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) | Emerging growth company o |
Three Months Ended | Six Months Ended | |||||||||||||||
(millions, except per share data) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||
Revenue | ||||||||||||||||
Total revenue | $ | 2,368 | $ | 2,282 | $ | 4,749 | $ | 4,558 | ||||||||
Expenses | ||||||||||||||||
Compensation and benefits | 1,457 | 1,396 | 2,918 | 2,741 | ||||||||||||
Information technology | 98 | 99 | 186 | 182 | ||||||||||||
Premises | 86 | 89 | 170 | 171 | ||||||||||||
Depreciation of fixed assets | 54 | 41 | 108 | 79 | ||||||||||||
Amortization and impairment of intangible assets | 460 | 38 | 503 | 75 | ||||||||||||
Other general expenses | 331 | 232 | 639 | 503 | ||||||||||||
Total operating expenses | 2,486 | 1,895 | 4,524 | 3,751 | ||||||||||||
Operating income | (118 | ) | 387 | 225 | 807 | |||||||||||
Interest income | 8 | 3 | 10 | 5 | ||||||||||||
Interest expense | (71 | ) | (73 | ) | (141 | ) | (142 | ) | ||||||||
Other income (expense) | (5 | ) | (1 | ) | (15 | ) | 17 | |||||||||
Income (loss) from continuing operations before income taxes | (186 | ) | 316 | 79 | 687 | |||||||||||
Income tax expense (benefit) | (143 | ) | 43 | (143 | ) | 102 | ||||||||||
Net income (loss) from continuing operations | (43 | ) | 273 | 222 | 585 | |||||||||||
Income from discontinued operations, net of tax | 821 | 35 | 861 | 60 | ||||||||||||
Net income | 778 | 308 | 1,083 | 645 | ||||||||||||
Less: Net income attributable to noncontrolling interests | 9 | 8 | 23 | 20 | ||||||||||||
Net income attributable to Aon shareholders | $ | 769 | $ | 300 | $ | 1,060 | $ | 625 | ||||||||
Basic net income (loss) per share attributable to Aon shareholders | ||||||||||||||||
Continuing operations | $ | (0.20 | ) | $ | 0.99 | $ | 0.75 | $ | 2.10 | |||||||
Discontinued operations | 3.13 | 0.13 | 3.27 | 0.22 | ||||||||||||
Net income | $ | 2.93 | $ | 1.12 | $ | 4.02 | $ | 2.32 | ||||||||
Diluted net income (loss) per share attributable to Aon shareholders | ||||||||||||||||
Continuing operations | $ | (0.20 | ) | $ | 0.98 | $ | 0.75 | $ | 2.08 | |||||||
Discontinued operations | 3.13 | 0.13 | 3.24 | 0.22 | ||||||||||||
Net income | $ | 2.93 | $ | 1.11 | $ | 3.99 | $ | 2.30 | ||||||||
Cash dividends per share paid on ordinary shares | $ | 0.36 | $ | 0.33 | $ | 0.69 | $ | 0.63 | ||||||||
Weighted average ordinary shares outstanding - basic | 262.4 | 268.0 | 263.6 | 269.9 | ||||||||||||
Weighted average ordinary shares outstanding - diluted | 262.4 | 269.8 | 265.7 | 271.7 |
Three Months Ended | Six Months Ended | |||||||||||||||
(millions) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||
Net income | $ | 778 | $ | 308 | $ | 1,083 | $ | 645 | ||||||||
Less: Net income attributable to noncontrolling interests | 9 | 8 | 23 | 20 | ||||||||||||
Net income attributable to Aon shareholders | $ | 769 | $ | 300 | $ | 1,060 | $ | 625 | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Change in fair value of financial instruments | 4 | (4 | ) | 2 | (11 | ) | ||||||||||
Foreign currency translation adjustments | 44 | (59 | ) | 191 | (138 | ) | ||||||||||
Postretirement benefit obligation | 20 | 51 | 38 | (150 | ) | |||||||||||
Total other comprehensive income (loss) | 68 | (12 | ) | 231 | (299 | ) | ||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | (5 | ) | — | (4 | ) | — | ||||||||||
Total other comprehensive income (loss) attributable to Aon shareholders | 73 | (12 | ) | 235 | (299 | ) | ||||||||||
Comprehensive income attributable to Aon shareholders | $ | 842 | $ | 288 | $ | 1,295 | $ | 326 |
(millions, except nominal value) | June 30, 2017 | December 31, 2016 | ||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 684 | $ | 426 | ||||
Short-term investments | 2,746 | 290 | ||||||
Receivables, net | 2,191 | 2,106 | ||||||
Fiduciary assets | 9,582 | 8,959 | ||||||
Other current assets | 399 | 247 | ||||||
Current assets of discontinued operations | — | 1,118 | ||||||
Total Current Assets | 15,602 | 13,146 | ||||||
Goodwill | 7,745 | 7,410 | ||||||
Intangible assets, net | 1,402 | 1,890 | ||||||
Fixed assets, net | 556 | 550 | ||||||
Deferred tax assets | 575 | 325 | ||||||
Prepaid pension | 941 | 858 | ||||||
Other non-current assets | 368 | 360 | ||||||
Non-current assets of discontinued operations | — | 2,076 | ||||||
TOTAL ASSETS | $ | 27,189 | $ | 26,615 | ||||
LIABILITIES AND EQUITY | ||||||||
LIABILITIES | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 1,423 | $ | 1,604 | ||||
Short-term debt and current portion of long-term debt | 292 | 336 | ||||||
Fiduciary liabilities | 9,582 | 8,959 | ||||||
Other current liabilities | 2,078 | 656 | ||||||
Current liabilities of discontinued operations | — | 940 | ||||||
Total Current Liabilities | 13,375 | 12,495 | ||||||
Long-term debt | 5,631 | 5,869 | ||||||
Deferred tax liabilities | 84 | 101 | ||||||
Pension, other postretirement and postemployment liabilities | 1,688 | 1,760 | ||||||
Other non-current liabilities | 858 | 719 | ||||||
Non-current liabilities of discontinued operations | — | 139 | ||||||
TOTAL LIABILITIES | 21,636 | 21,083 | ||||||
EQUITY | ||||||||
Ordinary shares - $0.01 nominal value Authorized: 750 shares (issued: 2017 - 255.7; 2016 - 262.0) | 3 | 3 | ||||||
Additional paid-in capital | 5,587 | 5,577 | ||||||
Retained earnings | 3,574 | 3,807 | ||||||
Accumulated other comprehensive loss | (3,677 | ) | (3,912 | ) | ||||
TOTAL AON SHAREHOLDERS' EQUITY | 5,487 | 5,475 | ||||||
Noncontrolling interests | 66 | 57 | ||||||
TOTAL EQUITY | 5,553 | 5,532 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 27,189 | $ | 26,615 |
(millions) | Shares | Ordinary Shares and Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Non- controlling Interests | Total | |||||||||||||||||
Balance at December 31, 2016 | 262.0 | $ | 5,580 | $ | 3,807 | $ | (3,912 | ) | $ | 57 | $ | 5,532 | |||||||||||
Adoption of new accounting guidance | — | — | 49 | — | — | 49 | |||||||||||||||||
Balance at January 1, 2017 | 262.0 | 5,580 | 3,856 | (3,912 | ) | 57 | 5,581 | ||||||||||||||||
Net income | — | — | 1,060 | — | 23 | 1,083 | |||||||||||||||||
Shares issued - employee stock compensation plans | 2.9 | (138 | ) | — | — | — | (138 | ) | |||||||||||||||
Shares purchased | (9.2 | ) | — | (1,160 | ) | — | — | (1,160 | ) | ||||||||||||||
Share-based compensation expense | — | 148 | — | — | — | 148 | |||||||||||||||||
Dividends to shareholders | — | — | (182 | ) | — | — | (182 | ) | |||||||||||||||
Net change in fair value of financial instruments | — | — | — | 2 | — | 2 | |||||||||||||||||
Net foreign currency translation adjustments | — | — | — | 195 | (4 | ) | 191 | ||||||||||||||||
Net postretirement benefit obligation | — | — | — | 38 | — | 38 | |||||||||||||||||
Purchases of shares from noncontrolling interests | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||
Dividends paid to noncontrolling interests on subsidiary common stock | — | — | — | — | (9 | ) | (9 | ) | |||||||||||||||
Balance at June 30, 2017 | 255.7 | $ | 5,590 | $ | 3,574 | $ | (3,677 | ) | $ | 66 | $ | 5,553 |
Six Months Ended | ||||||||
(millions) | June 30, 2017 | June 30, 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 1,083 | $ | 645 | ||||
Less: Income from discontinued operations, net of income taxes | 861 | 60 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Loss (gain) from sales of businesses and investments, net | 3 | (41 | ) | |||||
Depreciation of fixed assets | 108 | 79 | ||||||
Amortization and impairment of intangible assets | 503 | 75 | ||||||
Share-based compensation expense | 148 | 144 | ||||||
Deferred income taxes | (227 | ) | 15 | |||||
Change in assets and liabilities: | ||||||||
Fiduciary receivables | 10 | 96 | ||||||
Short-term investments — funds held on behalf of clients | (286 | ) | (409 | ) | ||||
Fiduciary liabilities | 275 | 313 | ||||||
Receivables, net | (25 | ) | 46 | |||||
Accounts payable and accrued liabilities | (377 | ) | (335 | ) | ||||
Restructuring reserves | 178 | — | ||||||
Current income taxes | (25 | ) | (62 | ) | ||||
Pension, other postretirement and other postemployment liabilities | (101 | ) | (28 | ) | ||||
Other assets and liabilities | 30 | 79 | ||||||
Cash provided by operating activities - continuing operations | 436 | 557 | ||||||
Cash provided by operating activities - discontinued operations | 64 | 207 | ||||||
CASH PROVIDED BY OPERATING ACTIVITIES | 500 | 764 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Proceeds from investments | 29 | 23 | ||||||
Payments for investments | (32 | ) | (29 | ) | ||||
Net sale (purchases) of short-term investments — non-fiduciary | (2,451 | ) | 106 | |||||
Acquisition of businesses, net of cash acquired | (149 | ) | (183 | ) | ||||
Sale of businesses, net of cash sold | 4,193 | 103 | ||||||
Capital expenditures | (82 | ) | (68 | ) | ||||
Cash provided by (used for) investing activities - continuing operations | 1,508 | (48 | ) | |||||
Cash used for investing activities - discontinued operations | (19 | ) | (36 | ) | ||||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | 1,489 | (84 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Share repurchase | (1,100 | ) | (750 | ) | ||||
Issuance of shares for employee benefit plans | (139 | ) | (87 | ) | ||||
Issuance of debt | 1,651 | 2,056 | ||||||
Repayment of debt | (1,990 | ) | (1,632 | ) | ||||
Cash dividends to shareholders | (182 | ) | (169 | ) | ||||
Noncontrolling interests and other financing activities | (10 | ) | (62 | ) | ||||
Cash used for financing activities - continuing operations | (1,770 | ) | (644 | ) | ||||
Cash used for financing activities - discontinued operations | — | — | ||||||
CASH USED FOR FINANCING ACTIVITIES | (1,770 | ) | (644 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 34 | 18 | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 253 | 54 | ||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 431 | 384 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 684 | $ | 438 | ||||
Supplemental disclosures: | ||||||||
Interest paid | $ | 144 | $ | 144 | ||||
Income taxes paid, net of refunds | $ | 108 | $ | 89 |
• | Commissions, fees and other and Fiduciary investment income are now reported as one Total revenue line item; and |
• | Other general expenses has been further broken out to provide greater clarity into charges related to Information technology, Premises, Depreciation of fixed assets, and Amortization and impairment of intangible assets. |
• | An increase to Deferred tax assets on the Condensed Consolidated Statement of Financial Position of approximately $49 million through a cumulative-effect adjustment to Retained earnings for excess tax benefits not previously recognized, and |
• | The recognition of $19 million, or $0.07 per share, income tax benefit from continuing operations related to excess tax benefits in the Condensed Consolidated Statement of Income for the three months ended June 30, 2017, and $48 million, or $0.18 per share, for the six months ended June 30, 2017. |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue | ||||||||||||||||
Total revenue | $ | 171 | $ | 518 | $ | 698 | $ | 1,047 | ||||||||
Expenses | ||||||||||||||||
Total operating expenses (1) | 156 | 466 | 626 | 952 | ||||||||||||
Operating Income from discontinued operations | 15 | 52 | 72 | 95 | ||||||||||||
Other income | 11 | 1 | 11 | 1 | ||||||||||||
Income from discontinued operations before income taxes | 26 | 53 | 83 | 96 | ||||||||||||
Income taxes | 3 | 18 | 20 | 36 | ||||||||||||
Income from discontinued operations excluding gain, net of tax | 23 | 35 | 63 | 60 | ||||||||||||
Gain on sale of discontinued operations, net of tax | 798 | — | 798 | — | ||||||||||||
Income from discontinued operations, net of tax | $ | 821 | $ | 35 | $ | 861 | $ | 60 |
(1) | Upon triggering held for sale criteria in February 2017, Aon ceased depreciating and amortizing all long-lived assets included in discontinued operations. No depreciation or amortization expense was recognized during the three months ended June 30, 2017. Included within total operating expenses for the three months ended June 30, 2016 was $17 million of depreciation of fixed assets and $30 million of intangible asset amortization. Total operating expenses for the six months ended June 30, 2017 and 2016 include, respectively, $8 million and $35 million of depreciation of fixed assets and $11 million and $60 million of intangible asset amortization. |
June 30, 2017 (1) | December 31, 2016 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | — | $ | 5 | ||||
Receivables, net | — | 483 | ||||||
Fiduciary assets | — | 526 | ||||||
Goodwill | — | 1,337 | ||||||
Intangible assets, net | — | 333 | ||||||
Fixed assets, net | — | 215 | ||||||
Other assets | — | 295 | ||||||
TOTAL ASSETS | $ | — | $ | 3,194 | ||||
LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | — | $ | 197 | ||||
Fiduciary liabilities | — | 526 | ||||||
Other liabilities | — | 356 | ||||||
TOTAL LIABILITIES | $ | — | $ | 1,079 |
(1) | All assets and liabilities associated with the Divested Business were sold on May 1, 2017. |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Foreign currency remeasurement gain (loss) | $ | (2 | ) | $ | — | $ | (12 | ) | $ | (17 | ) | ||||
Gain (loss) on disposal of business | — | 6 | (2 | ) | 41 | ||||||||||
Equity earnings | 3 | 1 | 9 | 3 | |||||||||||
Loss on financial instruments | (6 | ) | (8 | ) | (10 | ) | (10 | ) | |||||||
Total | $ | (5 | ) | $ | (1 | ) | $ | (15 | ) | $ | 17 |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Balance at beginning of period | $ | 61 | $ | 62 | $ | 56 | $ | 58 | |||||||
Provision charged to Other general expenses | 5 | 6 | 11 | 11 | |||||||||||
Accounts written off, net of recoveries | (7 | ) | (4 | ) | (10 | ) | (6 | ) | |||||||
Foreign currency translation | — | — | 2 | 1 | |||||||||||
Balance at end of period | $ | 59 | $ | 64 | $ | 59 | $ | 64 |
As of | June 30, 2017 | December 31, 2016 | |||||
Taxes receivable | $ | 152 | $ | 100 | |||
Prepaid expenses | 143 | 102 | |||||
Receivables from the Divested Business (1) | 78 | — | |||||
Other | 26 | 45 | |||||
Total | $ | 399 | $ | 247 |
(1) | Refer to Note 3 “Discontinued Operations” for additional information. |
As of | June 30, 2017 | December 31, 2016 | |||||
Investments | $ | 122 | $ | 119 | |||
Taxes receivable | 88 | 82 | |||||
Other | 158 | 159 | |||||
Total | $ | 368 | $ | 360 |
As of | June 30, 2017 | December 31, 2016 | |||||
Deferred revenue | $ | 377 | $ | 199 | |||
Taxes payable (1) | 1,254 | 77 | |||||
Other | 447 | 380 | |||||
Total | $ | 2,078 | $ | 656 |
(1) | Includes accrued taxes payable related to the gain on sale of the Divested Business. |
As of | June 30, 2017 | December 31, 2016 | |||||
Taxes payable | $ | 326 | $ | 288 | |||
Deferred revenue | 46 | 49 | |||||
Leases | 140 | 136 | |||||
Compensation and benefits | 59 | 56 | |||||
Other | 287 | 190 | |||||
Total | $ | 858 | $ | 719 |
June 30, 2017 | ||||
Cash | $ | 148 | ||
Deferred and contingent consideration | 28 | |||
Aggregate consideration transferred | 176 | |||
Assets acquired: | ||||
Cash and cash equivalents | 5 | |||
Receivables, net | 11 | |||
Goodwill | 119 | |||
Intangible assets, net | 69 | |||
Fixed assets, net | 1 | |||
Other assets | 8 | |||
Total assets acquired | 213 | |||
Liabilities assumed: | ||||
Current liabilities | 15 | |||
Other liabilities | 22 | |||
Total liabilities assumed | 37 | |||
Net assets acquired | $ | 176 |
Three months ended June 30, 2017 | Six months ended June 30, 2017 | Estimated Remaining Costs | Estimated Total Cost (1) | |||||||||||||
Workforce reduction | $ | 102 | $ | 205 | $ | 98 | $ | 303 | ||||||||
Technology rationalization (2) | 7 | 10 | 136 | 146 | ||||||||||||
Lease consolidation (2) | 1 | 4 | 76 | 80 | ||||||||||||
Asset impairments | 11 | 24 | 16 | 40 | ||||||||||||
Other costs associated with restructuring and separation (2) (3) | 34 | 56 | 125 | 181 | ||||||||||||
Total restructuring and related expenses | $ | 155 | $ | 299 | $ | 451 | $ | 750 |
(1) | Actual costs, when incurred, may vary due to changes in the assumptions built into the Restructuring Plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives. |
(2) | Contract termination costs included within Lease consolidations for the three and six months ended June 30, 2017 were $1 million and $5 million, respectively. No other contract termination costs were incurred through June 30, 2017. Total estimated contract termination costs to be incurred under the Restructuring Plan associated with Technology rationalizations and Lease consolidations, respectively, are $9 million and $80 million. |
(3) | Other costs associated with the Restructuring Plan include those to separate the Divested Business, as well as moving costs, and consulting and legal fees. These costs are generally recognized when incurred. |
Restructuring Plan | ||||
Balance at January 1, 2017 | $ | — | ||
Expensed | 272 | |||
Cash payments | (94 | ) | ||
Foreign currency translation and other | — | |||
Balance at June 30, 2017 | $ | 178 |
Balance as of January 1, 2017 | $ | 7,410 | |
Goodwill related to current year acquisitions | 119 | ||
Goodwill related to disposals | (1 | ) | |
Goodwill related to prior year acquisitions | 24 | ||
Foreign currency translation | 193 | ||
Balance as of June 30, 2017 | $ | 7,745 |
June 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization and Impairment | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization and Impairment | Net Carrying Amount | ||||||||||||||||||
Customer related and contract based | 2,050 | 1,307 | 743 | 2,023 | 1,198 | 825 | |||||||||||||||||
Tradenames(1) | $ | 1,037 | $ | 423 | $ | 614 | $ | 1,027 | $ | 7 | $ | 1,020 | |||||||||||
Technology and other(1) | 366 | 321 | 45 | 347 | 302 | 45 | |||||||||||||||||
Total | $ | 3,453 | $ | 2,051 | $ | 1,402 | $ | 3,397 | $ | 1,507 | $ | 1,890 |
(1) | Prior to May 1, 2017, finite lived tradenames were classified within Technology and other. For the period ended December 31, 2016, $29 million of gross carrying amount and $7 million of accumulated amortization related to finite-lived tradenames was reclassified from Technology and other to Tradenames. |
As of June 30, 2017 | |||
Remainder of 2017 | $ | 206 | |
2018 | 370 | ||
2019 | 351 | ||
2020 | 192 | ||
2021 | 83 | ||
Thereafter | 200 | ||
Total | $ | 1,402 |
Three months ended June 30 | Six months ended June 30 | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Basic weighted-average ordinary shares outstanding | 262.4 | 268.0 | 263.6 | 269.9 | |||||||
Dilutive effect of potentially issuable shares | — | 1.8 | 2.1 | 1.8 | |||||||
Diluted weighted-average ordinary shares outstanding | 262.4 | 269.8 | 265.7 | 271.7 |
Change in Fair Value of Financial Instruments (1) | Foreign Currency Translation Adjustments | Post-Retirement Benefit Obligation (2) | Total | ||||||||||||
Balance at December 31, 2016 | $ | (37 | ) | $ | (1,264 | ) | $ | (2,611 | ) | $ | (3,912 | ) | |||
Other comprehensive income (loss) before reclassifications, net | 5 | 206 | — | 211 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss: | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | (6 | ) | (11 | ) | 54 | 37 | |||||||||
Tax benefit (expense) | 3 | — | (16 | ) | (13 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net | (3 | ) | (11 | ) | 38 | 24 | |||||||||
Net current period other comprehensive income (loss) | 2 | 195 | 38 | 235 | |||||||||||
Balance at June 30, 2017 | $ | (35 | ) | $ | (1,069 | ) | $ | (2,573 | ) | $ | (3,677 | ) |
(1) | Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense), Other general expenses, and Compensation and benefits. See Note 14 “Derivatives and Hedging” for additional information regarding the Company’s derivative and hedging activity. |
(2) | Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Compensation and benefits. |
Three months ended June 30 | |||||||||||||||||||||||
U.K. | U.S. | Other | |||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Interest cost | 30 | 43 | 24 | 28 | 6 | 7 | |||||||||||||||||
Expected return on plan assets, net of administration expenses | (49 | ) | (65 | ) | (35 | ) | (39 | ) | (11 | ) | (12 | ) | |||||||||||
Amortization of prior-service cost | — | 1 | 1 | 1 | — | — | |||||||||||||||||
Amortization of net actuarial loss | 8 | 9 | 12 | 12 | 3 | 3 | |||||||||||||||||
Net periodic cost (benefit) | $ | (11 | ) | $ | (12 | ) | $ | 2 | $ | 2 | $ | (2 | ) | $ | (2 | ) | |||||||
Loss on pension settlement | — | 61 | — | — | — | — | |||||||||||||||||
Total net periodic cost (benefit) | $ | (11 | ) | $ | 49 | $ | 2 | $ | 2 | $ | (2 | ) | $ | (2 | ) | ||||||||
Six months ended June 30 | |||||||||||||||||||||||
U.K. | U.S. | Other | |||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Interest cost | 60 | 86 | 48 | 55 | 12 | 14 | |||||||||||||||||
Expected return on plan assets, net of administration expenses | (97 | ) | (129 | ) | (70 | ) | (78 | ) | (22 | ) | (24 | ) | |||||||||||
Amortization of prior-service cost | — | 1 | 1 | 1 | — | — | |||||||||||||||||
Amortization of net actuarial loss | 15 | 17 | 25 | 25 | 6 | 5 | |||||||||||||||||
Net periodic cost (benefit) | $ | (22 | ) | $ | (25 | ) | $ | 4 | $ | 3 | $ | (4 | ) | $ | (5 | ) | |||||||
Loss on pension settlement | — | 61 | — | — | — | — | |||||||||||||||||
Total net periodic cost (benefit) | $ | (22 | ) | $ | 36 | $ | 4 | $ | 3 | $ | (4 | ) | $ | (5 | ) |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Restricted share units (“RSUs”) | $ | 46 | $ | 40 | $ | 101 | $ | 97 | |||||||
Performance share awards (“PSAs”) | 21 | 24 | 40 | 43 | |||||||||||
Employee share purchase plans | 2 | 1 | 6 | 5 | |||||||||||
Total share-based compensation expense | $ | 69 | $ | 65 | $ | 147 | $ | 145 |
Six months ended June 30 | |||||||||||||
2017 | 2016 | ||||||||||||
Shares | Fair Value (1) | Shares | Fair Value (1) | ||||||||||
Non-vested at beginning of period | 6,195 | $ | 89 | 7,167 | $ | 77 | |||||||
Granted | 1,497 | 121 | 2,025 | 101 | |||||||||
Vested | (2,172 | ) | 82 | (2,581 | ) | 70 | |||||||
Forfeited | (522 | ) | 92 | (213 | ) | 79 | |||||||
Non-vested at end of period | 4,998 | $ | 101 | 6,398 | $ | 87 |
(1) | Represents per share weighted-average fair value of award at date of grant. |
June 30, 2017 | December 31, 2016 | December 31, 2015 | |||||||||
Target PSAs granted during period | 548 | 752 | 967 | ||||||||
Weighted average fair value per share at date of grant | $ | 114 | $ | 100 | $ | 96 | |||||
Number of shares that would be issued based on current performance levels | 547 | 667 | 1,364 | ||||||||
Unamortized expense, based on current performance levels | $ | 57 | $ | 33 | $ | 21 |
Notional Amount | Derivative Assets (1) | Derivative Liabilities (2) | |||||||||||||||||||||
June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | ||||||||||||||||||
Foreign exchange contracts: | |||||||||||||||||||||||
Accounted for as hedges | $ | 531 | $ | 758 | $ | 12 | $ | 14 | $ | 6 | $ | 13 | |||||||||||
Not accounted for as hedges (3) | 237 | 189 | — | 1 | 1 | 1 | |||||||||||||||||
Total | $ | 768 | $ | 947 | $ | 12 | $ | 15 | $ | 7 | $ | 14 |
(1) | Included within Other current assets ($2 million at June 30, 2017 and $6 million at December 31, 2016) or Other non-current assets ($10 million at June 30, 2017 and $9 million at December 31, 2016). |
(2) | Included within Other current liabilities ($4 million at June 30, 2017 and $7 million at December 31, 2016) or Other non-current liabilities ($3 million at June 30, 2017 and $7 million at December 31, 2016). |
(3) | These contracts typically are for 30 day durations and 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, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | |||||||||||||||||
Foreign exchange contracts | $ | 12 | $ | 14 | $ | — | $ | (1 | ) | $ | 12 | $ | 13 |
(1) | Included within Other current assets ($2 million at June 30, 2017 and $4 million at December 31, 2016) or Other non-current assets ($10 million at June 30, 2017 and $9 million at December 31, 2016). |
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, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | ||||||||||||||||||
Foreign exchange contracts | $ | 6 | $ | 13 | $ | — | $ | (1 | ) | $ | 6 | $ | 12 |
(1) | Included within Other current liabilities ($4 million at June 30, 2017 and $5 million at December 31, 2016) or Other non-current liabilities ($2 million at June 30, 2017 and $7 million at December 31, 2016). |
Cash Flow Hedge - Foreign Exchange Contracts | Location of reclassification from Accumulated Other Comprehensive Loss | Gain (Loss) Recognized in Accumulated Other Comprehensive Loss: | ||||||||||||||||||
