions):
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Shareholders' Equity (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of weighted average number of shares | Weighted average shares outstanding are as follows (in millions):
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Components of Accumulated other comprehensive loss, net of related tax | Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):
______________________________________________ (1) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income, Other general expenses, and Compensation and benefits. See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity. (2) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Compensation and benefits. |
Employee Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost for the pension plans | The following table provides the components of the net periodic (benefit) cost recognized in the Condensed Consolidated Statements of Income in Compensation and benefits for Aon's material U.K., U.S., and other significant international pension plans located in the Netherlands and Canada (in millions):
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Share-Based Compensation Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense recognized in continuing operations | The following table summarizes share-based compensation expense recognized in the Condensed Consolidated Statements of Income in Compensation and benefits (in millions):
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Restricted share unit activity | A summary of the status of the Company's RSUs is as follows (shares in thousands):
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Performance-based plans | Information as of June 30, 2016 regarding the Company's target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the six months ended June 30, 2016 and the years ended December 31, 2015 and 2014, respectively, is as follows (shares in thousands, dollars in millions, except fair value):
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Share options and related information | A summary of the status of the Company's share options and related information is as follows (shares in thousands):
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Other information related to the company's share options | Other information related to the Company's share options is as follows (in millions):
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Derivatives and Hedging (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional and fair values of derivative instruments | The notional and fair values of derivative instruments are as follows (in millions):
______________________________________________
Offsetting of financial assets and derivatives assets are as follows (in millions):
______________________________________________ (1) Included within Other current assets ($2 million at June 30, 2016 and $6 million at December 31, 2015) or Other non-current assets ($9 million at June 30, 2016 and $13 million at December 31, 2015). Offsetting of financial liabilities and derivative liabilities are as follows (in millions):
______________________________________________ (1) Included within Other current liabilities ($5 million at June 30, 2016 and $4 million at December 31, 2015) or Other non-current liabilities ($2 million at June 30, 2016 and $1 million at December 31, 2015). |
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Derivative gains (losses) | The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2016 and 2015 are as follows (in millions):
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Fair Value Measurements and Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities that are measured at fair value on a recurring basis | The following tables present the categorization of the Company's assets and liabilities that are measured at fair value on a recurring basis at June 30, 2016 and December 31, 2015 (in millions):
______________________________________________ (1) Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. (2) See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity.
______________________________________________ (1) Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. (2) See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity. |
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Schedule of financial instruments where the carrying amounts and fair values differ | The fair value of Long-term debt is classified as Level 2 of the fair value hierarchy. The following table discloses the Company's financial instruments where the carrying amounts and fair values differ (in millions):
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of total revenue by business segments | Aon's total revenue is as follows (in millions):
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Schedule of commissions, fees and other revenues by products | Commissions, fees and other revenues by product are as follows (in millions):
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Schedule of reconciliation of segment income before tax to income from continuing operations before income taxes | A reconciliation of segment operating income before tax to income before income taxes is as follows (in millions):
