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 | |
Emerging growth company o | ||
Three Months Ended | ||||||||
(millions, except per share data) | March 31, 2019 | March 31, 2018 | ||||||
Revenue | ||||||||
Total revenue | $ | $ | ||||||
Expenses | ||||||||
Compensation and benefits | ||||||||
Information technology | ||||||||
Premises | ||||||||
Depreciation of fixed assets | ||||||||
Amortization and impairment of intangible assets | ||||||||
Other general expenses | ||||||||
Total operating expenses | ||||||||
Operating income | ||||||||
Interest income | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Other income (expense) | ( | ) | ||||||
Income from continuing operations before income taxes | ||||||||
Income taxes | ||||||||
Net income from continuing operations | ||||||||
Net income from discontinued operations | ||||||||
Net income | ||||||||
Less: Net income attributable to noncontrolling interests | ||||||||
Net income attributable to Aon shareholders | $ | $ | ||||||
Basic net income per share attributable to Aon shareholders | ||||||||
Continuing operations | $ | $ | ||||||
Discontinued operations | ||||||||
Net income | $ | $ | ||||||
Diluted net income per share attributable to Aon shareholders | ||||||||
Continuing operations | $ | $ | ||||||
Discontinued operations | ||||||||
Net income | $ | $ | ||||||
Weighted average ordinary shares outstanding - basic | ||||||||
Weighted average ordinary shares outstanding - diluted | ||||||||
Three Months Ended | ||||||||
(millions) | March 31, 2019 | March 31, 2018 | ||||||
Net income | $ | $ | ||||||
Less: Net income attributable to noncontrolling interests | ||||||||
Net income attributable to Aon shareholders | ||||||||
Other comprehensive income, net of tax: | ||||||||
Change in fair value of financial instruments | ||||||||
Foreign currency translation adjustments | ||||||||
Postretirement benefit obligation | ||||||||
Total other comprehensive income | ||||||||
Less: Other comprehensive income attributable to noncontrolling interests | ||||||||
Total other comprehensive income attributable to Aon shareholders | ||||||||
Comprehensive income attributable to Aon shareholders | $ | $ | ||||||
(Unaudited) | ||||||||
(millions, except nominal value) | March 31, 2019 | December 31, 2018 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Short-term investments | ||||||||
Receivables, net | ||||||||
Fiduciary assets | ||||||||
Other current assets | ||||||||
Total current assets | ||||||||
Goodwill | ||||||||
Intangible assets, net | ||||||||
Fixed assets, net | ||||||||
Operating lease right-of-use assets | — | |||||||
Deferred tax assets | ||||||||
Prepaid pension | ||||||||
Other non-current assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities and equity | ||||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||
Short-term debt and current portion of long-term debt | ||||||||
Fiduciary liabilities | ||||||||
Other current liabilities | ||||||||
Total current liabilities | ||||||||
Long-term debt | ||||||||
Non-current operating lease liabilities | — | |||||||
Deferred tax liabilities | ||||||||
Pension, other postretirement, and postemployment liabilities | ||||||||
Other non-current liabilities | ||||||||
Total liabilities | ||||||||
Equity | ||||||||
Ordinary shares - $0.01 nominal value Authorized: 750 shares (issued: 2019 - 240.9; 2018 - 240.1) | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Total Aon shareholders' equity | ||||||||
Noncontrolling interests | ||||||||
Total equity | ||||||||
Total liabilities and equity | $ | $ | ||||||
(millions) | Shares | Ordinary Shares and Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Non- controlling Interests | Total | |||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||
Shares issued - employee stock compensation plans | ( | ) | — | — | — | ( | ) | ||||||||||||||||
Shares purchased | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||||||||
Dividends to shareholders ($0.40 per share) | — | — | ( | ) | — | — | ( | ) | |||||||||||||||
Net change in fair value of financial instruments | — | — | — | — | |||||||||||||||||||
Net foreign currency translation adjustments | — | — | — | ||||||||||||||||||||
Net postretirement benefit obligation | — | — | — | — | |||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