Three months ended June 30 | Compensation and Benefits | Other General Expenses | Interest Expense | Other Income (Expense) | Total | |||||||||||||||
2017 | $ | 1 | $ | 1 | $ | — | $ | (1 | ) | $ | 1 | |||||||||
2016 | — | (2 | ) | — | (6 | ) | (8 | ) |
Cash Flow Hedge - Foreign Exchange Contracts | Location of 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 | |||||||||||||||
2017 | $ | 9 | $ | 2 | $ | — | $ | (4 | ) | $ | 7 | |||||||||
2016 | (2 | ) | (5 | ) | — | (11 | ) | (18 | ) |
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 | |||||||||||||||
2017 | $ | — | $ | (1 | ) | $ | (1 | ) | $ | (2 | ) | $ | (4 | ) | ||||||
2016 | — | (1 | ) | (1 | ) | (2 | ) | (4 | ) |
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 | |||||||||||||||
2017 | $ | 13 | $ | (2 | ) | $ | (1 | ) | $ | (4 | ) | $ | 6 | |||||||
2016 | 1 | (1 | ) | (1 | ) | (3 | ) | (4 | ) |
• | 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, 2017 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | |||||||||||||||
Money market funds (1) | $ | 4,117 | $ | 4,117 | $ | — | $ | — | |||||||
Other investments: | |||||||||||||||
Government bonds | 1 | — | 1 | — | |||||||||||
Equity investments | 10 | 6 | 4 | — | |||||||||||
Derivatives: (2) | |||||||||||||||
Foreign exchange contracts | 12 | — | 12 | — | |||||||||||
Liabilities: | |||||||||||||||
Derivatives: | |||||||||||||||
Foreign exchange contracts | 7 | — | 7 | — |
(1) | Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. |
(2) | Refer to Note 14 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity. |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | |||||||||||||||
Money market funds (1) | $ | 1,371 | $ | 1,371 | $ | — | $ | — | |||||||
Other investments: | |||||||||||||||
Government bonds | 1 | — | 1 | — | |||||||||||
Equity investments | 9 | 6 | 3 | — | |||||||||||
Derivatives: (2) | |||||||||||||||
Foreign exchange contracts | 15 | — | 15 | — | |||||||||||
Liabilities: | |||||||||||||||
Derivatives: | |||||||||||||||
Foreign exchange contracts | 14 | — | 14 | — |
(1) | Included within Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. |
(2) | Refer to Note 14 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity. |
June 30, 2017 | December 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Current portion of long-term debt (1) | $ | 292 | $ | 298 | $ | — | $ | — | |||||||
Long-term debt | 5,631 | 6,163 | 5,869 | 6,264 |
(1) | Excludes commercial paper program |
Three months ended June 30 | Six months ended June 30 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Commercial Risk Solutions | $ | 1,042 | $ | 990 | $ | 2,026 | $ | 1,951 | |||||||
Reinsurance Solutions | 344 | 332 | 715 | 703 | |||||||||||
Retirement Solutions | 389 | 405 | 775 | 800 | |||||||||||
Health Solutions | 312 | 281 | 684 | 573 | |||||||||||
Data & Analytic Services | 285 | 275 | 553 | 534 | |||||||||||
Elimination | (4 | ) | (1 | ) | (4 | ) | (3 | ) | |||||||
Total revenue | 2,368 | 2,282 | 4,749 | 4,558 |
Three months ended June 30, 2017 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Total revenue | $ | — | $ | — | $ | 2,368 | $ | — | $ | 2,368 | ||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 8 | 5 | 1,444 | — | 1,457 | |||||||||||||||
Information technology | — | — | 98 | — | 98 | |||||||||||||||
Premises | — | — | 86 | — | 86 | |||||||||||||||
Depreciation of fixed assets | — | — | 54 | — | 54 | |||||||||||||||
Amortization and impairment of intangible assets | — | — | 460 | — | 460 | |||||||||||||||
Other general expenses (income) | 4 | (6 | ) | 333 | — | 331 | ||||||||||||||
Total operating expenses (income) | 12 | (1 | ) | 2,475 | — | 2,486 | ||||||||||||||
Operating income (loss) | (12 | ) | 1 | (107 | ) | — | (118 | ) | ||||||||||||
Interest income | — | 11 | 2 | (5 | ) | 8 | ||||||||||||||
Interest expense | (46 | ) | (23 | ) | (7 | ) | 5 | (71 | ) | |||||||||||
Intercompany interest income (expense) | 4 | (136 | ) | 132 | — | — | ||||||||||||||
Intercompany other income (expense) | (53 | ) | (16 | ) | 69 | — | — | |||||||||||||
Other income (expense) | (12 | ) | (4 | ) | 1 | 10 | (5 | ) | ||||||||||||
Income from continuing operations before income taxes | (119 | ) | (167 | ) | 90 | 10 | (186 | ) | ||||||||||||
Income tax benefit | (8 | ) | (63 | ) | (72 | ) | — | (143 | ) | |||||||||||
Net income (loss) from continuing operations | (111 | ) | (104 | ) | 162 | 10 | (43 | ) | ||||||||||||
Income from discontinued operations, net of tax | — | — | 821 | — | 821 | |||||||||||||||
net income (loss) before equity in earnings of subsidiaries | (111 | ) | (104 | ) | 983 | 10 | 778 | |||||||||||||
Equity in earnings of subsidiaries, net of tax | 870 | 635 | 531 | (2,036 | ) | — | ||||||||||||||
Net income | 759 | 531 | 1,514 | (2,026 | ) | 778 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 9 | — | 9 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 759 | $ | 531 | $ | 1,505 | $ | (2,026 | ) | $ | 769 |
Three months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Total revenue | $ | — | $ | — | $ | 2,282 | $ | — | $ | 2,282 | ||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 8 | 3 | 1,385 | — | 1,396 | |||||||||||||||
Information technology | — | — | 99 | — | 99 | |||||||||||||||
Premises | — | — | 89 | — | 89 | |||||||||||||||
Depreciation of fixed assets | — | — | 41 | — | 41 | |||||||||||||||
Amortization and impairment of intangible assets | — | — | 38 | — | 38 | |||||||||||||||
Other general expenses (income) | (1 | ) | 2 | 231 | — | 232 | ||||||||||||||
Total operating expenses | 7 | 5 | 1,883 | — | 1,895 | |||||||||||||||
Operating income (loss) | (7 | ) | (5 | ) | 399 | — | 387 | |||||||||||||
Interest income | — | 4 | 5 | (6 | ) | 3 | ||||||||||||||
Interest expense | (49 | ) | (26 | ) | (4 | ) | 6 | (73 | ) | |||||||||||
Intercompany interest income (expense) | 3 | (137 | ) | 134 | — | — | ||||||||||||||
Intercompany other income (expense) | (57 | ) | (16 | ) | 73 | — | — | |||||||||||||
Other income (expense) | 2 | (4 | ) | 5 | (4 | ) | (1 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | (108 | ) | (184 | ) | 612 | (4 | ) | 316 | ||||||||||||
Income tax expense (benefit) | (20 | ) | (64 | ) | 127 | — | 43 | |||||||||||||
Net income (loss) from continuing operations | (88 | ) | (120 | ) | 485 | (4 | ) | 273 | ||||||||||||
Income from discontinued operations, net of tax | — | — | 35 | — | 35 | |||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | (88 | ) | (120 | ) | 520 | (4 | ) | 308 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 392 | 255 | 135 | (782 | ) | — | ||||||||||||||
Net income | 304 | 135 | 655 | (786 | ) | 308 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 8 | — | 8 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 304 | $ | 135 | $ | 647 | $ | (786 | ) | $ | 300 |
Six months ended June 30, 2017 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Total revenue | $ | — | $ | — | $ | 4,749 | $ | — | $ | 4,749 | ||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 60 | 11 | 2,847 | — | 2,918 | |||||||||||||||
Information technology | — | — | 186 | — | 186 | |||||||||||||||
Premises | — | — | 170 | — | 170 | |||||||||||||||
Depreciation of fixed assets | — | — | 108 | — | 108 | |||||||||||||||
Amortization and impairment of intangible assets | — | — | 503 | — | 503 | |||||||||||||||
Other general expenses (income) | 9 | (4 | ) | 634 | — | 639 | ||||||||||||||
Total operating expenses | 69 | 7 | 4,448 | — | 4,524 | |||||||||||||||
Operating income (loss) | (69 | ) | (7 | ) | 301 | — | 225 | |||||||||||||
Interest income | — | 17 | — | (7 | ) | 10 | ||||||||||||||
Interest expense | (91 | ) | (47 | ) | (10 | ) | 7 | (141 | ) | |||||||||||
Intercompany interest income (expense) | 7 | (272 | ) | 265 | — | — | ||||||||||||||
Intercompany other income (expense) | (102 | ) | (9 | ) | 111 | — | — | |||||||||||||
Other income (expense) | (23 | ) | 8 | (18 | ) | 18 | (15 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | (278 | ) | (310 | ) | 649 | 18 | 79 | |||||||||||||
Income tax benefit | (22 | ) | (117 | ) | (4 | ) | — | (143 | ) | |||||||||||
Net income (loss) from continuing operations | (256 | ) | (193 | ) | 653 | 18 | 222 | |||||||||||||
Income from discontinued operations, net of tax | — | — | 861 | — | 861 | |||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | (256 | ) | (193 | ) | 1,514 | 18 | 1,083 | |||||||||||||
Equity in earnings of subsidiaries, net of tax | 1,298 | 906 | 713 | (2,917 | ) | — | ||||||||||||||
Net income | 1,042 | 713 | 2,227 | (2,899 | ) | 1,083 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 23 | — | 23 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 1,042 | $ | 713 | $ | 2,204 | $ | (2,899 | ) | $ | 1,060 |
Six months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Total revenue | $ | — | $ | — | $ | 4,558 | $ | — | $ | 4,558 | ||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | 51 | 6 | 2,684 | — | 2,741 | |||||||||||||||
Information technology | — | — | 182 | — | 182 | |||||||||||||||
Premises | — | — | 171 | — | 171 | |||||||||||||||
Depreciation of fixed assets | — | — | 79 | — | 79 | |||||||||||||||
Amortization and impairment of intangible assets | — | — | 75 | — | 75 | |||||||||||||||
Other general expenses | 6 | 4 | 493 | — | 503 | |||||||||||||||
Total operating expenses | 57 | 10 | 3,684 | — | 3,751 | |||||||||||||||
Operating income (loss) | (57 | ) | (10 | ) | 874 | — | 807 | |||||||||||||
Interest income | — | 9 | 9 | (13 | ) | 5 | ||||||||||||||
Interest expense | (94 | ) | (54 | ) | (7 | ) | 13 | (142 | ) | |||||||||||
Intercompany interest income (expense) | 7 | (270 | ) | 263 | — | — | ||||||||||||||
Intercompany other income (expense) | (111 | ) | (15 | ) | 126 | — | — | |||||||||||||
Other income (expense) | 2 | (9 | ) | 28 | (4 | ) | 17 | |||||||||||||
Income (loss) from continuing operations before income taxes | (253 | ) | (349 | ) | 1,293 | (4 | ) | 687 | ||||||||||||
Income tax expense (benefit) | (46 | ) | (126 | ) | 274 | — | 102 | |||||||||||||
Net income (loss) from continuing operations | (207 | ) | (223 | ) | 1,019 | (4 | ) | 585 | ||||||||||||
Income from discontinued operations, net of tax | — | — | 60 | — | 60 | |||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | (207 | ) | (223 | ) | 1,079 | (4 | ) | 645 | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 836 | 611 | 388 | (1,835 | ) | — | ||||||||||||||
Net income | 629 | 388 | 1,467 | (1,839 | ) | 645 | ||||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 20 | — | 20 | |||||||||||||||
Net income attributable to Aon shareholders | $ | 629 | $ | 388 | $ | 1,447 | $ | (1,839 | ) | $ | 625 |
Three months ended June 30, 2017 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 759 | $ | 531 | $ | 1,514 | $ | (2,026 | ) | $ | 778 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 9 | — | 9 | |||||||||||||||
Net income attributable to Aon shareholders | 759 | 531 | 1,505 | (2,026 | ) | 769 | ||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | — | 2 | 2 | — | 4 | |||||||||||||||
Foreign currency translation adjustments | — | — | 54 | (10 | ) | 44 | ||||||||||||||
Post-retirement benefit obligation | — | 8 | 12 | — | 20 | |||||||||||||||
Total other comprehensive income | — | 10 | 68 | (10 | ) | 68 | ||||||||||||||
Equity in other comprehensive income of subsidiaries, net of tax | 83 | 71 | 81 | (235 | ) | — | ||||||||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | — | — | (5 | ) | — | (5 | ) | |||||||||||||
Total other comprehensive income attributable to Aon shareholders | 83 | 81 | 154 | (245 | ) | 73 | ||||||||||||||
Comprehensive income attributable to Aon shareholders | $ | 842 | $ | 612 | $ | 1,659 | $ | (2,271 | ) | $ | 842 |
Three months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 304 | $ | 135 | $ | 655 | $ | (786 | ) | $ | 308 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 8 | — | 8 | |||||||||||||||
Net income attributable to Aon shareholders | 304 | 135 | 647 | (786 | ) | 300 | ||||||||||||||
Other comprehensive income (loss), 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 income (loss) | (2 | ) | 15 | (29 | ) | 4 | (12 | ) | ||||||||||||
Equity in other comprehensive loss of subsidiaries, net of tax | (14 | ) | (28 | ) | (13 | ) | 55 | — | ||||||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | — | — | — | — | — | |||||||||||||||
Total other comprehensive loss attributable to Aon shareholders | (16 | ) | (13 | ) | (42 | ) | 59 | (12 | ) | |||||||||||
Comprehensive income attributable to Aon Shareholders | $ | 288 | $ | 122 | $ | 605 | $ | (727 | ) | $ | 288 |
Six months ended June 30, 2017 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 1,042 | $ | 713 | $ | 2,227 | $ | (2,899 | ) | $ | 1,083 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 23 | — | 23 | |||||||||||||||
Net income attributable to Aon shareholders | 1,042 | 713 | 2,204 | (2,899 | ) | 1,060 | ||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | — | — | 2 | — | 2 | |||||||||||||||
Foreign currency translation adjustments | — | — | 209 | (18 | ) | 191 | ||||||||||||||
Post-retirement benefit obligation | — | 16 | 22 | — | 38 | |||||||||||||||
Total other comprehensive income | — | 16 | 233 | (18 | ) | 231 | ||||||||||||||
Equity in other comprehensive income of subsidiaries, net of tax | 253 | 235 | 251 | (739 | ) | — | ||||||||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | — | — | (4 | ) | — | (4 | ) | |||||||||||||
Total other comprehensive income attributable to Aon shareholders | 253 | 251 | 488 | (757 | ) | 235 | ||||||||||||||
Comprehensive income attributable to Aon shareholders | $ | 1,295 | $ | 964 | $ | 2,692 | $ | (3,656 | ) | $ | 1,295 |
Six months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
Net income | $ | 629 | $ | 388 | $ | 1,467 | $ | (1,839 | ) | $ | 645 | |||||||||
Less: Net income attributable to noncontrolling interests | — | — | 20 | — | 20 | |||||||||||||||
Net income attributable to Aon shareholders | 629 | 388 | 1,447 | (1,839 | ) | 625 | ||||||||||||||
Other comprehensive income (loss), 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 income (loss) | (2 | ) | 37 | (338 | ) | 4 | (299 | ) | ||||||||||||
Equity in other comprehensive loss of subsidiaries, net of tax | (301 | ) | (342 | ) | (305 | ) | 948 | — | ||||||||||||
Less: Other comprehensive loss attributable to noncontrolling interests | — | — | — | — | — | |||||||||||||||
Total other comprehensive loss attributable to Aon shareholders | (303 | ) | (305 | ) | (643 | ) | 952 | (299 | ) | |||||||||||
Comprehensive income (loss) attributable to Aon Shareholders | $ | 326 | $ | 83 | $ | 804 | $ | (887 | ) | $ | 326 |
As of June 30, 2017 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 2,675 | $ | 801 | $ | (2,792 | ) | $ | 684 | |||||||||
Short-term investments | — | 2,580 | 166 | — | 2,746 | |||||||||||||||
Receivables, net | — | 4 | 2,187 | — | 2,191 | |||||||||||||||
Fiduciary assets | — | — | 9,582 | — | 9,582 | |||||||||||||||
Intercompany receivables | 106 | 4,176 | 12,476 | (16,758 | ) | — | ||||||||||||||
Other current assets | — | 37 | 362 | — | 399 | |||||||||||||||
Current assets of discontinued operations | — | — | — | — | — | |||||||||||||||
Total Current Assets | 106 | 9,472 | 25,574 | (19,550 | ) | 15,602 | ||||||||||||||
Goodwill | — | — | 7,745 | — | 7,745 | |||||||||||||||
Intangible assets, net | — | — | 1,402 | — | 1,402 | |||||||||||||||
Fixed assets, net | — | — | 556 | — | 556 | |||||||||||||||
Deferred tax assets | 134 | 676 | 169 | (404 | ) | 575 | ||||||||||||||
Intercompany receivables | 380 | 261 | 8,729 | (9,370 | ) | — | ||||||||||||||
Prepaid pension | — | 5 | 936 | — | 941 | |||||||||||||||
Other non-current assets | 2 | 121 | 245 | — | 368 | |||||||||||||||
Investment in subsidiary | 11,677 | 16,596 | 532 | (28,805 | ) | — | ||||||||||||||
Non-current assets of discontinued operations | — | — | — | — | — | |||||||||||||||
TOTAL ASSETS | $ | 12,299 | $ | 27,131 | $ | 45,888 | $ | (58,129 | ) | $ | 27,189 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 2,336 | $ | 38 | $ | 1,841 | $ | (2,792 | ) | $ | 1,423 | |||||||||
Short-term debt and current portion of long-term debt | — | 2 | 290 | — | 292 | |||||||||||||||
Fiduciary liabilities | — | — | 9,582 | — | 9,582 | |||||||||||||||
Intercompany payables | 186 | 14,770 | 1,802 | (16,758 | ) | — | ||||||||||||||
Other current liabilities | 60 | 54 | 1,964 | — | 2,078 | |||||||||||||||
Current liabilities of discontinued operations | — | — | — | — | — | |||||||||||||||
Total Current Liabilities | 2,582 | 14,864 | 15,479 | (19,550 | ) | 13,375 | ||||||||||||||
Long-term debt | 4,216 | 1,414 | 1 | — | 5,631 | |||||||||||||||
Deferred tax liabilities | — | — | 488 | (404 | ) | 84 | ||||||||||||||
Pension, other post-retirement and other post-employment liabilities | — | 1,307 | 381 | — | 1,688 | |||||||||||||||
Intercompany payables | — | 8,895 | 475 | (9,370 | ) | — | ||||||||||||||
Other non-current liabilities | 14 | 119 | 725 | — | 858 | |||||||||||||||
Non-current liabilities of discontinued operations | — | — | — | — | — | |||||||||||||||
TOTAL LIABILITIES | 6,812 | 26,599 | 17,549 | (29,324 | ) | 21,636 | ||||||||||||||
TOTAL AON SHAREHOLDERS’ EQUITY | 5,487 | 532 | 28,273 | (28,805 | ) | 5,487 | ||||||||||||||
Noncontrolling interests | — | — | 66 | — | 66 | |||||||||||||||
TOTAL EQUITY | 5,487 | 532 | 28,339 | (28,805 | ) | 5,553 | ||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 12,299 | $ | 27,131 | $ | 45,888 | $ | (58,129 | ) | $ | 27,189 |
As of December 31, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 1,633 | $ | 655 | $ | (1,862 | ) | $ | 426 | |||||||||
Short-term investments | — | 140 | 150 | — | 290 | |||||||||||||||
Receivables, net | — | 3 | 2,103 | — | 2,106 | |||||||||||||||
Fiduciary assets | — | — | 8,959 | — | 8,959 | |||||||||||||||
Intercompany receivables | 105 | 1,880 | 9,825 | (11,810 | ) | — | ||||||||||||||
Other current assets | — | 25 | 222 | — | 247 | |||||||||||||||
Current assets of discontinued operations | — | — | 1,118 | — | 1,118 | |||||||||||||||
Total Current Assets | 105 | 3,681 | 23,032 | (13,672 | ) | 13,146 | ||||||||||||||
Goodwill | — | — | 7,410 | — | 7,410 | |||||||||||||||
Intangible assets, net | — | — | 1,890 | — | 1,890 | |||||||||||||||
Fixed assets, net | — | — | 550 | — | 550 | |||||||||||||||
Deferred tax assets | 134 | 726 | 171 | (706 | ) | 325 | ||||||||||||||
Intercompany receivables | 366 | 261 | 8,711 | (9,338 | ) | — | ||||||||||||||
Prepaid pension | — | 5 | 853 | — | 858 | |||||||||||||||
Other non-current assets | 2 | 119 | 239 | — | 360 | |||||||||||||||
Investment in subsidiary | 10,107 | 17,131 | (356 | ) | (26,882 | ) | — | |||||||||||||
Non-current assets of discontinued operations | — | — | 2,076 | — | 2,076 | |||||||||||||||
TOTAL ASSETS | $ | 10,714 | $ | 21,923 | $ | 44,576 | $ | (50,598 | ) | $ | 26,615 | |||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 585 | $ | 44 | $ | 2,837 | $ | (1,862 | ) | $ | 1,604 | |||||||||
Short-term debt and current portion of long-term debt | 279 | 50 | 7 | — | 336 | |||||||||||||||
Fiduciary liabilities | — | — | 8,959 | — | 8,959 | |||||||||||||||
Intercompany payables | 142 | 10,399 | 1,269 | (11,810 | ) | — | ||||||||||||||
Other current liabilities | — | 63 | 593 | — | 656 | |||||||||||||||
Current liabilities of discontinued operations | — | — | 940 | — | 940 | |||||||||||||||
Total Current Liabilities | 1,006 | 10,556 | 14,605 | (13,672 | ) | 12,495 | ||||||||||||||
Long-term debt | 4,177 | 1,413 | 279 | — | 5,869 | |||||||||||||||
Deferred tax liabilities | — | — | 759 | (658 | ) | 101 | ||||||||||||||
Pension, other post-retirement and other post-employment liabilities | — | 1,356 | 404 | — | 1,760 | |||||||||||||||
Intercompany payables | — | 8,877 | 461 | (9,338 | ) | — | ||||||||||||||
Other non-current liabilities | 8 | 77 | 634 | — | 719 | |||||||||||||||
Non-current liabilities of discontinued operations | — | — | 139 | — | 139 | |||||||||||||||
TOTAL LIABILITIES | 5,191 | 22,279 | 17,281 | (23,668 | ) | 21,083 | ||||||||||||||
TOTAL AON SHAREHOLDERS’ EQUITY | 5,523 | (356 | ) | 27,238 | (26,930 | ) | 5,475 | |||||||||||||
Noncontrolling interests | — | — | 57 | — | 57 | |||||||||||||||
TOTAL EQUITY | 5,523 | (356 | ) | 27,295 | (26,930 | ) | 5,532 | |||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 10,714 | $ | 21,923 | $ | 44,576 | $ | (50,598 | ) | $ | 26,615 |
Six months ended June 30, 2017 | ||||||||||||||||||||
Aon | Aon | Other Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||
Cash provided by (used for) operating activities - continuing operations | $ | (118 | ) | $ | 999 | $ | 1,056 | $ | (1,501 | ) | $ | 436 | ||||||||
Cash provided by operating activities - discontinued operations | — | — | 64 | — | 64 | |||||||||||||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | (118 | ) | 999 | 1,120 | (1,501 | ) | 500 | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||||||
Proceeds from investments | — | 567 | 6 | (544 | ) | 29 | ||||||||||||||
Payments for investments | (16 | ) | (15 | ) | (558 | ) | 557 | (32 | ) | |||||||||||
Net purchases of short-term investments - non-fiduciary | — | (2,440 | ) | (11 | ) | — | (2,451 | ) | ||||||||||||
Acquisition of businesses, net of cash acquired | — | 2 | (151 | ) | — | (149 | ) | |||||||||||||
Sale of businesses, net of cash sold | — | — | 4,193 | — | 4,193 | |||||||||||||||
Capital expenditures | — | — | (82 | ) | — | (82 | ) | |||||||||||||
Cash provided by (used for) investing activities - continuing operations | (16 | ) | (1,886 | ) | 3,397 | 13 | 1,508 | |||||||||||||
Cash used for investing activities - discontinued operations | — | — | (19 | ) | — | (19 | ) | |||||||||||||
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES | (16 | ) | (1,886 | ) | 3,378 | 13 | 1,489 | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||||||
Share repurchase | (1,100 | ) | — | — | — | (1,100 | ) | |||||||||||||
Advances from (to) affiliates | 1,846 | 1,977 | (4,381 | ) | 558 | — | ||||||||||||||
Issuance of shares for employee benefit plans | (139 | ) | — | — | — | (139 | ) | |||||||||||||
Issuance of debt | 544 | 1,102 | 5 | — | 1,651 | |||||||||||||||
Repayment of debt | (835 | ) | (1,150 | ) | (5 | ) | — | (1,990 | ) | |||||||||||
Cash dividends to shareholders | (182 | ) | — | — | — | (182 | ) | |||||||||||||
Noncontrolling interests and other financing activities | — | — | (10 | ) | — | (10 | ) | |||||||||||||
Cash provided by (used for) financing activities - continuing operations | 134 | 1,929 | (4,391 | ) | 558 | (1,770 | ) | |||||||||||||
Cash used for financing activities - discontinued operations | — | — | — | — | — | |||||||||||||||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | 134 | 1,929 | (4,391 | ) | 558 | (1,770 | ) | |||||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | — | 34 | — | 34 | |||||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | 1,042 | 141 | (930 | ) | 253 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR(1) | — | 1,633 | 660 | (1,862 | ) | 431 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | — | $ | 2,675 | $ | 801 | $ | (2,792 | ) | $ | 684 |
(1) | Includes $5 million of discontinued operations at December 31, 2016. |
Six months ended June 30, 2016 | ||||||||||||||||||||
Other | ||||||||||||||||||||
Aon | Aon | Non-Guarantor | Consolidating | |||||||||||||||||
(millions) | plc | Corporation | Subsidiaries | Adjustments | Consolidated | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||||||
Cash provided by (used for) operating activities - continuing operations | $ | 237 | $ | (625 | ) | $ | 949 | $ | (4 | ) | $ | 557 | ||||||||
Cash provided by operating activities - discontinued operations | — | — | 207 | — | 207 | |||||||||||||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 237 | (625 | ) | 1,156 | (4 | ) | 764 | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||||||
Proceeds from investments | — | 14 | 9 | — | 23 | |||||||||||||||
Payments for investments | — | (13 | ) | (16 | ) | — | (29 | ) | ||||||||||||
Net sales of short-term investments - non-fiduciary | — | 92 | 14 | — | 106 | |||||||||||||||
Acquisition of businesses, net of cash acquired | — | — | (183 | ) | — | (183 | ) | |||||||||||||
Sale of businesses, net of cash sold | — | — | 103 | — | 103 | |||||||||||||||
Capital expenditures | — | — | (68 | ) | — | (68 | ) | |||||||||||||
Cash provided by (used for) investing activities - continuing operations | — | 93 | (141 | ) | — | (48 | ) | |||||||||||||