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Guarantee of Registered Securities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Guarantee of Registered Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statements of Income | Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
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Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
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Condensed Consolidating Statements of Financial Position | Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Financial Position
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Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statement of Cash Flows
Condensed Consolidating Statement of Cash Flows
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Cash and Cash Equivalents and Short-term Investments (Details) £ in Millions, $ in Millions |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2016
GBP (£)
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2015
GBP (£)
|
Dec. 31, 2015
USD ($)
|
|
Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||||
Short-term investment, minimum maturity period (in excess of) | 3 months | |||
Short-term investment, maximum maturity period (less than) | 1 year | |||
Cash and cash equivalents and Short-term investments | $ 689.0 | $ 740.0 | ||
Restricted cash | 87.0 | 105.0 | ||
Operating funds in U.K. | £ 43.4 | $ 59.4 | £ 43.3 | $ 64.6 |
Other Financial Data - Schedule of Other Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Other (Expense) Income | ||||
Foreign currency remeasurement (loss) gain | $ 1 | $ (7) | $ (16) | $ 17 |
Gain on disposal of business | 6 | 1 | 41 | 20 |
Equity earnings | 1 | 4 | 3 | 6 |
Income (loss) on financial instruments | (8) | 3 | (10) | 0 |
Total | $ 0 | $ 1 | $ 18 | $ 43 |
Other Financial Data - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Balance at beginning of period | $ 62 | $ 70 | $ 58 | $ 74 |
Provision charged to Other general expenses | 6 | 3 | 12 | 11 |
Accounts written off, net of recoveries | (4) | (13) | (7) | (22) |
Foreign currency translation | 0 | 5 | 1 | 2 |
Balance at end of period | $ 64 | $ 65 | $ 64 | $ 65 |
Other Financial Data - Schedule of Other Current Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Financial Data [Abstract] | ||
Taxes receivable | $ 146 | $ 94 |
Prepaid expenses | 152 | 130 |
Deferred project costs | 94 | 92 |
Other | 3 | 13 |
Total | $ 395 | $ 329 |
Other Financial Data - Schedule of Other Non-current Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Financial Data [Abstract] | ||
Deferred project costs | $ 200 | $ 210 |
Investments | 127 | 135 |
Taxes receivable | 81 | 82 |
Other | 168 | 165 |
Total | $ 576 | $ 592 |
Other Financial Data - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Financial Data [Abstract] | ||
Deferred revenue | $ 433 | $ 394 |
Taxes payable | 67 | 94 |
Other | 372 | 331 |
Total | $ 872 | $ 819 |
Other Financial Data - Schedule of Other Non-current Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Financial Data [Abstract] | ||
Taxes payable | $ 260 | $ 223 |
Deferred revenue | 151 | 159 |
Leases | 172 | 166 |
Compensation and benefits | 59 | 59 |
Other | 125 | 162 |
Total | $ 767 | $ 769 |
Acquisitions and Dispositions of Businesses - Acquisitions (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
acquisition
|
Jun. 30, 2015
USD ($)
acquisition
|
Jun. 30, 2016
USD ($)
acquisition
|
Jun. 30, 2015
USD ($)
acquisition
|
Dec. 31, 2015
USD ($)
|
|
Business Acquisition | |||||
Number of business acquired under business combination | acquisition | 2 | 2 | 4 | 4 | |
Intangible assets: | |||||
Goodwill | $ 8,473 | $ 8,473 | $ 8,448 | ||
Business Acquisition 1 [Member] | |||||
Business Acquisition | |||||
Consideration | 190 | $ 23 | 190 | $ 23 | |
Intangible assets: | |||||
Goodwill | 110 | 16 | 110 | 16 | |
Other intangible assets | 82 | 1 | 82 | 1 | |
Total | $ 192 | $ 17 | $ 192 | $ 17 | |
Risk Solutions [Member] | |||||
Business Acquisition | |||||
Number of business acquired under business combination | acquisition | 2 | 1 | 2 | 2 | |
Intangible assets: | |||||
Goodwill | $ 5,654 | $ 5,654 | 5,593 | ||
HR Solutions [Member] | |||||
Business Acquisition | |||||
Number of business acquired under business combination | acquisition | 0 | 1 | 2 | ||
Intangible assets: | |||||
Goodwill | $ 2,819 | $ 2,819 | $ 2,855 |
Acquisitions and Dispositions of Businesses - Dispositions (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016
USD ($)
disposal
|
Jun. 30, 2015
USD ($)
disposal
|
Jun. 30, 2016
USD ($)
disposal
|
Jun. 30, 2015
USD ($)
disposal
|
|
Dispositions | ||||
Gain on disposal of business | $ | $ 6 | $ 1 | $ 41 | $ 20 |
Disposal Group, Not Discontinued Operations [Member] | ||||
Dispositions | ||||
Number of dispositions | 2 | 0 | 4 | 2 |
Gain on disposal of business | $ | $ 6 | $ (1) | ||
Disposal Group, Not Discontinued Operations [Member] | Risk Solutions [Member] | ||||
Dispositions | ||||
Number of dispositions | 2 | 0 | 3 | 1 |
Disposal Group, Not Discontinued Operations [Member] | HR Solutions [Member] | ||||
Dispositions | ||||
Number of dispositions | 0 | 0 | 1 | 1 |