(millions) | Shares | Ordinary Shares and Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Non- controlling Interests | Total | |||||||||||||||||
Balance at January 1, 2018 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||
Shares issued - employee stock compensation plans | ( | ) | — | — | — | ( | ) | ||||||||||||||||
Shares purchased | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||
Share-based compensation expense | — | — | — | — | |||||||||||||||||||
Dividends to shareholders ($0.36 per share) | — | — | ( | ) | — | — | ( | ) | |||||||||||||||
Net change in fair value of financial instruments | — | — | — | — | |||||||||||||||||||
Net foreign currency translation adjustments | — | — | — | ||||||||||||||||||||
Net postretirement benefit obligation | — | — | — | — | |||||||||||||||||||
Balance at March 31, 2018 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Three Months Ended | ||||||||
(millions) | March 31, 2019 | March 31, 2018 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | $ | ||||||
Less: Net income from discontinued operations | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
(Gain) loss from sales of businesses, net | ( | ) | ||||||
Depreciation of fixed assets | ||||||||
Amortization and impairment of intangible assets | ||||||||
Share-based compensation expense | ||||||||
Deferred income taxes | ( | ) | ||||||
Change in assets and liabilities: | ||||||||
Fiduciary receivables | ( | ) | ( | ) | ||||
Short-term investments — funds held on behalf of clients | ( | ) | ( | ) | ||||
Fiduciary liabilities | ||||||||
Receivables, net | ( | ) | ( | ) | ||||
Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
Restructuring reserves | ( | ) | ( | ) | ||||
Current income taxes | ||||||||
Pension, other postretirement and postemployment liabilities | ( | ) | ( | ) | ||||
Other assets and liabilities | ||||||||
Cash provided by operating activities | ||||||||
Cash flows from investing activities | ||||||||
Proceeds from investments | ||||||||
Payments for investments | ( | ) | ( | ) | ||||
Net sales of short-term investments — non-fiduciary | ||||||||
Acquisition of businesses, net of cash acquired | ( | ) | ( | ) | ||||
Sale of businesses, net of cash sold | ( | ) | ||||||
Capital expenditures | ( | ) | ( | ) | ||||
Cash provided by (used for) investing activities | ( | ) | ||||||
Cash flows from financing activities | ||||||||
Share repurchase | ( | ) | ( | ) | ||||
Issuance of shares for employee benefit plans | ( | ) | ( | ) | ||||
Issuance of debt | ||||||||
Repayment of debt | ( | ) | ( | ) | ||||
Cash dividends to shareholders | ( | ) | ( | ) | ||||
Noncontrolling interests and other financing activities | ( | ) | ||||||
Cash used for financing activities | ( | ) | ( | ) | ||||
Effect of exchange rates on cash and cash equivalents | ||||||||
Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||
Supplemental disclosures: | ||||||||
Interest paid | $ | $ | ||||||
Income taxes paid, net of refunds | $ | $ | ||||||
December 31, 2018 | January 1, 2019 | ||||||||||
As Reported | Adjustments | As Adjusted | |||||||||
Assets | |||||||||||
Operating lease right-of-use assets | $ | — | $ | $ | |||||||
Other non-current assets | $ | $ | $ | ||||||||
Liabilities | |||||||||||
Other current liabilities | $ | $ | $ | ||||||||
Non-current operating lease liabilities | $ | — | $ | $ | |||||||
Other non-current liabilities | $ | $ | ( | ) | $ | ||||||
Three Months Ended March 31 | ||||||||
2019 | 2018 | |||||||
Commercial Risk Solutions | $ | $ | ||||||
Reinsurance Solutions | ||||||||
Retirement Solutions | ||||||||
Health Solutions | ||||||||
Data & Analytic Services | ||||||||
Elimination | ( | ) | ( | ) | ||||
Total revenue | $ | $ | ||||||
Three Months Ended March 31 | ||||||||
2019 | 2018 | |||||||
United States | $ | $ | ||||||
Americas other than United States | ||||||||
United Kingdom | ||||||||
Europe, Middle East, & Africa other than United Kingdom | ||||||||
Asia Pacific | ||||||||
Total revenue | $ | $ | ||||||
As of | March 31, 2019 | December 31, 2018 | ||||||
Balance at beginning of period | $ | $ | ||||||
Additions | ||||||||
Amortization | ( | ) | ( | ) | ||||
Impairment | ||||||||
Foreign currency translation and other | ( | ) | ||||||
Balance at end of period | $ | $ | ||||||
As of | March 31, 2019 | December 31, 2018 | ||||||
Balance at beginning of period | $ | $ | ||||||
Additions | ||||||||