Cash used for investing activities - discontinued operations | — | — | (36 | ) | — | (36 | ) | |||||||||||||
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 used for financing activities - continuing operations | (237 | ) | (202 | ) | (389 | ) | 184 | (644 | ) | |||||||||||
Cash used for financing activities - discontinued operations | — | — | — | — | — | |||||||||||||||
CASH USED FOR FINANCING ACTIVITIES | (237 | ) | (202 | ) | (389 | ) | 184 | (644 | ) | |||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | — | 18 | — | 18 | |||||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | (734 | ) | 608 | 180 | 54 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR(1) | — | 2,083 | 1,242 | (2,941 | ) | 384 | ||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD(2) | $ | — | $ | 1,349 | $ | 1,850 | $ | (2,761 | ) | $ | 438 |
(1) | Includes $2 million of discontinued operations at December 31, 2015. |
(2) | Includes $4 million of discontinued operations at June 30, 2016. |
• | For the second quarter of 2017, revenue increased 4%, or $86 million, to $2.4 billion compared to the prior year period due primarily to organic revenue growth of 3% and a 3% increase related to acquisitions, net of divestitures, partially offset by a 2% unfavorable impact from foreign currency exchange rates. For the first six months ended June 30, 2017, revenue increased 4% compared to the prior year period due primarily to organic revenue growth of 4% and a 2% increase related to acquisitions, net of divestitures, partially offset by a 2% unfavorable impact from foreign currency exchange rates. |
• | Operating expenses for the second quarter of 2017 were $2.5 billion, an increase of $591 million compared to the prior year period. The increase was due primarily to a $380 million non-cash impairment charge to the tradenames associated with the Divested Business, $155 million of restructuring costs, a $62 million increase in operating expenses related to acquisitions, net of divestitures, $35 million of accelerated amortization related to tradenames to move to the one Aon United brand, $34 million of costs related to regulatory and compliance matters, and an $8 million increase in intangible asset amortization from previous acquisitions, partially offset by $62 million of expense related to certain non-cash pension settlements in the prior year period, a $50 million favorable impact from currency translation and $44 million |
• | Operating margin decreased to (5.0)% in the second quarter of 2017 from 17.0% in the prior year period. The decrease compared to the prior year period was driven by an increase in expense due to the factors listed above, partially offset by organic revenue growth of 3%. The decrease from the prior year period and first six months of 2017 was driven by an increase in expense due to the factors listed above, partially offset by organic revenue growth of 4%. |
• | Due to the factors set forth above, income from continuing operations decreased $316 million, or 116%, to net loss of $43 million for the second quarter of 2017 compared to the prior year period. During the first six months of 2017, income from continuing operations decreased $363 million, or 62%, to $222 million compared to the first six months of 2016. |
• | Cash flow provided by operating activities was $436 million for the first six months of 2017, a decrease of $121 million from $557 million in the prior year period. The decrease was driven primarily by $94 million of restructuring payments and $44 million of transaction related costs. |
• | Organic revenue growth, a non-GAAP measure defined under the caption “Review of Consolidated Results — Organic Revenue Growth,” was 3% for the second quarter, comparable to the organic growth from the prior year period. Organic revenue growth was 4% for the first six months of 2017, an increase from 3% in the prior year period. |
• | Adjusted operating margin, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Operating Margin,” was 22.4% for the second quarter of 2017. Adjusted operating margin was 21.3% for the prior year period. For the first six months of 2017, adjusted operating margin was 22.3% as compared to 20.7% for the prior year period. The increases primarily reflect restructuring savings, organic revenue growth, and underlying operational improvement, partially offset by expenses related to reinvestment. |
• | Adjusted diluted earnings per share from continuing operations, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Diluted Earnings per Share,” was $1.45 per share for the second quarter of 2017 and $2.90 in the first six months of 2017, compared to $1.28 per share and $2.50 per share for the respective prior year periods. |
• | Free cash flow, a non-GAAP measure defined under the caption “Review of Consolidated Results — Free Cash Flow,” decreased in the first six months of 2017 by $135 million, or 28% from the prior year period, to $354 million, driven by a decrease of $121 million in cash flow from operations and an increase of $14 million in capital expenditures, including investments in our operating model. |
Three Months Ended | Six Months Ended | |||||||||||||||
(millions) | June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||
Revenue | ||||||||||||||||
Total revenue | $ | 2,368 | $ | 2,282 | $ | 4,749 | $ | 4,558 | ||||||||
Expenses | ||||||||||||||||
Compensation and benefits | 1,457 | 1,396 | 2,918 | 2,741 | ||||||||||||
Information technology | 98 | 99 | 186 | 182 | ||||||||||||
Premises | 86 | 89 | 170 | 171 | ||||||||||||
Depreciation of fixed assets | 54 | 41 | 108 | 79 | ||||||||||||
Amortization and impairment of intangible assets | 460 | 38 | 503 | 75 | ||||||||||||
Other general expenses | 331 | 232 | 639 | 503 | ||||||||||||
Total operating expenses | 2,486 | 1,895 | 4,524 | 3,751 | ||||||||||||
Operating income | (118 | ) | 387 | 225 | 807 | |||||||||||
Interest income | 8 | 3 | 10 | 5 | ||||||||||||
Interest expense | (71 | ) | (73 | ) | (141 | ) | (142 | ) | ||||||||
Other income (expense) | (5 | ) | (1 | ) | (15 | ) | 17 | |||||||||
Income (loss) from continuing operations before income taxes | (186 | ) | 316 | 79 | 687 | |||||||||||
Income tax expense (benefit) | (143 | ) | 43 | (143 | ) | 102 | ||||||||||
Net income (loss) from continuing operations | (43 | ) | 273 | 222 | 585 | |||||||||||
Income from discontinued operations, net of tax | 821 | 35 | 861 | 60 | ||||||||||||
Net income | 778 | 308 | 1,083 | 645 | ||||||||||||
Less: Net income attributable to noncontrolling interests | 9 | 8 | 23 | 20 | ||||||||||||
Net income attributable to Aon shareholders | $ | 769 | $ | 300 | $ | 1,060 | $ | 625 |
Three Months Ended | |||||||||||||||||||||||
June 30, 2017 | June 30, 2016 | % Change | Less: Currency Impact (1) | Less: Fiduciary Investment Income (2) | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth (3) | |||||||||||||||||
Revenue | |||||||||||||||||||||||
Commercial Risk Solutions | $ | 1,042 | $ | 990 | 5 | % | (1 | )% | — | % | 4 | % | 2 | % | |||||||||
Reinsurance Solutions | 344 | 332 | 4 | (1 | ) | — | (1 | ) | 6 | ||||||||||||||
Retirement Solutions | 389 | 405 | (4 | ) | (4 | ) | — | (1 | ) | 1 | |||||||||||||
Health Solutions | 312 | 281 | 11 | (1 | ) | — | 7 | 5 | |||||||||||||||
Data & Analytic Services | 285 | 275 | 4 | (1 | ) | — | 1 | 4 | |||||||||||||||
Elimination | (4 | ) | (1 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||
Total revenue | $ | 2,368 | $ | 2,282 | 4 | % | (2 | )% | — | % | 3 | % | 3 | % |
Six Months Ended | |||||||||||||||||||||||
June 30, 2017 | June 30, 2016 | % Change | Less: Currency Impact (1) | Less: Fiduciary Investment Income (2) | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth (3) | |||||||||||||||||
Revenue | |||||||||||||||||||||||
Commercial Risk Solutions | $ | 2,026 | $ | 1,951 | 4 | % | (1 | )% | — | % | 3 | % | 2 | % | |||||||||
Reinsurance Solutions | 715 | 703 | 2 | (1 | ) | — | (1 | ) | 4 | ||||||||||||||
Retirement Solutions | 775 | 800 | (3 | ) | (4 | ) | — | (1 | ) | 2 | |||||||||||||
Health Solutions | 684 | 573 | 19 | (2 | ) | — | 12 | 9 | |||||||||||||||
Data & Analytic Services | 553 | 534 | 4 | (1 | ) | — | 1 | 4 | |||||||||||||||
Elimination | (4 | ) | (3 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||
Total revenue | $ | 4,749 | $ | 4,558 | 4 | % | (2 | )% | — | % | 2 | % | 4 | % |
(1) | Currency impact is determined by translating prior period's revenue at this period's foreign exchange rates. |
(2) | Fiduciary investment income for the three months ended June 30, 2017 and 2016, respectively, was $7 million and $5 million. Fiduciary Investment Income for the six months ended June 30, 2017 and 2016, respectively, was $13 million and $10 million. |
(3) | Organic revenue growth includes the impact of intercompany activity and excludes the impact of changes in foreign exchange rates, acquisitions, divestitures, transfers between business units, fiduciary investment income, and reimbursable expenses. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||
Revenue from continuing operations | $ | 2,368 | $ | 2,282 | $ | 4,749 | $ | 4,558 | ||||||||
Operating income from continuing operations - as reported | $ | (118 | ) | $ | 387 | $ | 225 | $ | 807 | |||||||
Amortization and impairment of intangible assets | 460 | 38 | 503 | 75 | ||||||||||||
Restructuring | 155 | — | 299 | — | ||||||||||||
Regulatory and compliance matters | 34 | — | 34 | — | ||||||||||||
Pension settlement | — | 62 | — | 62 | ||||||||||||
Operating income income from continuing operations - as adjusted | $ | 531 | $ | 487 | $ | 1,061 | $ | 944 | ||||||||
Operating margin from continuing operations - as reported | (5.0 | )% | 17.0 | % | 4.7 | % | 17.7 | % | ||||||||
Operating margin from continuing operations - as adjusted | 22.4 | % | 21.3 | % | 22.3 | % | 20.7 | % |
Three Months Ended June 30, 2017 | |||||||||||
(millions, except per share data) | U.S. GAAP | Adjustments | As Adjusted | ||||||||
Operating income from continuing operations | $ | (118 | ) | 649 | $ | 531 | |||||
Interest income | 8 | — | 8 | ||||||||
Interest expense | (71 | ) | — | (71 | ) | ||||||
Other income | (5 | ) | — | (5 | ) | ||||||
Income before income taxes from continuing operations | (186 | ) | 649 | 463 | |||||||
Income taxes (1) | (143 | ) | 215 | 72 | |||||||
Net income from continuing operations | (43 | ) | 434 | 391 | |||||||
Income from discontinued operations, net of tax (2) | 821 | (799 | ) | 22 | |||||||
Net income | 778 | (365 | ) | 413 | |||||||
Less: Net income attributable to noncontrolling interests | 9 | — | 9 | ||||||||
Net income attributable to Aon shareholders | $ | 769 | (365 | ) | $ | 404 | |||||
Diluted net income (loss) per share attributable to Aon shareholders | |||||||||||
Continuing operations | $ | (0.20 | ) | 1.65 | $ | 1.45 | |||||
Discontinued operations | $ | 3.13 | (3.05 | ) | $ | 0.08 | |||||
Net income | $ | 2.93 | (1.40 | ) | $ | 1.53 | |||||
Weighted average ordinary shares outstanding - diluted | 262.4 | 1.9 | 264.3 |
Three Months Ended June 30, 2016 | |||||||||||
(millions, except per share data) | U.S. GAAP | Adjustments | As Adjusted | ||||||||
Operating income from continuing operations | $ | 387 | 100 | $ | 487 | ||||||
Interest income | 3 | — | 3 | ||||||||
Interest expense | (73 | ) | — | (73 | ) | ||||||
Other income | (1 | ) | — | (1 | ) | ||||||
Income before income taxes from continuing operations | 316 | 100 | 416 | ||||||||
Income taxes (1) | 43 | 19 | 62 | ||||||||
Net income from continuing operations | 273 | 81 | 354 | ||||||||
Income from discontinued operations, net of tax (2) | 35 | 23 | 58 | ||||||||
Net income | 308 | 104 | 412 | ||||||||
Less: Net income attributable to noncontrolling interests | 8 | — | 8 | ||||||||
Net income attributable to Aon shareholders | $ | 300 | 104 | $ | 404 | ||||||
Diluted net income per share attributable to Aon shareholders | |||||||||||
Continuing operations | $ | 0.98 | 0.30 | $ | 1.28 | ||||||
Discontinued operations | $ | 0.13 | 0.09 | $ | 0.22 | ||||||
Net income | $ | 1.11 | 0.39 | $ | 1.50 | ||||||
Weighted average ordinary shares outstanding - diluted | 269.8 | — | 269.8 |
Six Months Ended June 30, 2017 | |||||||||||
(millions, except per share data) | U.S. GAAP | Adjustments | As Adjusted | ||||||||
Operating income from continuing operations | $ | 225 | 836 | $ | 1,061 | ||||||
Interest income | 10 | — | 10 | ||||||||
Interest expense | (141 | ) | — | (141 | ) | ||||||
Other income | (15 | ) | — | (15 | ) | ||||||
Income before income taxes from continuing operations | 79 | 836 | 915 | ||||||||
Income taxes (1) | (143 | ) | 265 | 122 | |||||||
Net income from continuing operations | 222 | 571 | 793 | ||||||||
Income from discontinued operations, net of tax (2) | 861 | (791 | ) | 70 | |||||||
Net income | 1,083 | (220 | ) | 863 | |||||||
Less: Net income attributable to noncontrolling interests | 23 | — | 23 | ||||||||
Net income attributable to Aon shareholders | $ | 1,060 | (220 | ) | $ | 840 | |||||
Diluted net income per share attributable to Aon shareholders | |||||||||||
Continuing operations | $ | 0.75 | 2.15 | $ | 2.90 | ||||||
Discontinued operations | $ | 3.24 | (2.98 | ) | $ | 0.26 | |||||
Net income | $ | 3.99 | (0.83 | ) | $ | 3.16 | |||||
Weighted average ordinary shares outstanding - diluted | 265.7 | — | 265.7 |
Six Months Ended June 30, 2016 | |||||||||||
(millions, except per share data) | U.S. GAAP | Adjustments | As Adjusted | ||||||||
Operating income from continuing operations | $ | 807 | 137 | $ | 944 | ||||||
Interest income | 5 | — | 5 | ||||||||
Interest expense | (142 | ) | — | (142 | ) | ||||||
Other income | 17 | — | 17 | ||||||||
Income before income taxes from continuing operations | 687 | 137 | 824 | ||||||||
Income taxes (1) | 102 | 24 | 126 | ||||||||
Net income from continuing operations | 585 | 113 | 698 | ||||||||
Income from discontinued operations, net of tax (2) | 60 | 46 | 106 | ||||||||
Net income | 645 | 159 | 804 | ||||||||
Less: Net income attributable to noncontrolling interests | 20 | — | 20 | ||||||||
Net income attributable to Aon shareholders | $ | 625 | 159 | $ | 784 | ||||||
Diluted net income per share attributable to Aon shareholders | |||||||||||
Continuing operations | $ | 2.08 | 0.42 | $ | 2.50 | ||||||
Discontinued operations | $ | 0.22 | 0.17 | $ | 0.39 | ||||||
Net income | $ | 2.30 | 0.59 | $ | 2.89 | ||||||
Weighted average ordinary shares outstanding - diluted | 271.7 | — | 271.7 |
(1) | The effective tax rates used in the U.S. GAAP financial statements for continuing operations were 76.9% and (181.0)%, respectively, for the three and six months ended June 30, 2017. Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring expenses, accelerated tradename amortization, impairment charges, regulatory and compliance provisions, and non-cash pension settlement charges anticipated in Q4 2017, which are adjusted at the related jurisdictional rate. After adjusting to exclude the applicable tax impact, the adjusted effective tax rates for continuing operations were 15.6% and 13.3%, respectively, for the three and six months ended June 30, 2017. The effective tax rates used in the U.S. GAAP financial statements for continuing operations were 13.6% and 14.8%, respectively, for the three and six months ended 2016. Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with non-cash pension charges settled in Q2 2016, which are adjusted at the related jurisdictional rate. After adjusting to exclude the applicable tax impact, the adjusted effective tax rates for continuing operations were 14.9% and 15.3%, respectively, for the three and six months ended 2016. |
(2) | Adjusted income from discontinued operations, net of tax, excludes the gain on sale and intangible asset amortization on discontinued operations of $1,972 million and $0 million, respectively, for the three months ended June 30, 2017 and $1,972 million and $11 million for the six months ended June 30, 2017. The effective tax rates used in the U.S. GAAP financial statements for discontinued operation were 59.0% and 58.1%, respectively, for the three months and six months ended June 30, 2017. After adjusting to exclude the applicable tax impact associated with the gain on sale and intangible asset amortization, the adjusted effective tax rates for discontinued operations were 16.2% and 25.9%, respectively, for the three months and six months ended June 30, 2017. Adjusted income from discontinued operations, net of tax, excludes intangible asset amortization on discontinued operations of $30 million and $60 million, respectively, for the three months and six months ended June 30, 2016. The effective tax rates used in the U.S. GAAP financial statements for discontinued operation were 34.0% and 37.5% for the three and six months ended 2016, respectively. After adjusting to exclude the applicable tax impact associated with amortization, the adjusted effective tax rates for discontinued operations were 30.1% and 32.1% for the three and six months ended 2016, respectively. |
Six Months Ended | |||||||||||
June 30, 2017 | June 30, 2016 | Percent Change | |||||||||
Cash Provided by Continuing Operating Activities | $ | 436 | $ | 557 | (22 | )% | |||||
Capital Expenditures Used for Continuing Operations | (82 | ) | (68 | ) | 21 | ||||||
Free Cash Flow Provided By Continuing Operations | $ | 354 | $ | 489 | (28 | )% |
Three months ended June 30, 2017 | Six months ended June 30, 2017 | Estimated Remaining Costs | Estimated Total Cost (1) | |||||||||||||
Workforce reduction | $ | 102 | $ | 205 | $ | 98 | $ | 303 | ||||||||
Technology rationalization (2) | 7 | 10 | 136 | 146 | ||||||||||||
Lease consolidation (2) | 1 | 4 | 76 | 80 | ||||||||||||
Asset impairments | 11 | 24 | 16 | 40 | ||||||||||||
Other costs associated with restructuring and separation (2) (3) | 34 | 56 | 125 | 181 | ||||||||||||
Total restructuring and related expenses | $ | 155 | $ | 299 | $ | 451 | $ | 750 |
(1) | Actual costs, when incurred, may vary due to changes in the assumptions built into this plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives. |
(2) | Contract termination costs included within Lease consolidations for the three and six months ended June 30, 2017 were $1 million and $5 million, respectively. No other contract termination costs were incurred through June 30, 2017. Total estimated contract termination costs to be incurred under the Restructuring Plan associated with Technology rationalizations and Lease consolidations, respectively, are $9 million and $80 million. |
(3) | Other costs associated with the Restructuring Plan include those to separate the Divested Business, as well as moving costs and consulting and legal fees. These costs are generally recognized when incurred. |
Restructuring Plan | ||||
Balance at January 1, 2017 | $ | — | ||
Expensed | 272 | |||
Cash payments | (94 | ) | ||
Foreign currency translation and other | — | |||
Balance at June 30, 2017 | $ | 178 |
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 | $ | 684 | $ | — | $ | 2,341 | $ | 3,025 | ||||||||
Money market funds | — | 2,746 | 1,371 | 4,117 | ||||||||||||
Cash and short-term investments | 684 | 2,746 | 3,712 | 7,142 | ||||||||||||
Fiduciary receivables | — | — | 5,870 | 5,870 | ||||||||||||
Total | $ | 684 | $ | 2,746 | $ | 9,582 | $ | 13,012 |
Rolling twelve months ended | |||||||
June 30, | |||||||
2017 | 2016 | ||||||
Net income | $ | 890 | $ | 1,304 | |||
Interest expense | 281 | 282 | |||||
Income taxes | (97 | ) | 200 | ||||
Depreciation of fixed assets | 191 | 161 | |||||
Amortization and impairment of intangible assets | 585 | 159 | |||||
Restructuring charges | 275 | — | |||||
Non-cash pension expense | 125 | 36 | |||||
Total EBITDA | $ | 2,250 | $ | 2,142 | |||
Total Debt | $ | 5,923 | $ | 6,158 | |||
Total debt-to-EBITDA ratio | 2.6 | 2.9 |
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 |
• | positive net foreign currency translation adjustments of $195 million, which are attributable to the weakening of the U.S. dollar against certain foreign currencies, |
• | an increase of $38 million in net post-retirement benefit obligations, and |
• | net financial instrument gains of $2 million. |
• | general economic and political conditions in different countries in which we do business around the world; |
• | changes in the competitive environment; |
• | fluctuations in exchange and interest rates that could influence revenues and expenses; |
• | changes in global equity and fixed income markets that could affect the return on invested assets; |
• | changes in the funding status of our various defined benefit pension plans and the impact of any increased pension funding resulting from those changes; |
• | the level of our debt limiting financial flexibility or increasing borrowing costs; |
• | rating agency actions that could affect our ability to borrow funds; |
• | the effect of the change in global headquarters and jurisdiction of incorporation, including differences in the anticipated benefits; |
• | changes in estimates or assumptions on our financial statements; |
• | limits on our subsidiaries to make dividend and other payments to us; |
• | the impact of lawsuits and other contingent liabilities and loss contingencies arising from errors and omissions and other claims against us; |
• | the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which we operate, particularly given the global scope of our businesses and the possibility of conflicting regulatory requirements across jurisdictions in which we do business; |
• | the impact of any investigations brought by regulatory authorities in the U.S., U.K. and other countries; |
• | the impact of any inquiries relating to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws and with U.S. and non-U.S. trade sanctions regimes; |
• | failure to protect intellectual property rights or allegations that we infringe on the intellectual property rights of others; |
• | the effects of English law on our operating flexibility and the enforcement of judgments against us; |
• | the failure to retain and attract qualified personnel; |
• | international risks associated with our global operations; |
• | the effect of natural or man-made disasters; |
• | the potential of a system or network breach or disruption resulting in operational interruption or improper disclosure of personal data; |
• | our ability to develop and implement new technology; |
• | damage to our reputation among clients, markets or third parties; |
• | the actions taken by third parties that perform aspects of our business operations and client services; |
• | the extent to which we manage certain risks created in connection with the various services, including fiduciary and investments and other advisory services and business process outsourcing services, among others, that we currently provide, or will provide in the future, to clients; |
• | our ability to continue, and the costs associated with, growing, developing and integrating companies that we acquire or new lines of business; |
• | changes in commercial property and casualty markets, commercial premium rates or methods of compensation; |
• | changes in the health care system or our relationships with insurance carriers; |
• | our ability to implement initiatives intended to yield cost savings and the ability to achieve those cost savings; |
• | our risks and uncertainties in connection with the sale of our Benefits Administration and HR Business Process Outsourcing business; and |
• | our ability to realize the expected benefits from our restructuring plan. |
Period | Total Number of Shares Purchased | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)(2) | ||||||||||
4/1/17 - 4/30/17 | 837,564 | $ | 119.39 | 837,564 | $ | 7,598,328,724 | ||||||||
5/1/17 - 5/31/17 | 3,877,896 | 126.34 | 3,877,896 | 7,108,403,638 | ||||||||||
6/1/17 - 6/30/17 | 3,296,735 | 133.45 | 3,296,735 | 6,668,439,388 | ||||||||||
Total | 8,012,195 | $ | 128.54 | 8,012,195 | $ | 6,668,439,388 |
(1) | Does not include commissions or other costs paid to repurchase shares. |
(2) | Our board of directors authorized the Company’s share repurchase program in April 2012. In November 2014 and February 2017, our board of directors authorized incremental increases of $5.0 billion each time. During the second quarter of 2017, we repurchased 8.0 million shares at an average price per share of $128.54 for a total cost of $1.0 billion. Included in the 8.0 million shares repurchased was 450 thousand shares, which are included in the above table, that did not settle until July 2017. These shares were settled at an average price per share of $133.24 and total cost of $60.0 million. |