Income Taxes (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 16.40% | 12.20% | 17.50% | 16.80% |
Share-Based Compensation Plans - Restricted share unit activity (Details) - Restricted share units (RSUs) [Member] - $ / shares shares in Thousands |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Non-vested share awards (in shares) | |||
Non-vested at beginning of period (in shares) | 7,169 | 8,381 | 8,381 |
Granted (in shares) | 2,023 | 2,144 | |
Vested (in shares) | (2,581) | (3,037) | |
Forfeited (in shares) | (213) | (130) | |
Non-vested at end of period (in shares) | 6,398 | 7,358 | 7,169 |
Weighted Average Fair value | |||
Non-vested at beginning of period (in dollars per share) | $ 77 | $ 63 | $ 63 |
Granted (in dollars per share) | 101 | 98 | |
Vested (in dollars per share) | 70 | 58 | |
Forfeited (in dollars per share) | 79 | 67 | |
Non-vested at end of period (in dollars per share) | $ 87 | $ 76 | $ 77 |
Share-Based Compensation Plans - Performance Share Awards Narrative (Details) - Performance Shares [Member] |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting conditions period (in years) | 3 years |
Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued, percent | 0.00% |
Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued, percent | 200.00% |
Share-Based Compensation Plans - Schedule of Performance-based plans (Details) - Performance Shares [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Target PSAs granted during period (in shares) | 783 | 993 | 816 |
Weighted average fair value per share at date of grant (in dollars per share) | $ 101 | $ 96 | $ 81 |
Number of shares that would be issued based on current performance levels (in shares) | 772 | 963 | 1,552 |
Unamortized expense, based on current performance levels | $ 71 | $ 49 | $ 21 |
Share-Based Compensation Plans - Share options activity (Details) - Share options [Member] - $ / shares shares in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Share Options | ||
Beginning outstanding (in shares) | 837 | 2,300 |
Granted (in shares) | 0 | 0 |
Exercised (in shares) | (271) | (1,388) |
Forfeited and expired (in shares) | (5) | (13) |
Outstanding at end of period (in shares) | 561 | 899 |
Exercisable at end of period (in shares) | 561 | 899 |
Weighted-Average Exercise Price | ||
Beginning outstanding (in dollars per share) | $ 40 | $ 32 |
Granted (in dollars per share) | 0 | 0 |
Exercised (in dollars per share) | 38 | 27 |
Forfeited and expired (in dollars per share) | 42 | 39 |
Outstanding at end of period (in dollars per share) | 41 | 39 |
Exercisable at end of period (in dollars per share) | $ 41 | $ 39 |
Share-Based Compensation Plans - Stock Option Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Closing share price (in dollars per share) | $ 109.23 | |
Aggregate intrinsic value of options outstanding | $ 38 | |
Unamortized deferred compensation expense | $ 460 | |
Remaining weighted-average amortization period (in years) | 2 years | |
Share options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average remaining contractual life (in years) | 2 years 4 months 24 days | 2 years 8 months 12 days |
Share-Based Compensation Plans - Other information related to the company's share options (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Aggregate intrinsic value of stock options exercised | $ 9 | $ 6 | $ 17 | $ 100 |
Cash received from the exercise of stock options | 6 | 4 | 11 | 38 |
Tax benefit realized from the exercise of stock options | $ 2 | $ 1 | $ 4 | $ 35 |
Derivatives and Hedging - Foreign Exchange Risk Management Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Foreign currency exposures, maximum average hedging period (less than) | 2 years |
Not Designated as Hedging Instrument [Member] | |
Derivative [Line Items] | |
Foreign currency exposures, maximum hedging period (up to) | 1 year |
Derivatives and Hedging - Interest Rate Management Risk Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Derivative [Line Items] | ||||
Estimated pretax losses currently included within Accumulated Other Comprehensive Loss that will be reclassified to earnings in next twelve months | $ 15 | $ 15 | ||
Not Designated as Hedging Instrument [Member] | Foreign exchange contracts [Member] | ||||
Derivative [Line Items] | ||||
Derivative gain | $ 2 | $ (2) | $ 1 | $ (9) |
Derivatives and Hedging - Foreign Hedge (Details) - 6 months ended Jun. 30, 2016 € in Millions, $ in Millions |
USD ($) |
EUR (€) |
USD ($) |
---|---|---|---|
Derivative [Line Items] | |||
Derivative Instruments in Hedges, Net Investment in Foreign Operations, Liabilities, Fair Value | € 217 | $ 241 | |
Derivative Instruments in Hedges, Net Investment in Foreign Operations, Liabilities, Weighted Average Balance | € | € 55 | ||
Derivative Instruments, Gain Reclassified from Accumulated OCI into Income, Effective Portion | $ | $ 4 |
Fair Value Measurements and Financial Instruments - Schedule of financial instruments where the carrying amounts and fair values differ (Details) - USD ($) $ in Millions |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair value of financial instrument | ||
Carrying value of total debt | $ 5,907 | $ 5,138 |
Fair value of total debt | $ 6,448 | $ 5,386 |
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