Aon plc | ||
(Registrant) | ||
August 4, 2017 | 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 | Second Amendment to the Aon Deferred Compensation Plan, effective April 19, 2017. | |
10.2 | Transition and Separation Agreement entered into between Aon Corporation and Kristi Savacool, dated April 25, 2017. | |
10.3 | Amendment No. 1 to the Credit Agreement among Aon plc, Aon Corporation and Aon UK Limited, the banks, financial institutions and other institutional lenders party to the Credit Agreement, dated June 21, 2017. | |
12.1 | Statement regarding Computation of Ratio of Earnings to Fixed Charges. | |
31.1 | Certification of CEO. | |
31.2 | Certification of CFO. | |
32.1 | Certification of CEO Pursuant to section 1350 of Title 18 of the United States Code. | |
32.2 | Certification of CFO Pursuant to section 1350 of Title 18 of the United States Code. | |
101 | Interactive Data Files. The following materials are filed electronically with this Quarterly Report on Form 10-Q: | |
101.INS XBRL Report Instance Document | ||
101.SCH XBRL Taxonomy Extension Schema Document | ||
101.CAL XBRL Taxonomy Calculation Linkbase Document | ||
101.DEF XBRL Taxonomy Definition Linkbase Document | ||
101.PRE XBRL Taxonomy Presentation Linkbase Document | ||
101.LAB XBRL Taxonomy Calculation Linkbase Document |
1. | Transition. The Company will employ the Executive during the Transition Period under the title of Special Advisor to the CEO. |
2. | Responsibilities. During the Transition Period, the Executive will report to the Chief Executive Officer of the Company (the “CEO”), and her responsibilities will focus on oversight of the separation of the outsourcing business in a manner that delivers full value capture for all parties, and such other special projects and other responsibilities as determined by mutual agreement with the CEO. In addition, during the Transition Period, the Executive will work toward achievement of the Transition Goals as set forth in Section 5(b). |
3. | Salary and Benefits. |
a. | Base Salary. During the Transition Period, the Company will pay the Executive a base salary at a rate of $800,000 per year (the “Base Salary”), payable in accordance with the Company’s payroll policies. |
b. | Employee Benefits. During the Transition Period, the Executive will be entitled to participate in the Company’s employee benefit plans generally available to senior employees of the Company, in accordance with the terms of such plans, including the Northwestern Executive Health Plan. Nothing in this Agreement will require the Company to establish, maintain, or continue any of the benefits already in existence or hereafter adopted for senior employees |
c. | Executive Relocation. The Company will relocate the Executive from one residence in Illinois to one new residence in Nevada or Washington, in accordance with the Aon Senior Executive Domestic Transfer Policy. In addition, the Company will provide price protection for the sale of the Executive’s Illinois residence of up to $300,000 gross as compared to the original purchase price. |
d. | Legal Fees. The Company will pay the legal fees incurred by Executive in connection with the negotiation and execution of this Agreement, up to a maximum amount of $25,000. |
e. | Expense Reimbursement. In accordance with Company policies and procedures and on prescribed Company forms, the Company will reimburse the Executive for all proper expenses incurred by the Executive in the performance of her duties hereunder. |
4. | Separation. |
a. | Separation on the Separation Date. Unless earlier terminated as provided herein, the Executive’s employment with the Company shall terminate on the Separation Date. Such termination on the Separation Date shall be deemed a termination of employment “without Cause” by mutual agreement for purposes of this Agreement and the Company’s compensation and benefit plans. The Company will pay the Executive (i) all accrued but unpaid base salary and vested benefits (subject to Section 5) as of the Separation Date, payable in accordance with the applicable Company policy, plan, or program, and (ii) subject to the terms and conditions set forth in Sections 5 and 6, the payments and benefits set forth in Sections 5 and 6. The Executive’s eligibility to participate in the Company’s employee benefit plans generally available to senior employees of the Company, including without limitation health care plans, shall terminate as of the Separation Date, subject to any applicable rights pursuant to COBRA. |
b. | Separation |
i. | Death or Disability. In the event of the death or total disability of the Executive (as defined under the Aon Long Term Disability Plan or its successor plan), or in the event that the Executive becomes otherwise disabled through any illness, injury, accident or condition of either a physical or psychological nature so as to be unable to perform substantially all of the Executive’s duties and responsibilities for one hundred eighty (180) consecutive calendar days, in each case occurring: |
(1) | Prior to July 1, 2017, then the Executive (or her beneficiary per Section 9(b) below) shall receive unpaid Agreement Payments (as defined below), but with each Agreement Payment discounted by 20%, and with each such Agreement Payment paid on the date that it would have been paid had the Executive not died or become disabled; or |
(2) | On or after July 1, 2017 and until the Separation Date, then the Executive (or her beneficiary per Section 9(b) below) shall receive unpaid Agreement Payments, without discount, and paid on the date that it would have been paid had the Executive not died or become disabled. |
ii. | By the Executive. During the Transition Period, this Agreement and the Executive’s employment hereunder may be terminated by the Executive on no less than thirty (30) days advance notice by the Executive. The notice will specify the termination date, provided that the Company may require the Executive to leave Company premises immediately upon giving of notice. In the event of such a termination, the Company will pay Executive all accrued by unpaid Base Salary and vested benefits as of the termination date, payable in accordance with the applicable Company policy, plan, or program. |
iii. | For Cause. During the Term, the Company may terminate this Agreement for Cause, effective immediately by written notice of termination given to the Executive setting forth the basis for such termination. For the purposes of this Agreement, “Cause” will mean the Executive’s: (A) performing a deliberate act of dishonesty, fraud, theft, embezzlement, or misappropriation involving the Executive’s employment with the Company, or breach of the duty of loyalty to the Company; (B) performing an act of race, sex, national origin, religion, disability, or age-based discrimination, or sexual harassment, which after investigation, the Company reasonably concludes will result in material exposure to the Company’s business reputation or counsel to the Company reasonably concludes will result in material liability being imposed on the Company and/or the Executive; (C) material violation of the Company’s written policies and procedures including, but not limited to, the Aon Code of Business Conduct; (D) material non-compliance with the terms of this Agreement, including but not limited to Section 8, which is not cured within twenty (20) days after written notice (with specificity as to the noncompliance) is given to the Executive; or (E) admission or conviction of, or a plea of nolo contendere, to a felony or any crime involving moral turpitude or misrepresentation. In the event of a termination for Cause, the Company will only be required to pay or provide to the Executive all accrued but unpaid Base Salary and benefits as of the date of such termination; provided, however, that in such event the Executive will not be waiving her rights or entitlements pursuant to any employee benefit plan or program or equity plan or agreement. |
c. | Effecting Termination on the Separation Date. As of the Separation Date, the Executive agrees that the Secretary of the Company may, as an irrevocable proxy and in the Executive’s |
d. | Obligations Upon Separation. Upon the Separation Date, the obligations of the parties under this Agreement and the Prior Agreement will cease, except as otherwise explicitly set forth in this Agreement. The Executive will continue to be indemnified and held harmless to the maximum extent provided under the Company’s charter, by-laws and applicable law for her acts and omissions to act through the Separation Date, which indemnification shall survive her termination of employment. Executive will continue to be insured under policies of directors and officers liability insurance to the fullest extent provided for former officers or directors under the applicable policy(ies); provided, such insurance coverage may be terminated if Aon terminates coverage generally for all officers and directors. Nothing in this Agreement or its Exhibits waives the Executive’s right to make any claim under any director and officer liability insurance coverage provided by the Company for acts or omissions by Executive while an executive officer of the Company or any affiliate. |
e. | Copy of Restrictive Covenants. The Executive agrees that, prior to the commencement of any new employment in the insurance brokerage, reinsurance brokerage or human capital consulting business, the Executive will furnish the prospective new employer with a complete and accurate copy of the text of the restrictive covenant obligation the Executive has to Aon (the “Restrictive Covenant Text”) under Section 8 of this Agreement. The Executive also agrees that the Company may advise any prospective new employer of the existence and terms of such restrictive covenants and furnish the prospective new employer with a copy of the Restrictive Covenant Text. |
5. | Separation Payments. Contingent upon the Executive’s (a) continued employment with the Company through the Separation Date, (b) continued compliance with the provisions of Section 8 herein, and (c) execution and return (and non-revocation) of a general release of claims agreement in the form attached hereto as Exhibit A (the “Release”) within 21 calendar days after receiving such agreement (but not before the Separation Date), the Executive shall be eligible to receive, in addition to the other benefits and consideration conferred upon her by virtue of this Agreement, the following payments and benefits in exchange for her remaining employed during the Transition Period, agreeing to the restrictive covenants in Section 8, and agreeing to the other terms and conditions in this Agreement (the “Separation Payments”): |
a. | A cash payment in the amount of $3,000,000 in recognition of exemplary leadership and contributions during 2017, payable as follows: (i) $2,200,000 no earlier than January 1, 2018 and no later than February 28, 2018; and (ii) $800,000 payable on July 1, 2018; and |
b. | A discretionary cash payment in an amount up to $3,000,000, payable no earlier than January 1, 2018 and no later than March 15, 2018. The actual amount will be determined by the Company’s CEO through a qualitative, holistic assessment of Executive’s overall performance, including, without limitation, consideration of facts such as: |
i. | The retention by the Company and by Tempo (as defined below) of designated “white glove” clients at 2017 year-over-year recurring revenue, considering pre-deal book of business retention rate; |
ii. | The overall success of the Company’s Tempo divestiture; and |
iii. | Effective transition of Aon Hewitt to Aon target model. |
6. | Equity Awards. The Executive’s equity awards issued under the Aon plc Amended and Restated 2011 Incentive Plan in connection with the Leadership Performance Program (“LPP”) for the 2014-2016 performance cycle (“LPP9”), the 2015-2017 performance cycle (“LPP10”), and the 2015-2018 performance cycle (“LPP11”) will continue to be governed by the terms and conditions of the applicable plan documents. Notwithstanding the foregoing provisions of this Section 6 and anything to the contrary contained in the LPP10 or LPP11 plan documents, and contingent upon the Executive’s (a) continued employment with the Company through the Separation Date, (b) continued compliance with the provisions of Section 8 herein, and (c) execution and return (and non-revocation) of the Release, the Executive’s LPP10 and LPP11 awards shall be determined and paid as though the Executive had continued employment with the Company through the payment date. The Executive’s Incentive Stock Plan (“ISP”) awards for 2014, 2015 and 2016 will continue to be governed by the terms and conditions of the applicable plan documents. |
7. | Acknowledgments. The Executive understands and agrees that she would not otherwise be eligible for, or entitled to, any of the payments or other benefits set forth in this Agreement if she did not enter into this Agreement. Further, by signing this Agreement, the Executive agrees that she is not entitled to any additional payments and/or benefits that are not specifically listed in this Agreement including, but not limited to, any benefits under the Prior Agreement, any benefits under any tax equalization policy, and/or any applicable Aon bonus or incentive plan, except for those payments or benefits in which she has a vested right pursuant to the terms of the applicable plans or agreements, and applicable law. |
8. | Restrictive Covenants. |
a. | General. The Executive acknowledges that in the course of her employment with the Company and any predecessor or affiliated company, the Executive has become familiar with trade secret and other confidential information concerning the Company and their subsidiaries (collectively “Aon”). The Executive further acknowledges and agrees that her services as a senior executive of the Company have been, and are, of special, unique, and extraordinary value to the Company and its affiliates. |
b. | Noncompetition. |
i. | The Executive agrees that for a period of two years after the Separation Date (the “Noncompetition Period”) the Executive will not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer director, stockholder, investor or employee of or consultant to any other corporation or enterprise or otherwise, (x) engage or be engaged, or assist any other person, firm, corporation or enterprise in engaging or being engaged, in the business of insurance brokerage, reinsurance brokerage, employee benefits brokerage and benefits and human resources consulting and administration and cloud-based human resources solutions or deployment (the “Specified Business”) provided that such Specified Business represents, or is reasonably expected to represent, the greater of $400 million dollars or at least 55% of the business’ annual gross revenue, respectively, in the fiscal year prior to the Executive becoming affiliated with such entity or in the fiscal year of such affiliation (the “Limits”) or (y) provide services to (A) a Listed Major Competitor (as defined below), or a successor in interest to all or substantially all of the assets of a Listed Major Competitor, within a business unit or division that engages in a Specified Business or would be a Specified Business if the definition of “Specified Business” included human resources business process outsourcing services or (B) any business (or any entity owning such business) which is spun-off or otherwise disposed of by a Listed Major competitor if (I) such spun-off or otherwise disposed business is a Specified Business or would be a Specified Business if the definition of “Specified Business” included human resources business process outsourcing services and (II) the Limits are satisfied, with the Limits being calculated based only on the spun-off or otherwise disposed business. Service to a business unit or division of a Listed Major Competitor that is not a business unit or division described in (A) above shall not be a violation of this Section 8(b). This restriction will apply in any geographic area in which the Company or any of its subsidiaries is then conducting such business. |
ii. | Without limiting the generality of the foregoing prohibition, the following businesses are the “Listed Major Competitors”: Marsh & McLennan Companies, Inc.; Willis Group Holdings Limited; Towers Watson & Co.; the Hay Group; Xerox Corporation; Fidelity Investments; Accenture pic; International Business Machines Corporation; and any entity that satisfies the criteria in the following sentence. A Listed Major Competitor shall also include any entity that is involved in human resources business process outsourcing services (x) in which more than 50% of the voting power to elect directors is owned by private equity funds, directly or indirectly, and (y) that has indicated (by words or actions) that its intent is to become a significant competitor to the Company with respect to human resources business process outsourcing services generally. |
iii. | For purposes of this Section 8(b): (x) “benefits and human resources administration” means providing recordkeeping services to and for retirement plans and health and other welfare benefit plans and designing, implementing and maintaining health care exchanges for retiree and active populations under health and other welfare benefit plans, whether independent or as part of a health insurance provider service (e.g., Aetna, Blue Cross Blue Shield, etc.) or health care provider (e.g., Kaiser or UPMC); (y) “benefits and human resources consulting” means providing consulting or actuarial services to clients in their capacity as employers and/or sponsors of retirement plans and health and other welfare plans, including investment consulting and delegated investment consulting for retirement plans and pension risk transfer advice and execution, but shall not include management consulting services; and (z) neither payroll services nor outsourcing services (other than the aforesaid recordkeeping or consulting to employers and/or sponsors as to selection of vendors) shall be within the meaning of “benefits and human resources consulting and administration.” |
iv. | Furthermore, in calculating the Limits, any entity’s revenues from subsegments of a segment of the Company that represents less than 10% of the revenues of Aon Hewitt in the fiscal year prior to the termination of the Executive’s employment with the Company shall not be considered as revenues of the Specified Businesses. |
c. | Nonsolicitation. The Executive further agrees that during the Noncompetition Period the Executive will not in any manner, directly or indirectly, induce or attempt to induce any employee of Aon to terminate or abandon his or her employment with Aon for any purpose whatsoever. |
d. | Exceptions. Nothing in this Section 8 will prohibit the Executive from being (i) a stockholder in a mutual fund or a diversified investment company or (ii) a passive owner of note more than two percent of the outstanding stock of any class of a corporation, any securities of which are publicly traded, so long as the Executive has no active participation in the business of such corporation. |
e. | Trade Secrets and Confidential Information. The Executive acknowledges that Aon’s business depends to a significant degree upon the possession of confidential, proprietary and trade secret information which is not generally known to others, and that the profitability of the business of Aon requires that this information remain proprietary to Aon. |
f. | Inventions. The Executive hereby assigns to the Company her entire right, title and interest in and to all discoveries and improvements, patentable or otherwise, trade secrets and ideas writings and copyrightable material, which may be conceived by the Executive or developed or acquired by the Executive during the Term of Employment, which may pertain directly or indirectly to the business of Aon. The Executive agrees to disclose fully all such developments to the Company upon its request, which disclosure will be made in writing promptly following any such request. The Executive will, upon the Company’s request, execute, acknowledge and deliver to the Company all instruments and do all other acts which are necessary or desirable to enable Aon to file and prosecute applications for, and to acquire, maintain and enforce, all patents, trademarks, and copyrights in all countries. |
g. | Reformation. If, at any time of enforcement of this Section 8, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope, or geographical area reasonable under such circumstances will be substituted for the stated period, scope or area and that the court will be allowed to revise the restrictions contained herein to cover the maximum period, scope, and area permitted by law. This Agreement will not authorize a court to increase or broaden any of the restrictions of this Section 8. |
h. | Consideration; Breach. The Company and the Executive agree that the payments to be made by the Company to the Executive pursuant to Sections 3 and 5 hereof will be made and provided expressly in consideration of the Executive’s agreements contained in, and continued compliance with, this Section 8. In the event that the Company determines that the Executive has committed a material breach of any provision of Section 8 hereof, on written notice to the Executive setting forth the basis for such determination, the Company will be entitled immediately to terminate making all remaining payments and providing all remaining benefits pursuant to Sections 3 and 5 hereof and upon such termination the Company will have no further liability to the Executive under this Agreement; provided, however, that if a court of law determines that no such material breach occurred, the Company will be obligated to make such payments in a timely manner. |
i. | Company’s Right to Injunctive Relief. The Executive acknowledges that the Executive’s services to the Company are of a unique character which gives them a special value to the Company, the loss of which cannot reasonably or adequately be compensated in damages in an action at law, and that a breach of Section 8 of this Agreement will result in irreparable and continuing harm to the Company and that therefore, in addition to any other remedy |
j. | Return of Property. Upon the Separation Date or upon the Company’s request (whichever is earlier), the Executive will promptly return to the Company all materials and all copies or tangible embodiments of materials involving any confidential information in the Executive’s possession or control, except as otherwise provided by law or in Section 12 below. Notwithstanding the foregoing, and contingent upon satisfying the Company’s security protocols, Executive will be permitted to retain Company-provided laptop and mobile phone after the Separation Date. |
9. | Mergers and Consolidations; Assignability. |
a. | The rights and obligations under this Agreement will inure to the benefit of and be binding upon the Company and its successors and assigns. This Agreement will not be assignable by the Executive, but in the event of the Executive’s death it will be binding upon and inure to the benefit of the Executive’s beneficiary (per Section 9(b) below) and legal representatives to the extent required to effectuate its terms. |
b. | With the exception of compensation in respect of Equity Awards referenced in Section 6, which will continue to be governed by the respective Plan documents, the Executive may name a beneficiary or beneficiaries to receive any Agreement Payments following the Executive’s death by giving the Company written notice thereof. In the event there is no such named beneficiary, or no surviving named beneficiary, such compensation and benefits shall be paid to the Executive’s surviving spouse, or, if none, to the Executive’s estate. |
10. | Release. |
a. | For and in consideration of the payments and benefits provided, or to be provided, to the Executive under this Agreement, the Executive, and anyone claiming through her or on her behalf, hereby waives and releases the Released Parties (as defined below) with respect to any and all claims, whether currently known or unknown, that the Executive now has or ever has had against a Released Party arising from or related to any act, omission, or thing occurring or existing at any time prior to or on the date on which the Executive signs this Agreement. “Released Parties” include (A) the Company and its past, present, and future parents, divisions, subsidiaries, partnerships, affiliates, and other related entities, (B) each of the foregoing entities’ and persons’ past, present, and future owners, trustees, fiduciaries, administrators, shareholders, directors, officers, partners, members, associates, agents, executives, employees, and attorneys, and (C) the predecessors, successors and assigns of each of the foregoing persons and entities. Without limiting the generality of the foregoing, the claims waived and released by the Executive hereunder include, but are not limited to: |
i. | All claims arising out of or related in any way to her employment, compensation, other terms and conditions of employment, or termination from employment, including, without limitation, claims with respect to any advance notice of |
ii. | All claims that were or could have been asserted by the Executive or on her behalf: (A) in any federal, state, or local court, commission, or agency; or (B) under any common law theory (including without limitation all claims for breach of contract (oral, written or implied), wrongful termination, defamation, invasion of privacy, infliction of emotional distress, tortious interference, fraud, estoppel, unjust enrichment, and any other contract, tort or other common law claim of any kind); and |
iii. | All claims that were or could have been asserted by the Executive or on her behalf under: (A) the Age Discrimination in Employment Act (the “ADEA”) and the Older Worker Benefit Protection Act (the “OWBPA”); and (B) any other federal, state, local, employment, services or other law, regulation, ordinance, constitutional provision, executive order or other source of law, including without limitation under any of the following laws, as amended from time to time: Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 1981 & 1981a, the Americans with Disabilities Act, the Equal Pay Act, Executive Retirement Income Security Act, the Lilly Ledbetter Fair Pay Act of 2009, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act and all applicable state, county or other local fair employment laws. |
b. | Exceptions. Notwithstanding the foregoing, the releases and waivers in this Agreement shall not apply to any claim for unemployment or workers’ compensation, any claim for vested benefits under any employee benefit plan, any claim that by law is non-waivable, any claim as a stockholder of Aon plc, or any claim to rights pursuant to this Agreement (including, without limitation, the last sentence of Section 4(d), Section 5, Section 6, and the last sentence of Section 7). |
c. | No Further Obligations; Additional Representations. In the event of any further proceedings based upon any released matter, Aon shall have no further monetary or other obligation of any kind to the Executive, and the Executive hereby waives any such monetary or other recovery (provided that nothing limits the Executive’s rights under Section 12 below). The Executive represents and warrants that: (i) there has not been filed by the Executive or on the Executive’s behalf any legal or other proceedings against any of the Released Parties (provided, however, that the Executive need not disclose to the Company, and the foregoing representation and warranty in this subpart (c) does not apply to, conduct or matters described in Section 12 below); (ii) the Executive is the sole owner of the claims that are released in this Section 10; (iii) none of these claims has been transferred or assigned or caused to be transferred or assigned to any other person, firm or other legal entity; and (iv) the Executive |
d. | Specific Rights Under OWBPA. They Executive understands and agrees that: (i) this is the full and final release of all claims against the Company and the other Released Parties through the date she signs this Agreement; (ii) the Executive knowingly and voluntarily releases claims hereunder for valuable consideration; (iii) the Executive hereby is and has been advised of her right to have her attorney review this Agreement before signing it; (iv) the Executive has twenty-one (21) days to consider whether to sign this Agreement; and (v) the Executive may, at her sole option, revoke this Agreement upon written notice within seven (7) days after signing it. This Agreement will not become effective until this seven (7) day period has expired and will be void if she revokes it within such period. Although the Executive is releasing claims that she may have under the ADEA and the OWBPA, she understands that she may challenge the knowing and voluntary nature of this Agreement under the OWBPA and the ADEA before a court, the EEOC, the NLRB, or any other federal state or local agency charged with the enforcement of any employment laws. |
11. | Future Conduct. The Executive agrees that she shall refrain from, and the Company agrees that it shall use reasonable efforts to refrain from, all conduct, verbal or otherwise, that disparages or damages the reputation, goodwill, or standing in the community of the other such party or, with respect to the Executive’s conduct any of the other Released Parties, provided that nothing herein shall prohibit the Executive from exercising her rights detailed in Section 12 or prohibit either party from giving truthful testimony or evidence to a governmental entity, or if properly subpoenaed or otherwise required to do so under applicable law. The Executive agrees that she has no present or future right to employment with the Company or any of the other Released Parties. Subject to and except as otherwise provided in Section 12 of this Agreement the Executive shall cooperate fully with the Company and the other Released Parties in transitioning her responsibilities as requested by the Company. |
12. | Protected Rights. Nothing in this Agreement is intended to limit in any way the Executive’s right or ability to report possible violations of law or regulation to, or file a charge or complaint with, the U.S. Securities and Exchange Commission, the U.S. Equal Employment Opportunity Commission, the National Labor Relations Board, or other federal, state or local agencies or commissions (collectively, “Government Agencies”). The Executive further understands that nothing in this Agreement limits the Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies, including providing documents or other information, without notice to the Company. Nothing in this Agreement shall limit the Executive’s ability to disclose in confidence trade secrets to Government Agencies, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law or to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure. This Agreement does not limit the Executive’s ability to receive an award from a Government Agency for information provided by the Executive to such Government Agency. |
13. | Miscellaneous. |
a. | Integration; Amendment; Counterparts. Except as is otherwise provided herein, this Agreement contains all of the terms and conditions agreed upon by the parties relating to the subject matter of this Agreement and supersedes all prior and contemporaneous agreements, negotiations, correspondence, undertakings and communications of the parties, whether oral or written, respecting the subject matter of this Agreement; provided, however, that the parties specifically acknowledge that the Change in Control Agreement between the parties, dated February 24, 2015, is not superseded by this Agreement. This Agreement may not be amended, altered, or modified without the prior written consent of both parties and such instrument must acknowledge that it is an amendment or modification of this Agreement. This Agreement may be executed in two counterparts, each of which will be deemed an original and both of which together will constitute one and the same instrument. Any signature delivered via .pdf file shall be the same as an original signature. |
b. | Waiver. Waiver of any term or condition of this Agreement by any party will not be construed as a waiver of a subsequent breach or failure of the same term or condition, or a waiver of any other term or condition of this Agreement. Any waiver must be in writing. |
c. | Captions. The captions in this Agreement are not part of its provisions, are merely for reference and have no force or effect. If any caption is inconsistent with any provision of this Agreement, such provision will govern. |
d. | Governing Law. The validity, interpretation, construction, performance, enforcement and remedies of, or relating to, this Agreement, and the rights and obligations of the parties hereunder, will be governed by and construed in accordance with the substantive laws of |
e. | Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held by a court of competent jurisdiction to be prohibited or unenforceable for any reason, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. |
f. | Notice. All notices given hereunder will be in writing and will be sent by registered or certified mail or delivered by hand and, if intended for the Company, will be addressed to it or delivered to it at its principal office for the attention of the Chief Human Resources Officer of the Company. If intended for the Executive, notices will be delivered personally or will be addressed (if sent by mail) to the Executive’s then current residence address as shown on the Company’s records, or to such other address as the Executive directs in a notice to the Company. All notices will be deemed to be given on the date received at the address of the addressee or, if delivered personally, on the date delivered. |
g. | Code Section 409A. The parties intend that this Agreement and the benefits provided hereunder be interpreted and construed to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and all regulatory and interpretative guidance issued thereunder (“Code Section 409A”) to the extent applicable thereto. The time and form of payment of incentive compensation, disability benefits, severance payments, expense reimbursements and payments of in-kind benefits described herein will be made in accordance with the applicable sections of this Agreement, provided that with respect to termination of employment for reasons other than death, the payment at such time can be characterized as a “short-term deferral” for purposes of Code Section 409A or as otherwise exempt from the provisions of Code Section 409A, or if any portion of the payment cannot be so characterized, and the Executive is a “specified employee” under Code Section 409A, such portion of the payment will be delayed until the earlier to occur of the Executive’s death or the date that is six months and one day following the Executive’s termination of employment (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section will be paid or reimbursed to the Executive in a lump sum, and any remaining payments due under this Agreement will be payable at the same time and in the same form as such amounts would have been paid. Further, if the Executive is a “specified employee” and if any equity-based awards granted to the Executive by the Company, pursuant to this Agreement or otherwise, continue to vest upon the Executive’s termination of employment, and are deemed a “deferral of compensation” (as such term is described under Code Section 409A), the equity-based awards will not be settled or released until the expiration of the Delay Period. For purposes of applying the provisions of Code Section 409A, each separately identifiable amount to which the Executive is entitled will be treated |
AON CORPORATION By: Printed Name: Its: Date: |
Kristi Savacool Date: |
1. | Release. The Executive, and anyone claiming through her or on her behalf, hereby waives and releases the Released Parties (as defined below) with respect to any and all claims, whether currently known or unknown, that the Executive now has or ever has had against a Released Party arising from or related to any act, omission, or thing occurring or existing at any time prior to or on the date on which the Executive signs this Release. “Released Parties” include (A) the Company and its past, present, and future parents, divisions, subsidiaries, partnerships, affiliates, and other related entities, (B) each of the foregoing entities’ and persons’ past, present, and future owners, trustees, fiduciaries, administrators, shareholders, directors, officers, partners, members, associates, agents, executives, employees, and attorneys, and (C) the predecessors, successors and assigns of each of the foregoing persons and entities. Without limiting the generality of the foregoing, the claims waived and released by the Executive hereunder include, but are not limited to: |
a. | All claims arising out of or related in any way to her employment, compensation, other terms and conditions of employment, or termination from employment, including, without limitation, claims arising out of any employment agreements, change in control agreements, bonus plans, incentive plans or awards, severance plans or policies, stock plans or policies, relocation letters or any other employee benefit plans; and |
b. | All claims that were or could have been asserted by the Executive or on her behalf: (i) in any federal, state, or local court, commission, or agency; or (ii) under any common law theory (including without limitation all claims for breach of contract (oral, written or implied), wrongful termination, defamation, invasion of privacy, infliction of emotional distress, tortious interference, fraud, estoppel, unjust enrichment, and any other contract, tort or other common law claim of any kind); and |
c. | All claims that were or could have been asserted by the Executive or on her behalf under: (i) the Age Discrimination in Employment Act (the “ADEA”) and the Older Worker Benefit |
2. | Exceptions. Notwithstanding the foregoing, the releases and waivers in this Release shall not apply to any claim: (A) for unemployment or workers’ compensation, (B) for vested benefits under any employee benefit plan, (C) that by law is non-waivable, (D) for payments or benefits under Section 5, 6, or 7 of the Agreement, (E) as a stockholder of Aon plc, or (F) for indemnification pursuant to Section 4(d) of the Agreement or applicable law and for coverage as an insured under directors and officers liability insurance. |
3. | No Further Obligations; Additional Representations. In the event of any further proceedings based upon any released matter, the Company, its affiliates, parent companies, and subsidiaries (collectively, “Aon”) shall have no further monetary or other obligation of any kind to the Executive, and the Executive hereby waives any such monetary or other recovery (provided that nothing limits the Executive’s rights under Section 5 below). The Executive represents and warrants that: (A) there has not been filed by the Executive or on the Executive’s behalf any legal or other proceedings against any of the Released Parties (provided, however, that the Executive need not disclose to the Company, and the foregoing representation and warranty in this subpart (A) does not apply to, conduct or matters described in Section 5 below); (B) the Executive is the sole owner of the claims that are released in Section 1 above; (C) none of these claims has been transferred or assigned or caused to be transferred or assigned to any other person, firm or other legal entity; and (D) the Executive has the full right and power to grant, execute, and deliver the releases, undertakings, and agreements contained in this Release. |
4. | Specific Rights Under OWBPA. The Executive understands and agrees that: (A) this is the full and final release of all claims against Aon through the date she signs this Release; (B) the Executive knowingly and voluntarily releases claims hereunder for valuable consideration; (C) the Executive hereby is and has been advised of her right to have her attorney review this Release before signing it; (D) the Executive has twenty-one (21) days to consider whether to sign this Release; and (E) the Executive may, at her sole option, revoke this Release upon written notice within seven (7) days after signing it. This Release will not become effective until this seven (7) day period has expired and will be void if she revokes it within such period. Although the Executive is releasing claims that she may have under the ADEA and the OWBPA, she understands that she may challenge the knowing and voluntary nature of this Release under the OWBPA and the ADEA before a court, the EEOC, the NLRB, or any other federal state or local agency charged with the enforcement of any employment laws. |
5. | Protected Rights. Nothing in this Release is intended to limit in any way the Executive’s right or ability to report possible violations of law or regulation to, or file a charge or complaint with, the U.S. Securities and Exchange Commission, the U.S. Equal Employment Opportunity Commission, the National Labor Relations Board, or other federal, state or local agencies or commissions (collectively, “Government Agencies”). The Executive further understands that nothing in this Release limits the Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Release does not limit the Executive’s ability to receive an award from a Government Agency for information provided by the Executive to such Government Agency. |
AON CORPORATION By: Printed Name: Its: Date: |
Kristi Savacool Date: |
(b) | A new Section 9.14 is added to read as follows: |
AON PLC, | |
by | |
Name: Title: |
AON CORPORATION, | |
by | |
Name: Title: |
AON UK LIMITED, | |
by | |
Name: Title: |
CITIBANK, N.A., individually and as Administrative Agent, | |
by | |
Name: Title: |
Name of Institution: | |
by | |
Name: Title: |
Name of Institution: | |
by | |
Name: Title: |
Six Months Ended June 30 | Years Ended December 31, | |||||||||||||||||||||||
(millions except ratio) | 2017 | 2016 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||
Income from continuing operations before income taxes and noncontrolling interests | $ | 79 | $ | 687 | $ | 1,401 | $ | 1,428 | $ | 1,559 | $ | 1,347 | ||||||||||||
Less: Equity in earnings on less than 50% owned entities | 9 | 3 | 13 | 13 | 12 | 20 | ||||||||||||||||||
Add back fixed charges: | ||||||||||||||||||||||||
Interest on indebtedness | 141 | 142 | 282 | 273 | 255 | 210 | ||||||||||||||||||
Interest on uncertain tax positions | — | — | — | — | 4 | 5 | ||||||||||||||||||
Portion of rents representative of interest factor | 16 | 16 | 28 | 33 | 40 | 40 | ||||||||||||||||||
Income as adjusted | $ | 227 | $ | 842 | $ | 1,698 | $ | 1,721 | $ | 1,846 | $ | 1,582 | ||||||||||||
Fixed charges: | ||||||||||||||||||||||||
Interest on indebtedness | $ | 141 | $ | 142 | $ | 282 | $ | 273 | $ | 255 | $ | 210 | ||||||||||||
Interest on uncertain tax positions | — | — | — | — | 4 | 5 | ||||||||||||||||||
Portion of rents representative of interest factor | 16 | 16 | 28 | 33 | 40 | 40 | ||||||||||||||||||
Total fixed charges | $ | 157 | $ | 158 | $ | 310 | $ | 306 | $ | 299 | $ | 255 | ||||||||||||
Ratio of earnings to fixed charges | 1.4 | 5.3 | 5.5 | 5.6 | 6.2 | 6.2 |
1. | I have reviewed this quarterly report on Form 10-Q of Aon plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 4, 2017 | /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: | August 4, 2017 | /s/ CHRISTA DAVIES |
Christa Davies Chief Financial Officer |
/s/ GREGORY C. CASE | |
Gregory C. Case Chief Executive Officer | |
August 4, 2017 |
/s/ CHRISTA DAVIES | |
Christa Davies Chief Financial Officer | |
August 4, 2017 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Aug. 03, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | Aon plc | |
Entity Central Index Key | 0000315293 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 254,337,319 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 778 | $ 308 | $ 1,083 | $ 645 |
Less: Net income attributable to noncontrolling interests | 9 | 8 | 23 | 20 |
Net income attributable to Aon shareholders | 769 | 300 | 1,060 | 625 |
Other comprehensive income (loss), net of tax: | ||||
Change in fair value of financial instruments | 4 | (4) | 2 | (11) |
Foreign currency translation adjustments | 44 | (59) | 191 | (138) |
Postretirement benefit obligation | 20 | 51 | 38 | (150) |
Total other comprehensive income (loss) | 68 | (12) | 231 | (299) |
Less: Other comprehensive income attributable to noncontrolling interests | (5) | 0 | (4) | 0 |
Total other comprehensive income (loss) attributable to Aon shareholders | 73 | (12) | 235 | (299) |
Comprehensive income (loss) attributable to Aon shareholders | $ 842 | $ 288 | $ 1,295 | $ 326 |
Condensed Consolidated Statements of Financial Position (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, nominal or par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares (in shares) | 750,000,000 | 750,000,000 |
Common stock, issued shares (in shares) | 255,700,000 | 262,000,000 |
Basis of Presentation |
6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||
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, 2016. The results for the three and six months ended June 30, 2017 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2017. Discontinued Operations On February 9, 2017, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Tempo Acquisition, LLC (the “Buyer”), an entity formed and controlled by affiliates of The Blackstone Group L.P. Pursuant to the Purchase Agreement, the Company sold its benefits administration and business process outsourcing business (the “Divested Business”) to the Buyer and certain designated purchasers that are direct or indirect subsidiaries of the Buyer (the “Transaction”). As a result, the Divested Business’s financial results are reflected in the Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Financial Position, and Condensed Consolidated Statements of Cash Flows, retrospectively, as discontinued operations beginning in the first quarter of 2017. Additionally, all Notes to the Condensed Consolidated Financial Statements have been retrospectively restated to only include the impacts of continuing operations, unless noted otherwise. The Transaction closed on May 1, 2017. Refer to Note 3 “Discontinued Operations” for additional information. Reportable Segments Beginning in the first quarter of 2017, the Company began operating as one segment that includes all of Aon’s continuing operations, which as a global professional services firm provides advice and solutions to clients focused on risk, retirement, and health through five revenue lines that make up our principal products and services. Refer to Note 17 “Segment Information” for additional information. As a result of these initiatives, Aon made the following changes to its presentation of the Condensed Consolidated Statement of Income beginning in the first quarter of 2017:
Prior period comparable financial information has been reclassified to conform to this presentation. The Company believes this presentation provides greater clarity into the risks and opportunities that management believes are important and allows users of the financial statements to assess the performance in the same way as the Chief Operating Decision Maker (the “CODM”). Use of Estimates The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the financial statements in future periods. |
Accounting Principles and Practices |
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Jun. 30, 2017 | |||||||||
Accounting Policies [Abstract] | |||||||||
Accounting Principles and Practices | Accounting Principles and Practices Adoption of New Accounting Standards Share-based Compensation In March 2016, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement and treated as discrete items in the reporting period. Further, excess tax benefits are required to be classified along with other income tax cash flows as an operating activity. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The Company adopted this guidance on January 1, 2017, with the following impacts:
Adoption of the guidance was applied prospectively on the Condensed Consolidated Statement of Cash Flows and prior period comparable information was not restated. Other elements of the guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements. Accounting Standards Issued But Not Yet Adopted Presentation of Net Periodic Pension and Postretirement Benefit Costs In March 2017, the FASB issued new accounting guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Additionally, only the service cost component is eligible for capitalization, when applicable. An entity will apply the new guidance retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension costs and net periodic postretirement benefit in assets. The new guidance allows a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The new guidance is effective for Aon in the first quarter of 2018. The adoption of this guidance will have no impact on the total results of the Company. The presentation of results will reflect a change in Operating income offset by an equal change in Other income (expense) for the period. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued new accounting guidance on simplifying the test for goodwill impairment. Currently the standard requires an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The new guidance removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. An entity will apply the new guidance on a prospective basis. The new guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted for annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact and period of adoption that the standard will have on the Condensed Consolidated Financial Statements. Income Tax Consequences of Intercompany Transactions In October 2016, the FASB issued new accounting guidance on the income tax consequences of intra-entity asset transfers other than inventory. The guidance will require that the seller and buyer recognize the consolidated current and deferred income tax consequences of a transaction in the period the transaction occurs rather than deferring to a future period and recognizing those consequences when the asset has been sold to an outside party or otherwise recovered through use (i.e., depreciated, amortized, impaired). An entity will apply the new guidance on a modified retrospective basis with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The new guidance is effective for Aon in the first quarter of 2018, and the Company is currently evaluating the impact that the standard will have on the Condensed Consolidated Financial Statements. Statement of Cash Flows In August 2016, the FASB issued new accounting guidance on the classification of certain cash receipts and cash payments. Under the new guidance, an entity will no longer have discretion to choose the classification for a number of transactions, including contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The new standard will be effective for the Company in the first quarter of 2018, with early adoption permitted. An entity will apply the new guidance through retrospective adjustment to all periods presented. The retrospective approach includes a practical expedient that entities may apply should retrospective adoption be impracticable; in this case, the amendments for these issues may be applied prospectively as of the earliest date practicable. The guidance will not have a material impact on the Company’s Condensed Consolidated Statements of Cash Flows. Credit Losses In June 2016, the FASB issued new accounting guidance on the measurement of credit losses on financial instruments. The new guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. Aon is currently evaluating the impact that the standard will have on the 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 adoption 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 the Condensed Consolidated Financial Statements 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 Condensed Consolidated Financial Statements and period of adoption. Revenue Recognition In May 2014, the FASB issued a new accounting standard on revenue from contracts with customers, which, when effective, will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of the standard is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The standard is effective for Aon in the first quarter of 2018 and early adoption is permitted beginning in the first quarter of 2017. Two methods of transition are permitted upon adoption: full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing a comparable view across all periods presented. Under the modified retrospective method, prior periods would not be restated. Rather, revenue and other disclosures for pre-2018 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The Company will adopt this standard in the first quarter of 2018 and is evaluating both methods of transition; however, it is currently anticipated that a modified retrospective adoption approach will be used. A preliminary assessment to determine the impacts of the new accounting standard has been performed. The Company is currently implementing accounting and operational processes and controls that will be impacted by the new standard, but is still evaluating the quantitative impacts the standard will have on its financial statements. However, the more significant impacts of the new standard to the Company are anticipated to be as follows: The Company currently recognizes revenue for certain brokerage activities over a period of time either due to the transfer of value to customers or as the remuneration becomes determinable. Under the new standard, this revenue will be recognized on the effective date of the associated policies when control of the policy transfers to the customer. As a result, revenue from these arrangements will be recognized in earlier periods under the new standard in comparison to the current guidance and will change the timing and amount of revenue recognized for annual and interim periods. This change is anticipated to result in a significant shift in interim revenue for Reinsurance Solutions. The Company is currently assessing the timing and measurement of revenue recognition under the new standard for certain other services. Additionally, the new standard provides guidance on accounting for certain revenue-related costs including when to capitalize costs associated with obtaining and fulfilling a contract. These costs are currently expensed as incurred under existing U.S. GAAP. Assets recognized for the costs to obtain a contract will be amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, considering anticipated renewals when applicable. For situations where the renewal period is one year or less and renewal costs are commensurate with the initial contract, the Company plans to apply a practical expedient and recognize the costs of obtaining a contract as an expense when incurred. Assets recognized as costs to fulfill a contract will be amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, which is expected to commonly be a period of less than one year. The Company is quantifying the nature and amount of costs that would qualify for capitalization and the amount of amortization that will be recognized in each period. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations On February 9, 2017, the Company entered into the Purchase Agreement with Tempo Acquisition, LLC to sell its benefits administration and business process outsourcing business to the Buyer, an entity formed and controlled by affiliates of The Blackstone Group L.P., and certain designated purchasers that are direct or indirect subsidiaries of the Buyer. On May 1, 2017, the Buyer purchased all of the outstanding equity interests of the Divested Business, plus certain related assets, for a purchase price of (i) $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and (ii) deferred consideration of up to $500 million, plus the assumption of certain liabilities. Cash proceeds after customary adjustments and before taxes due were $4.2 billion. Aon and the Buyer entered into certain transaction related agreements at the closing, including two commercial agreements, a transition services agreement, certain intellectual property license agreements, sub-leases and other customary agreements. Aon expects to continue to be a significant client of the Divested Business and the Divested Business has agreed to use Aon for its broking and other services for a specified period of time. In the second quarter of 2017, the Company recorded an estimated gain on sale, net of taxes, of $798 million and a non-cash impairment charge to its tradename associated with the Divested Business of $380 million as this asset was not sold to the Buyer. The impairment charge is included in Amortization and impairment of intangible assets on the Condensed Consolidated Statement of Income for the three and six months ended June 30, 2017. The Company has classified the results of the Divested Business as discontinued operations in the Company’s Condensed Consolidated Statements of Income for all periods presented. Additionally, the assets and liabilities of the Divested Business were retrospectively classified as discontinued operations in the Company’s Condensed Consolidated Statements of Financial Position upon triggering held for sale criteria in February 2017. These assets and liabilities were sold on May 1, 2017. The financial results of the Divested Business for the three and six months ended June 30, 2017 and 2016 are presented as Income from discontinued operations on the Company’s Condensed Consolidated Statements of Income. The following table presents financial results of the Divested Business (in millions):
The following table presents the aggregate carrying amounts of the classes of assets and liabilities presented as discontinued operations within the Company’s Condensed Consolidated Statements of Financial Position (in millions):
The Company’s Condensed Consolidated Statements of Cash Flows present the operating, investing, and financing cash flows of the Divested Business as discontinued operations. Aon uses a centralized approach to cash management and financing of its operations. Prior to the closing of the Transaction, portions of the Divested Business’s cash were transferred to Aon daily, and Aon would fund the Divested Business as needed. Cash and cash equivalents of discontinued operations at June 30, 2016 was $4 million. |
Cash and Cash Equivalents and Short-term Investments |
6 Months Ended |
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Jun. 30, 2017 | |
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 instruments with initial maturities of three months or less. Short-term investments consist of money market funds. The estimated fair value of cash and cash equivalents and short-term investments approximates their carrying values. At June 30, 2017, Cash and cash equivalents and Short-term investments were $3,430 million compared to $716 million at December 31, 2016, an increase of $2,714 million that was primarily related to the receipt of proceeds from the sale of the Divested Business. Of the total balances, $91 million and $82 million was restricted as to its use at June 30, 2017 and December 31, 2016, respectively. Included within the June 30, 2017 and December 31, 2016 balances, respectively, were £42.7 million ($54.3 million at June 30, 2017 exchange rates) and £43.3 million ($53.2 million at December 31, 2016 exchange rates) of operating funds required to be held by the Company in the United Kingdom 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 (Expense) Other income (expense) 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 Company completed four acquisitions during the six months ended June 30, 2017 and eight acquisitions during the twelve months ended December 31, 2016. The following table includes the preliminary fair values of consideration transferred, assets acquired, and liabilities assumed as a result of the Company’s acquisitions (in millions):
The results of operations of these acquisitions are included in the Condensed Consolidated Financial Statements as of the respective acquisition dates. The Company’s results of operations would not have been materially different if these acquisitions had been reported from the beginning of the period in which they were acquired. 2017 Acquisitions On May 31, 2017, the Company completed the transaction to acquire SchneiderGolling IFFOXX Assekuranzmakler AG and SchneiderGolling Industrie Assekuranzmaklergesellschaft mbH from SchneiderGolling Gruppe, a property and casualty broker based in Southern Germany. On May 2, 2017, the Company completed the transaction to acquire cut-e Assessment Global Holdings Limited, a high-volume online psychometric assessments provider based in Ireland. On March 3, 2017, the Company completed the transaction to acquire Finaccord Limited, a market research, publishing and consulting company based in the United Kingdom. On January 19, 2017, the Company completed the transaction to acquire VERO Management AG, an insurance broker and risk advisor based in Austria. 2016 Acquisitions On December 26, 2016, the Company completed the transaction to acquire Admix, a leading health and benefits brokerage and solutions firm based in Brazil. On November 11, 2016 the Company completed the transaction to acquire CoCubes, a leading hiring assessment company based in India. On October 31, 2016, the Company completed the transaction to acquire Stroz, Friedberg, Inc., a leading global cyber risk management firm based in New York City, with offices across the U.S. and in London, Zurich, Dubai and Hong Kong. On August 19, 2016, the Company completed the transaction to acquire Cammack Health LLC, a leading health and benefits consulting firm that serves large health care organizations in the Eastern region of the U.S., including health plans, health systems and employers. On June 1, 2016, the Company completed the transaction to acquire Univers Workplace Solutions, a leading elective benefit enrollment and communication services firm based in New Jersey. On April 11, 2016, the Company completed the transaction to acquire Nexus Insurance Brokers Limited and Bayfair Insurance Centre Limited, insurance brokerage firms located in New Zealand. On February 1, 2016, the Company completed the transaction to acquire Modern Survey, an employee survey and talent analytics solutions provider based in Minneapolis. On January 1, 2016, the Company completed the transaction to acquire Globe Events Management, an insurance, retirement, and investment consulting business company based in Australia. Dispositions The Company completed one disposition during the three months ended June 30, 2017 and four dispositions during the six months ended June 30, 2017, excluding the sale of the Divested Business. Refer to Note 3 “Discontinued Operations” for further information. The Company completed two dispositions during the three months ended June 30, 2016 and four dispositions during the six months ended June 30, 2016. There were no gains recognized on the disposition of businesses for the three months ended June 30, 2017, excluding the sale of the Divested Business. Total pretax gains recognized, net of losses, were $6 million for the three months ended June 30, 2016. Total pretax losses recognized, net of gains, were $2 million for the six months ended June 30, 2017, and total pretax gains recognized, net of losses, were $41 million for the six months ended June 30, 2016. Gains and losses recognized as a result of a disposition are included in Other income (expense) in the Condensed Consolidated Statements of Income. |
Restructuring |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring In 2017, Aon initiated a global restructuring plan (the “Restructuring Plan”) in connection with the sale of the Divested Business. The Restructuring Plan is intended to streamline operations across the organization and deliver greater efficiency, insight, and connectivity. Based on assumptions built into the Restructuring Plan at inception, the Company expected these restructuring activities and related expenses to affect continuing operations through 2019, including an estimated 2,400 to 2,850 role eliminations. The Restructuring Plan is expected to result in cumulative costs of approximately $750 million through the end of the plan, consisting of approximately $303 million in employee termination costs, $146 million in technology rationalization costs, $80 million in lease consolidation costs, $40 million in asset impairments, and $181 million in other costs, including certain separation costs associated with the sale of the Divested Business. Included in the estimated $750 million are $50 million of estimated non-cash charges related to asset impairments and lease consolidations. From the inception of the Restructuring Plan through June 30, 2017, 1,785 positions have been eliminated and total expenses of $299 million have been incurred for restructuring and related separation costs. These charges are included in Compensation and benefits, Information technology, Premises, Depreciation of fixed assets, and Other general expenses in the accompanying Condensed Consolidated Statements of Income. The following summarizes restructuring and separation costs by type that have been incurred through June 30, 2017 and are estimated to be incurred through the end of the Restructuring Plan (in millions). Estimated cost may be revised in future periods as these assumptions are updated:
The changes in the Company’s liabilities for the Restructuring Plan as of June 30, 2017 are as follows (in millions):
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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 for the six months ended June 30, 2017 are as follows (in millions):
In the second quarter of 2017 and in connection with the completion of the sale of the Divested Business, the Company recognized a non-cash impairment charge to the associated tradenames of $380 million. The fair value of the tradenames was determined using the Relief from Royalty Method. This impairment was included in Amortization and impairment of intangible assets on the Condensed Consolidated Statement of Income. Refer to Note 3 “Discontinued Operations” for further information. Other intangible assets by asset class are as follows (in millions):
Additionally, effective May 1, 2017 and consistent with operating as one segment, the Company implemented a three-year strategy to transition to a unified Aon brand. As a result, Aon commenced amortization of all indefinite lived tradenames and prospectively accelerated amortization of its finite lived tradenames over the three-year period. The change in estimated useful life resulted in $22 million, or $0.09 per share, additional amortization expense, net of tax, to continuing operations in the three months ended June 30, 2017. Amortization expense and impairment charges from finite lived intangible assets was $460 million and $503 million for the three and six months ended June 30, 2017, respectively. Amortization expense from finite lived intangible assets was $38 million and $75 million for the three and six months ended June 30, 2016, respectively. The estimated future amortization for finite lived intangible assets as of June 30, 2017 is as follows (in millions):
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Debt |
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Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Notes During the six months ended June 30, 2017, CAD 375 million ($283 million at June 30, 2017 rates) 4.76% Senior Notes due March 2018 were classified as Short-term debt and current portion of long-term debt in the Consolidated Statements of Financial Position as the date of maturity is less than one year. Revolving Credit Facilities As of June 30, 2017, Aon plc had one primary committed credit facility outstanding: its $900 million multi-currency U.S. credit facility expiring in February 2021 (the “2021 Facility”). The Company’s $400 million U.S. credit facility expired in March 2017. The 2021 Facility includes customary representations, warranties and covenants, including financial covenants that require Aon plc to maintain specified ratios of adjusted consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”) to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At June 30, 2017, Aon plc did not have borrowings under the 2021 Facility, and was in compliance with all covenants contained therein during the six months ended June 30, 2017. Commercial Paper Aon Corporation, a wholly-owned subsidiary of Aon plc, has established a U.S. commercial paper program and a European multi-currency commercial paper program (the “CP Programs”). Commercial paper may be issued in an aggregate principal amount of up to $1.3 billion under the CP Programs, allocated between the two programs as determined by management, not to exceed the amount of committed credit, currently $900 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 no commercial paper outstanding at June 30, 2017 and $329 million of commercial paper outstanding at December 31, 2016, 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, 2017 was $318 million and $342 million, respectively. The weighted average commercial paper outstanding for the three and six months ended June 30, 2016 was $304 million and $240 million, respectively. The weighted average interest rate of the commercial paper outstanding for the three and six months ended June 30, 2017 was 0.26% and 0.18%, respectively. 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. |
Income Taxes |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate on net income (loss) from continuing operations was 76.9% and (181.0)% for the three and six months ended June 30, 2017, respectively. The effective tax rate on net income (loss) from continuing operations was 13.6% and 14.8% for the three and six months ended June 30, 2016, respectively. In the second quarter of 2017, the Company reported a tax benefit of $143 million on a pretax loss of $186 million, which resulted in an effective tax rate of 76.9%. For the six months ended June 30, 2017, the Company reported a tax benefit of $143 million on pretax income of $79 million, which resulted in an effective tax rate of (181.0)%. The primary components of the quarter to date and year to date tax amounts were the non-cash tax benefit from the tradename impairment associated with the Divested Business and the impact of share-based payments from adoption of the new share-based compensation guidance. Refer to Note 2 “Accounting Principles and Practices” for additional details. |
Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity Ordinary Shares Aon has a share repurchase program authorized by the Company’s Board of Directors (the “Repurchase Program”) . The Repurchase Program was established in April 2012 with up to $5.0 billion in authorized repurchases and increased in November 2014 and February 2017 by incremental increases of $5.0 billion in authorized repurchases at each of those times. Under the Repurchase Program, Class A Ordinary Shares may be repurchased through the open market or in privately negotiated transactions, from time to time, based on prevailing market conditions, and will be funded from available capital. In the three months ended June 30, 2017, the Company repurchased 8.0 million shares at an average price per share of $128.54, for a total cost of approximately $1.0 billion. The Company recorded an additional $5.1 million of costs associated with the repurchases to retained earnings during the quarter. During the six months ended June 30, 2017, the Company repurchased 9.1 million shares at an average price per share of $126.85, for a total cost of approximately $1.2 billion. The Company recorded an additional $5.8 million of costs associated with the repurchases to retained earnings during the six months ended June 30, 2017. Included in the 8.0 million shares and 9.1 million shares repurchased during the three and six months ended June 30, 2017 were 450 thousand shares that did not settle until July 2017. These shares were settled at an average price per share of $133.24 and total cost of $60.0 million. In the three months ended June 30, 2016, the Company did not repurchase shares under the Repurchase Program. 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. At June 30, 2017, the remaining authorized amount for share repurchase under the Repurchase Program was $6.7 billion. Under the Repurchase Program, the Company has repurchased a total of 99.3 million shares for an aggregate cost of approximately $8.3 billion. Net Income (Loss) Per Share Weighted average shares outstanding are as follows (in millions):
Potentially issuable shares are not included in the computation of diluted net income (loss) per share if their inclusion would be antidilutive. Due to the net loss for the three months ended June 30, 2017, 1.9 million shares were excluded from the calculation. There were 0.2 million shares excluded from the calculation for the six months ended June 30, 2017. There were no shares and 0.3 million shares excluded from the calculation for the three and six months ended June 30, 2016, respectively. Accumulated Other Comprehensive Loss Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):
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Employee Benefits |
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Retirement Benefits [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):
In March 2017, the Company approved a plan to offer a voluntary one-time lump sum payment option to certain eligible employees of the Company’s U.K. pension plans that, if accepted, would settle the Company’s pension obligation to them. A non-cash settlement charge is expected in the fourth quarter of 2017. Contributions The Company expects to make cash contributions of approximately $80 million, $51 million, and $18 million, based on exchange rates as of December 31, 2016, to its significant U.K., U.S., and other significant international pension plans, respectively, during 2017. On July 1, 2017, the Company made a non-cash contribution of approximately $80 million to its U.S. pension plan. During the three months ended June 30, 2017, cash contributions of $26 million, $13 million, and $9 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, 2017, cash contributions of $42 million, $26 million, and $11 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, 2016, cash 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, cash 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. |
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 RSUs generally vest between three and five years. The fair value of RSUs is based upon the market value of Aon ordinary shares at the date of grant. With certain limited exceptions, any break in continuous employment will cause the forfeiture of all non-vested awards. Compensation expense associated with RSUs is recognized on a straight-line basis over the requisite service period. Dividend equivalents are paid on certain RSUs, based on the initial grant amount. The following table summarizes the status of the Company’s RSUs, including shares related to the Divested Business (shares in thousands):
Unamortized deferred compensation expense amounted to $409 million as of June 30, 2017, with a remaining weighted-average amortization period of approximately 2.1 years. Performance Share Awards The vesting of PSAs is contingent upon meeting a cumulative level of earnings per share performance over a three-year period. The actual issue of shares may range from 0-200% of the target number of PSAs granted, based on the terms of the plan and level of achievement of the related performance target. The grant date fair value of PSAs is based upon the market price of an Aon ordinary share at the date of grant. The performance conditions are not considered in the determination of the grant date fair value for these awards. Compensation expense is recognized over the performance period based on management’s estimate of the number of units expected to vest. Management evaluates its estimate of the actual number of shares expected to be issued at the end of the programs on a quarterly basis. The cumulative effect of the change in estimate is recognized in the period of change as an adjustment to Compensation and benefits expense, if necessary. Dividend equivalents are not paid on PSAs. Information as of June 30, 2017 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, 2017 and the years ended December 31, 2016 and 2015, respectively, is as follows (shares in thousands and dollars in millions, except fair value):
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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 (expense) 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):
Offsetting of financial liabilities and derivative liabilities are as follows (in millions):
The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2017 and 2016 are as follows (in millions):
The Company estimates that approximately $14 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified in to earnings in the next twelve months. The amount of gain (loss) recognized in income on the ineffective portion of derivatives for the three and six months ended June 30, 2017 and 2016 was immaterial. During the three and six months ended June 30, 2017, the Company recorded a loss of $1 million and a gain of $0.4 million, respectively, in Other income (expense) for foreign exchange derivatives not designated or qualifying as hedges. 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 (expense) for foreign exchange derivatives not designated or qualifying as hedges. Net Investments in Foreign Operations Risk Management The Company uses non-derivative financial instruments to protect the value of its investments in a number of foreign subsidiaries. In 2016, the Company designated a portion of its Euro-denominated commercial paper issuances as a non-derivative hedge of the foreign currency exposure of a net investment in its European operations. The change in fair value of the designated portion of the Euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive income (loss), to the extent it is effective as a hedge. The foreign currency translation adjustment of the hedged net investments that is also recorded in Accumulated other comprehensive income (loss). Ineffective portions of net investment hedges, if any, are reclassified from Accumulated other comprehensive income (loss) into earnings during the period of change. As of June 30, 2017, the Company had no outstanding Euro-denominated commercial paper designated as a hedge of the foreign currency exposure of its net investment in its European operations. As of June 30, 2017, the unrealized gain recognized in Accumulated other comprehensive income (loss) related to the net investment non derivative hedging instrument was immaterial. 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 and six months ended June 30, 2017. In addition, the Company did not incur any ineffectiveness related to net investment hedges during the three and six months ended June 30, 2017. |
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 consist of institutional prime, treasury, and government money market funds. The Company reviews treasury and government money market funds to obtain reasonable assurance that the fund net asset value is $1 per share, and reviews the floating net asset value of institutional prime money market funds for reasonableness. Equity investments consist of domestic and international equity securities and equity derivatives valued using the closing stock price on a national securities exchange. Over the counter equity derivatives are valued using observable inputs such as underlying prices of the underlying security and volatility. On a sample basis the Company reviews the listing of Level 1 equity securities in the portfolio and agrees the closing stock prices to a national securities exchange, and independently verifies the observable inputs for Level 2 equity derivatives and securities. Fixed income investments consist of certain categories of bonds and derivatives. Corporate, government, and agency bonds are valued by pricing vendors who estimate fair value using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves, and credit risk. Asset-backed securities are valued by pricing vendors who estimate fair value using discounted cash flow models utilizing observable inputs based on trade and quote activity of securities with similar features. Fixed income derivatives are valued by pricing vendors using observable inputs such as interest rates and yield curves. The Company obtains an understanding of the models, inputs, and assumptions used in developing prices provided by its vendors through discussions with the fund managers. The Company independently verifies the observable inputs, as well as assesses assumptions used for reasonableness based on relevant market conditions and internal Company guidelines. If an assumption is deemed unreasonable, based on the Company’s guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates used in the Consolidated Financial Statements. Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities. Debt is carried at outstanding principal balance, less any unamortized discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements. The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016 (in millions):
There were no transfers of assets or liabilities between fair value hierarchy levels in either the three and six months ended June 30, 2017 or 2016. The Company recognized no realized or unrealized gains or losses in the Condensed Consolidated Statements of Income during either the three and six months ended June 30, 2017 or 2016, related to assets and liabilities measured at fair value using unobservable inputs. The fair value of debt is classified as Level 2 of the fair value hierarchy. The following table discloses the Company’s financial instruments where the carrying amounts and fair values differ (in millions):
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2017 | |
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 Consolidated Statements of Financial Position and have been recognized in Other general expenses in the Consolidated Statements of Income to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Matters that are not probable and reasonably estimable are not accrued for in the financial statements. The Company has included in the current matters described below certain matters in which (1) loss is probable, (2) loss is reasonably possible, that is, more than remote but not probable, or (3) there exists the reasonable possibility of loss greater than the accrued amount. In addition, the Company may from time to time disclose matters for which the probability of loss could be remote but the claim amounts associated with such matters are potentially significant. The reasonably possible range of loss for the matters described below for which loss is estimable, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.3 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. The insurers have appealed both of these trial court decisions. Aon believes it has meritorious defenses and intends to vigorously defend itself against these claims. On June 1, 2007, the International Road Transport Union (“IRU”) sued Aon in the Geneva Tribunal of First Instance in Switzerland. IRU alleges, among other things, that, between 1995 and 2004, a business acquired by Aon and, later, an Aon subsidiary (1) accepted commissions for certain insurance placements that violated a fee agreement entered between the parties and (2) negligently failed to ask certain insurance carriers to contribute to the IRU’s risk management costs. IRU sought damages of approximately CHF 46 million ($47 million at June 30, 2017 exchange rates) and $3 million, plus legal fees and interest of approximately $30 million. On December 2, 2014, the Geneva Tribunal of First Instance entered a judgment that accepted some, and rejected other, of IRU’s claims. The judgment awarded IRU CHF 16.8 million ($17 million at June 30, 2017 exchange rates) and $3.1 million, plus interest and adverse costs. The entire amount of the judgment, including interest through December 31, 2014, totaled CHF 27.9 million ($28 million at December 31, 2014 exchange rates) and $5 million. On January 26, 2015, in return for IRU agreeing not to appeal the bulk of its dismissed claims, the Aon subsidiary agreed not to appeal a part of the judgment and to pay IRU CHF 12.8 million ($14 million at January 31, 2015 exchange rates) and $4.7 million without Aon admitting liability. The Aon subsidiary appealed those aspects of the judgment it retained the right to appeal. IRU did not appeal. After the Geneva Appellate Court affirmed the judgment of the Geneva Tribunal of First Instance, the Aon subsidiary filed an appeal with the Swiss Federal Tribunal. By judgment issued June 16, 2017, the Swiss Federal Tribunal affirmed in part and reversed in part the appellate judgment and remanded the case to the appellate court. IRU and the Aon subsidiary agreed that the Aon subsidiary will pay IRU CHF 15.0 million ($15 million at June 30, 2017 exchange rates) and $344,000. As a result of this agreement, the legal proceedings between IRU and the Aon subsidiary will be discontinued. A pensions consulting and administration subsidiary of Aon provided advisory services to the Trustees of the Gleeds pension fund in the United Kingdom and, on occasion, to the relevant employer of the fund. In April 2014, the High Court, Chancery Division, London found that certain governing documents of the fund that sought to alter the fund’s benefit structure and that had been drafted by Aon were procedurally defective and therefore invalid. No lawsuit naming Aon as a party was filed, although a tolling agreement was entered. The High Court decision says that the additional liabilities in the pension fund resulting from the alleged defect in governing documents amount to approximately £45 million ($57 million at June 30, 2017 exchange rates). In December 2014, the Court of Appeal granted the employer leave to appeal the High Court decision. At a hearing in October 2016, the Court of Appeal approved a settlement of the pending litigation. On October 31, 2016, the fund’s trustees and employer sued Aon in the High Court, Chancery Division, London, alleging negligence and breach of duty in relation to the governing documents. The proceedings were served on Aon on December 20, 2016. The claimants seek damages of approximately £70 million ($89 million at June 30, 2017 exchange rates). Aon believes that it has meritorious defenses and intends to vigorously defend itself against this claim. On June 29, 2015, Lyttelton Port Company Limited (“LPC”) sued Aon New Zealand in the Christchurch Registry of the High Court of New Zealand. LPC alleges, among other things, that Aon was negligent and in breach of contract in arranging LPC’s property insurance program for the period covering June 30, 2010, to June 30, 2011. LPC contends that acts and omissions by Aon caused LPC to recover less than it otherwise would have from insurers for losses suffered in the 2010 and 2011 Canterbury Earthquakes. LPC claims damages of approximately NZD 184 million ($134 million at June 30, 2017 exchange rates) plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims. The Financial Conduct Authority (the “FCA”) commenced an investigation relating to suspected competition law breaches in the aviation and aerospace broking industry, which, for Aon in 2016, represented less than $100 million in global revenue. Other regulatory agencies may also be conducting formal or informal investigations regarding these matters. In such case, Aon intends to work diligently with the FCA and other regulatory agencies to ensure they can carry out their work as efficiently as possible. At this time, in light of the uncertainties and many variables involved, we cannot estimate the ultimate impact on our company from these investigations or any related private litigation, nor any damages, penalties, or fines related to them. There can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity. Aon UK Limited, an indirect wholly-owned subsidiary of the Company, is presently engaged in several internal regulatory reviews and ongoing interactions with the FCA concerning Aon UK Limited’s systems and controls. These interactions may result in additional charges above amounts accrued for in the second quarter in connection with these reviews. Guarantees and Indemnifications Redomestication 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. Sale of the Divested Business In connection with the sale of the Divested Business, the Company guaranteed future operating lease commitments related to certain facilities assumed by the Buyer. The Company is obligated to perform under the guarantees if the Divested Business defaults on the leases at any time during the remainder of the lease agreements, which expire on various dates through 2024. As of June 30, 2017, the undiscounted maximum potential future payments under the lease guarantee is $108 million, with an estimated fair value of $39 million. Additionally, the Company is subject to performance guarantee requirements under certain client arrangements that were assumed by the Buyer. Should the Divested Business fail to perform as required by the terms of the arrangement, the Company would be required to fulfill the remaining contract terms, which expire on various dates through 2023. As of June 30, 2017, the undiscounted maximum potential future payments under the performance guarantees were $401 million, with an estimated fair value of $4 million. Letters of Credit Aon has entered into a number of arrangements whereby the Company’s performance on certain obligations is guaranteed by a third party through the issuance of letters of credit (“LOCs”). The Company had total LOCs outstanding of approximately $89 million at June 30, 2017, compared to $90 million at December 31, 2016. These letters of credit cover the beneficiaries related to certain of Aon’s U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for Aon’s own workers compensation program. The Company has also obtained LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at its international subsidiaries Premium Payments The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $88 million at June 30, 2017 compared to $95 million at December 31, 2016. |
Segment Information |
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Segment Information | Segment Information Beginning in the first quarter of 2017 and following the Transaction described in Note 3 “Discontinued Operations,” the Company began leading a set of initiatives designed to strengthen Aon and unite the firm with one portfolio of capability enabled by proprietary data and analytics and one operating model to deliver additional insight, connectivity and efficiency. These initiatives reinforce Aon’s return on invested capital (ROIC) decision-making process and emphasis on free cash flow. The Company is now operating as one segment that includes all of Aon’s continuing operations, which as a global professional services firm provides advice and solutions to clients focused on risk, retirement, and health through five revenue lines which make up its principal products and services. The CODM assesses the performance of the Company and allocates resources based on one company: Aon United. The Company’s reportable operating segment has been determined using a management approach, which is consistent with the basis and manner in which Aon’s CODM uses financial information for the purposes of allocating resources and evaluating performance. The CODM assesses performance and allocates resources based on total Aon results against its key four metrics, including organic revenue growth, expense discipline, and collaborative behaviors that maximize value for Aon and its shareholders, regardless of which revenue line it benefits. Prior period comparative segment information has been restated to conform with current year presentation. In prior periods, the Company did not include unallocated expenses in segment operating income, which represented corporate governance costs not allocated to the previous operating segments. These costs are now reflected within operating expenses for the current and prior period. Revenue from continuing operations for each of the Company’s principal product and service lines is as follows (in millions):
As Aon is operating as one segment, segment profit or loss is consistent with consolidated reporting as disclosed on the Condensed Consolidated Statements of Income. The geographic distribution of Aon’s total revenue or long-lived assets did not change as a result of the change in reportable operating segments described above. |
Guarantee of Registered Securities |
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Guarantee of Registered Securities | Guarantee of Registered Securities As described in Note 16 “Commitments and Contingencies,” in connection with the Redomestication, Aon plc entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, including the 5.00% Notes due September 2020, the 8.205% Notes due January 2027 and the 6.25% Notes due September 2040 (collectively, the “Aon Corp Notes”). Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. All guarantees of Aon plc are full and unconditional. There are no other subsidiaries of Aon plc that are guarantors of the Aon Corp Notes. In addition, Aon Corporation entered into an agreement pursuant to which it agreed to guarantee the obligations of Aon plc arising under the 4.25% Notes due 2042 exchanged for Aon Corporation’s outstanding 8.205% Notes due January 2027 and also agreed to guarantee the obligations of Aon plc arising under the 4.45% Notes due 2043, the 4.00% Notes due November 2023, the 2.875% Notes due May 2026, the 3.50% Notes due June 2024, the 4.60% Notes due June 2044, the 4.75% Notes due May 2045, the 2.80% Notes due March 2021, and the 3.875% Notes due December 2025 (collectively, the “Aon plc Notes”). In each case, the guarantee of Aon Corporation is full and unconditional. There are no subsidiaries of Aon plc, other than Aon Corporation, that are guarantors of the Aon plc Notes. As a result of the existence of these guarantees, the Company has elected to present the financial information set forth in this footnote in accordance with Rule 3-10 of Regulation S-X. The following tables set forth Condensed Consolidating Statements of Income for the three and six months ended June 30, 2017 and 2016, Condensed Consolidating Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016, Condensed Consolidating Statements of Financial Position as of June 30, 2017 and December 31, 2016, and Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2017 and 2016 in accordance with Rule 3-10 of Regulation S-X. The condensed consolidating financial information includes the accounts of Aon plc, the accounts of Aon Corporation, and the combined accounts of the non-guarantor subsidiaries. The condensed consolidating financial statements are presented in all periods as a merger under common control, with Aon plc presented as the parent company in all periods prior and subsequent to the Redomestication. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions. As described in Note 1 “Basis of Presentation” and consistent with The Company’s Condensed Consolidated Financial Statements, the following tables present the financial results of the Divested Business as discontinued operations for all periods presented within non-guarantor Subsidiaries. The impact of intercompany transactions have been reflected within continuing operations in the Condensed Consolidating Financial Statements. Condensed Consolidating Statement of Income
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Condensed Consolidating Statement of Comprehensive Income
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Accounting Principles and Practices (Policies) |
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Accounting Policies [Abstract] | |
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. |
Use of Estimates | 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. |
New Accounting Pronouncements | Presentation of Net Periodic Pension and Postretirement Benefit Costs In March 2017, the FASB issued new accounting guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Additionally, only the service cost component is eligible for capitalization, when applicable. An entity will apply the new guidance retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension costs and net periodic postretirement benefit in assets. The new guidance allows a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The new guidance is effective for Aon in the first quarter of 2018. The adoption of this guidance will have no impact on the total results of the Company. The presentation of results will reflect a change in Operating income offset by an equal change in Other income (expense) for the period. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued new accounting guidance on simplifying the test for goodwill impairment. Currently the standard requires an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The new guidance removes the second step of the test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. An entity will apply the new guidance on a prospective basis. The new guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted for annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact and period of adoption that the standard will have on the Condensed Consolidated Financial Statements. Income Tax Consequences of Intercompany Transactions In October 2016, the FASB issued new accounting guidance on the income tax consequences of intra-entity asset transfers other than inventory. The guidance will require that the seller and buyer recognize the consolidated current and deferred income tax consequences of a transaction in the period the transaction occurs rather than deferring to a future period and recognizing those consequences when the asset has been sold to an outside party or otherwise recovered through use (i.e., depreciated, amortized, impaired). An entity will apply the new guidance on a modified retrospective basis with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The new guidance is effective for Aon in the first quarter of 2018, and the Company is currently evaluating the impact that the standard will have on the Condensed Consolidated Financial Statements. Statement of Cash Flows In August 2016, the FASB issued new accounting guidance on the classification of certain cash receipts and cash payments. Under the new guidance, an entity will no longer have discretion to choose the classification for a number of transactions, including contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The new standard will be effective for the Company in the first quarter of 2018, with early adoption permitted. An entity will apply the new guidance through retrospective adjustment to all periods presented. The retrospective approach includes a practical expedient that entities may apply should retrospective adoption be impracticable; in this case, the amendments for these issues may be applied prospectively as of the earliest date practicable. The guidance will not have a material impact on the Company’s Condensed Consolidated Statements of Cash Flows. Credit Losses In June 2016, the FASB issued new accounting guidance on the measurement of credit losses on financial instruments. The new guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. Aon is currently evaluating the impact that the standard will have on the 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 adoption 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 the Condensed Consolidated Financial Statements 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 Condensed Consolidated Financial Statements and period of adoption. Revenue Recognition In May 2014, the FASB issued a new accounting standard on revenue from contracts with customers, which, when effective, will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of the standard is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The standard is effective for Aon in the first quarter of 2018 and early adoption is permitted beginning in the first quarter of 2017. Two methods of transition are permitted upon adoption: full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing a comparable view across all periods presented. Under the modified retrospective method, prior periods would not be restated. Rather, revenue and other disclosures for pre-2018 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The Company will adopt this standard in the first quarter of 2018 and is evaluating both methods of transition; however, it is currently anticipated that a modified retrospective adoption approach will be used. A preliminary assessment to determine the impacts of the new accounting standard has been performed. The Company is currently implementing accounting and operational processes and controls that will be impacted by the new standard, but is still evaluating the quantitative impacts the standard will have on its financial statements. However, the more significant impacts of the new standard to the Company are anticipated to be as follows: The Company currently recognizes revenue for certain brokerage activities over a period of time either due to the transfer of value to customers or as the remuneration becomes determinable. Under the new standard, this revenue will be recognized on the effective date of the associated policies when control of the policy transfers to the customer. As a result, revenue from these arrangements will be recognized in earlier periods under the new standard in comparison to the current guidance and will change the timing and amount of revenue recognized for annual and interim periods. This change is anticipated to result in a significant shift in interim revenue for Reinsurance Solutions. The Company is currently assessing the timing and measurement of revenue recognition under the new standard for certain other services. Additionally, the new standard provides guidance on accounting for certain revenue-related costs including when to capitalize costs associated with obtaining and fulfilling a contract. These costs are currently expensed as incurred under existing U.S. GAAP. Assets recognized for the costs to obtain a contract will be amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, considering anticipated renewals when applicable. For situations where the renewal period is one year or less and renewal costs are commensurate with the initial contract, the Company plans to apply a practical expedient and recognize the costs of obtaining a contract as an expense when incurred. Assets recognized as costs to fulfill a contract will be amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, which is expected to commonly be a period of less than one year. The Company is quantifying the nature and amount of costs that would qualify for capitalization and the amount of amortization that will be recognized in each period |
Derivatives | The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, enters into monetary intercompany transfers denominated in a currency that differs from its functional currency, or enters into other transactions that are denominated in a currency other than its functional currency. The Company uses foreign exchange derivatives, typically forward contracts, options and cross currency swaps, to reduce its overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income. The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company’s global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30-day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income (expense) in the Condensed Consolidated Statements of Income. |
Fair Value Measurement | The following methods and assumptions are used to estimate the fair values of the Company’s financial instruments: Money market funds consist of institutional prime, treasury, and government money market funds. The Company reviews treasury and government money market funds to obtain reasonable assurance that the fund net asset value is $1 per share, and reviews the floating net asset value of institutional prime money market funds for reasonableness. Equity investments consist of domestic and international equity securities and equity derivatives valued using the closing stock price on a national securities exchange. Over the counter equity derivatives are valued using observable inputs such as underlying prices of the underlying security and volatility. On a sample basis the Company reviews the listing of Level 1 equity securities in the portfolio and agrees the closing stock prices to a national securities exchange, and independently verifies the observable inputs for Level 2 equity derivatives and securities. Fixed income investments consist of certain categories of bonds and derivatives. Corporate, government, and agency bonds are valued by pricing vendors who estimate fair value using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves, and credit risk. Asset-backed securities are valued by pricing vendors who estimate fair value using discounted cash flow models utilizing observable inputs based on trade and quote activity of securities with similar features. Fixed income derivatives are valued by pricing vendors using observable inputs such as interest rates and yield curves. The Company obtains an understanding of the models, inputs, and assumptions used in developing prices provided by its vendors through discussions with the fund managers. The Company independently verifies the observable inputs, as well as assesses assumptions used for reasonableness based on relevant market conditions and internal Company guidelines. If an assumption is deemed unreasonable, based on the Company’s guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates used in the Consolidated Financial Statements. Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities. Debt is carried at outstanding principal balance, less any unamortized discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements. |
Discontinued Operations (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | The following table presents financial results of the Divested Business (in millions):
The following table presents the aggregate carrying amounts of the classes of assets and liabilities presented as discontinued operations within the Company’s Condensed Consolidated Statements of Financial Position (in millions):
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Other Financial Data (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Income (Expense) | Other income (expense) 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, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table includes the preliminary fair values of consideration transferred, assets acquired, and liabilities assumed as a result of the Company’s acquisitions (in millions):
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Restructuring (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following summarizes restructuring and separation costs by type that have been incurred through June 30, 2017 and are estimated to be incurred through the end of the Restructuring Plan (in millions). Estimated cost may be revised in future periods as these assumptions are updated:
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Schedule of Restructuring Reserve by Type of Cost | Company’s liabilities for the Restructuring Plan as of June 30, 2017 are as follows (in millions):
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Goodwill and Other Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 for the six months ended June 30, 2017 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, 2017 is as follows (in millions):
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Shareholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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Employee Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [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, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | The following table summarizes the status of the Company’s RSUs, including shares related to the Divested Business (shares in thousands):
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Performance-based plans | Information as of June 30, 2017 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, 2017 and the years ended December 31, 2016 and 2015, respectively, is as follows (shares in thousands and dollars in millions, except fair value):
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Derivatives and Hedging (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
Offsetting of financial liabilities and derivative liabilities are as follows (in millions):
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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, 2017 and 2016 are as follows (in millions):
|
Fair Value Measurements and Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017 and December 31, 2016 (in millions):
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Schedule of financial instruments where the carrying amounts and fair values differ | The fair value of debt is classified as Level 2 of the fair value hierarchy. The following table discloses the Company’s financial instruments where the carrying amounts and fair values differ (in millions):
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of segment income before tax to income from continuing operations before income taxes | Revenue from continuing operations for each of the Company’s principal product and service lines is as follows (in millions):
|
Guarantee of Registered Securities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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
|
Basis of Presentation Basis of Presentation - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017
segment
revenue_line
| |
Segment Reporting, Revenue Reconciling Item [Line Items] | |
Number of reportable segments | segment | 1 |
Number of revenue lines | 5 |
Commissions, Fees and Other and Fiduciary Investment Income | |
Segment Reporting, Revenue Reconciling Item [Line Items] | |
Number of revenue lines | 1 |
Accounting Principles and Practices (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Adoption of new accounting guidance | $ 49 | ||
Deferred tax assets | $ 575 | $ 575 | 325 |
Excess tax benefit amount | 19 | 48 | |
Accounting Standards Update 2016-09, Excess Tax Benefit Component | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Deferred tax assets | $ 49 | $ 49 | |
Income (loss) from extraordinary items, tax effect, (in dollars per share) | $ 0.07 | $ 0.18 | |
Retained Earnings | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Adoption of new accounting guidance | 49 | ||
Retained Earnings | Accounting Standards Update 2016-09, Excess Tax Benefit Component | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Adoption of new accounting guidance | $ 49 |
Discontinued Operations (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
May 01, 2017
USD ($)
agreement
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Dispositions | |||||||
Cash and cash equivalents | $ 4 | $ 4 | $ 5 | $ 2 | |||
Gain on sale of discontinued operations, net of tax | $ 0 | $ 798 | $ 0 | ||||
Tempo Business | |||||||
Dispositions | |||||||
Number of commercial agreements | agreement | 2 | ||||||
Tempo Business | Discontinued Operations, Disposed of by Sale | |||||||
Dispositions | |||||||
Cash and cash equivalents | $ 0 | $ 0 | $ 5 | ||||
Purchase price | $ 4,300 | ||||||
Gain on sale of discontinued operations, net of tax | $ 798 | ||||||
Maximum | Tempo Business | Discontinued Operations, Disposed of by Sale | |||||||
Dispositions | |||||||
Purchase price | 4,200 | ||||||
Deferred consideration | $ 500 |
Discontinued Operations Income Statement (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Total operating expenses (1) | ||||
Income from discontinued operations excluding gain, net of tax | $ 23,000,000 | $ 35,000,000 | $ 63,000,000 | $ 60,000,000 |
Gain on sale of discontinued operations, net of tax | 0 | 798,000,000 | 0 | |
Income from discontinued operations, net of tax | 821,000,000 | 35,000,000 | 861,000,000 | 60,000,000 |
Tempo Business | Discontinued Operations, Disposed of by Sale | ||||
Revenue | ||||
Total revenue | 171,000,000 | 518,000,000 | 698,000,000 | 1,047,000,000 |
Total operating expenses (1) | ||||
Operating expense | 156,000,000 | 466,000,000 | 626,000,000 | 952,000,000 |
Operating Income from discontinued operations | 15,000,000 | 52,000,000 | 72,000,000 | 95,000,000 |
Other income | 11,000,000 | 1,000,000 | 11,000,000 | 1,000,000 |
Income from discontinued operations before income taxes | 26,000,000 | 53,000,000 | 83,000,000 | 96,000,000 |
Income taxes | 3,000,000 | 18,000,000 | 20,000,000 | 36,000,000 |
Gain on sale of discontinued operations, net of tax | 798,000,000 | |||
Income from discontinued operations, net of tax | 821,000,000 | 35,000,000 | 861,000,000 | 60,000,000 |
Depreciation and amortization | $ 0 | |||
Depreciation of fixed assets | 17,000,000 | 8,000,000 | 35,000,000 | |
Amortization of intangible assets | $ 30,000,000 | $ 11,000,000 | $ 60,000,000 |
Discontinued Operations Balance Sheet (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
ASSETS | ||||
Cash and cash equivalents | $ 5 | $ 4 | $ 2 | |
Receivables, net | $ 78 | 0 | ||
Tempo Business | Discontinued Operations, Disposed of by Sale | ||||
ASSETS | ||||
Cash and cash equivalents | 0 | 5 | ||
Receivables, net | 0 | 483 | ||
Fiduciary assets | 0 | 526 | ||
Goodwill | 0 | 1,337 | ||
Intangible assets, net | 0 | 333 | ||
Fixed assets, net | 0 | 215 | ||
Other assets | 0 | 295 | ||
TOTAL ASSETS | 0 | 3,194 | ||
LIABILITIES | ||||
Accounts payable and accrued liabilities | 0 | 197 | ||
Fiduciary liabilities | 0 | 526 | ||
Other liabilities | 0 | 356 | ||
TOTAL LIABILITIES | $ 0 | $ 1,079 |
Cash and Cash Equivalents and Short-term Investments (Details) £ in Millions, $ in Millions |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
GBP (£)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
GBP (£)
|
Dec. 31, 2016
USD ($)
|
|
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |||||
Cash and cash equivalents and short-term investments | $ 3,430.0 | $ 716.0 | |||
Cash and cash equivalents and short term investments, period increase (decrease) | $ 2,714.0 | ||||
Restricted cash | 91.0 | 82.0 | |||
Operating funds in U.K. | £ 42.7 | $ 54.3 | £ 43.3 | $ 53.2 |
Other Financial Data - Schedule of Other Income (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Other (Expense) Income | ||||
Foreign currency remeasurement gain (loss) | $ (2,000,000) | $ 0 | $ (12,000,000) | $ (17,000,000) |
Gain (loss) on disposal of business | 0 | 6,000,000 | (2,000,000) | 41,000,000 |
Equity earnings | 3,000,000 | 1,000,000 | 9,000,000 | 3,000,000 |
Loss on financial instruments | (6,000,000) | (8,000,000) | (10,000,000) | (10,000,000) |
Total | $ (5,000,000) | $ (1,000,000) | $ (15,000,000) | $ 17,000,000 |
Other Financial Data - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Balance at beginning of period | $ 61 | $ 62 | $ 56 | $ 58 |
Provision charged to Other general expenses | 5 | 6 | 11 | 11 |
Accounts written off, net of recoveries | (7) | (4) | (10) | (6) |
Foreign currency translation | 0 | 0 | 2 | 1 |
Balance at end of period | $ 59 | $ 64 | $ 59 | $ 64 |
Other Financial Data - Schedule of Other Current Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Financial Data [Abstract] | ||
Taxes receivable | $ 152 | $ 100 |
Prepaid expenses | 143 | 102 |
Receivables from Divested Business | 78 | 0 |
Other | 26 | 45 |
Total | $ 399 | $ 247 |
Other Financial Data - Schedule of Other Non-current Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Financial Data [Abstract] | ||
Investments | $ 122 | $ 119 |
Taxes receivable | 88 | 82 |
Other | 158 | 159 |
Total | $ 368 | $ 360 |
Other Financial Data - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Financial Data [Abstract] | ||
Deferred revenue | $ 377 | $ 199 |
Taxes payable (1) | 1,254 | 77 |
Other | 447 | 380 |
Total | $ 2,078 | $ 656 |
Other Financial Data - Schedule of Other Non-current Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Financial Data [Abstract] | ||
Taxes payable | $ 326 | $ 288 |
Deferred revenue | 46 | 49 |
Leases | 140 | 136 |
Compensation and benefits | 59 | 56 |
Other | 287 | 190 |
Total | $ 858 | $ 719 |
Acquisitions and Dispositions of Businesses - Acquisitions (Details) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2017
USD ($)
acquisition
|
Dec. 31, 2016
USD ($)
acquisition
|
|
Business Acquisition | ||
Number of business acquired under business combination | acquisition | 4 | 8 |
Assets acquired: | ||
Goodwill | $ 7,745 | $ 7,410 |
2017 Acquisitions | ||
Business Combination, Consideration Transferred [Abstract] | ||
Cash | 148 | |
Deferred and contingent consideration | 28 | |
Aggregate consideration transferred | 176 | |
Assets acquired: | ||
Cash and cash equivalents | 5 | |
Receivables, net | 11 | |
Goodwill | 119 | |
Intangible assets, net | 69 | |
Fixed assets, net | 1 | |
Other assets | 8 | |
Total assets acquired | 213 | |
Liabilities assumed: | ||
Current liabilities | 15 | |
Other liabilities | 22 | |
Total liabilities assumed | 37 | |
Net assets acquired | $ 176 |
Acquisitions and Dispositions of Businesses - Dispositions (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017
USD ($)
disposal
|
Jun. 30, 2016
USD ($)
disposal
|
Jun. 30, 2017
USD ($)
disposal
|
Jun. 30, 2016
USD ($)
disposal
|
|
Dispositions | ||||
Gain (loss) on disposal of business | $ | $ 0 | $ 6,000,000 | $ (2,000,000) | $ 41,000,000 |
Disposal Group, Not Discontinued Operations [Member] | ||||
Dispositions | ||||
Number of dispositions | disposal | 1 | 2 | 4 | 4 |
Restructuring - Schedule of Restructuring Reserve (Details) - 2017 Plan $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Restructuring Plan | |
Balance at January 1, 2017 | $ 0 |
Expensed | 272 |
Cash payments | (94) |
Foreign currency translation and other | 0 |
Balance at June 30, 2017 | $ 178 |
Goodwill and Other Intangible Assets Rollforward (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Changes in the net carrying amount of goodwill by operating segment | |
Beginning balance | $ 7,410 |
Goodwill related to current year acquisitions | 119 |
Goodwill related to disposals | (1) |
Goodwill related to prior year acquisitions | 24 |
Foreign currency translation | 193 |
Ending balance | $ 7,745 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 76.90% | 13.60% | (181.00%) | 14.80% |
Income tax expense (benefit) | $ (143) | $ 43 | $ (143) | $ 102 |
Income from continuing operations before income taxes | $ (186) | $ 316 | $ 79 | $ 687 |
Share-Based Compensation Plans - Share-based compensation expenses recognized (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 69 | $ 65 | $ 147 | $ 145 |
Restricted share units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 46 | 40 | 101 | 97 |
Performance share awards (“PSAs”) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | 21 | 24 | 40 | 43 |
Employee share purchase plans | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total share-based compensation expense | $ 2 | $ 1 | $ 6 | $ 5 |
Share-Based Compensation Plans - Performance Share Awards Narrative (Details) - Performance Shares |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting conditions period (in years) | 3 years |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued, percent | 0.00% |
Maximum | |
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 - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Target PSAs granted during period (in shares) | 548 | 752 | 967 |
Weighted average fair value per share at date of grant (in dollars per share) | $ 114 | $ 100 | $ 96 |
Number of shares that would be issued based on current performance levels (in shares) | 547 | 667 | 1,364 |
Unamortized expense, based on current performance levels | $ 57 | $ 33 | $ 21 |
Derivatives and Hedging - Foreign Exchange Risk Management Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Cash Flow Hedging | |
Derivative [Line Items] | |
Foreign currency exposures, maximum average hedging period (less than) | 2 years |
Not Designated as Hedging Instrument | |
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, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Derivative [Line Items] | ||||
Estimated pretax losses currently included within Accumulated Other Comprehensive Loss that will be reclassified to earnings in next twelve months | $ 14.0 | $ 14.0 | ||
Not Designated as Hedging Instrument | Foreign exchange contracts | ||||
Derivative [Line Items] | ||||
Derivative gain (loss) | $ (1.0) | $ (2.0) | $ 0.4 | $ (1.0) |
Derivatives and Hedging - Foreign Hedge (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value of hedge of net investment of foreign operations | $ 0 |
Effective portion of gain reclassified from Accumulated OCI into income | $ 0 |
Fair Value Measurements and Financial Instruments - Schedule of financial instruments where the carrying amounts and fair values differ (Details) - USD ($) $ in Millions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Carrying Value | ||
Fair value of financial instrument | ||
Current portion of long-term debt | $ 292 | $ 0 |
Long-term debt | 5,631 | 5,869 |
Fair Value | Fair Value, Inputs, Level 2 | ||
Fair value of financial instrument | ||
Current portion of long-term debt | 298 | 0 |
Long-term debt | $ 6,163 | $ 6,264 |
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