Amortization | ( | ) | ( | ) | ||||
Impairment | ||||||||
Foreign currency translation and other | ( | ) | ||||||
Balance at end of period | $ | $ | ||||||
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Foreign currency remeasurement | $ | ( | ) | $ | ( | ) | |
Disposal of business | ( | ) | |||||
Pension and other postretirement | |||||||
Equity earnings | |||||||
Financial instruments | |||||||
Other | ( | ) | |||||
Total | $ | $ | ( | ) | |||
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Balance at beginning of period | $ | $ | |||||
Provision charged to Other general expenses | |||||||
Accounts written off, net of recoveries | ( | ) | ( | ) | |||
Foreign currency translation and other | |||||||
Balance at end of period | $ | $ | |||||
As of | March 31, 2019 | December 31, 2018 | |||||
Costs to fulfill contracts with customers (1) | $ | $ | |||||
Prepaid expenses | |||||||
Taxes receivable | |||||||
Other (2) | |||||||
Total | $ | $ | |||||
(1) | Refer to Note 3 “Revenue from Contracts with Customers” for further information. |
(2) |
As of | March 31, 2019 | December 31, 2018 | |||||
Costs to obtain contracts with customers (1) | $ | $ | |||||
Taxes receivable | |||||||
Leases (2) | — | ||||||
Investments | |||||||
Other | |||||||
Total | $ | $ | |||||
(1) | Refer to Note 3 “Revenue from Contracts with Customers” for further information. |
(2) |
As of | March 31, 2019 | December 31, 2018 | |||||
Deferred revenue (1) | $ | $ | |||||
Leases (2) | — | ||||||
Taxes payable | |||||||
Other | |||||||
Total | $ | $ | |||||
(1) | During the Three Months Ended March 31, 2019, and twelve months ended December 31, 2018, $ |
(2) | Refer to Note 20 “Lease Commitments” for further information. |
As of | March 31, 2019 | December 31, 2018 | |||||
Taxes payable (1) | $ | $ | |||||
Leases | |||||||
Deferred revenue | |||||||
Compensation and benefits | |||||||
Other | |||||||
Total | $ | $ | |||||
Three Months Ended March 31 | ||||||||
2019 | 2018 | |||||||
Expenses | ||||||||
Total operating expenses | $ | $ | ||||||
Loss from discontinued operations before income taxes | ( | ) | ||||||
Income tax benefit | ( | ) | ||||||
Net loss from discontinued operations excluding gain | ( | ) | ||||||
Gain on sale of discontinued operations, net of tax | ||||||||
Net income from discontinued operations | $ | $ | ||||||
Three Months Ended March 31, 2019 | Inception to Date | Estimated Remaining Costs | Estimated Total Cost (1) | |||||||||||||
Workforce reduction | $ | $ | $ | $ | ||||||||||||
Technology rationalization (2) | ||||||||||||||||
Lease consolidation (2) | ||||||||||||||||
Asset impairments | ||||||||||||||||
Other costs associated with restructuring and separation (2) (3) | ||||||||||||||||
Total restructuring and related expenses | $ | $ | $ | $ | ||||||||||||
(1) | Actual costs, when incurred, may vary due to changes in the assumptions built into the Restructuring Plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives. |
(2) | Total contract termination costs incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, for the three months ended March 31, 2019 were $ |
(3) |
Balance as of December 31, 2018 | $ | |||
Expensed | ||||
Cash payments | ( | ) | ||
Foreign currency translation | ( | ) | ||
Balance as of March 31, 2019 | $ | |||
Three Months Ended March 31, 2019 | ||||
Consideration Transferred | $ | |||
Deferred and contingent consideration | ||||
Aggregate consideration transferred | $ | |||
Assets acquired | ||||
Cash and cash equivalents | $ | |||
Goodwill | ||||
Intangible assets, net | ||||
Other assets | ||||
Total assets acquired | ||||
Liabilities assumed | ||||
Current liabilities | ||||
Other non-current liabilities | ||||
Total liabilities assumed | ||||
Net assets acquired | $ | |||
Balance as of December 31, 2018 | $ | ||
Goodwill related to current year acquisitions | |||
Goodwill related to disposals | ( | ) | |
Goodwill related to prior year acquisitions | |||
Foreign currency translation and other | |||
Balance as of March 31, 2019 | $ | ||
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Tradenames | |||||||||||||||||||||||
Technology and other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total | $ | ||
As of | March 31, 2019 | December 31, 2018 | ||||||
Commercial paper outstanding | $ | $ | ||||||
Three Months Ended March 31 | ||||||||
2019 | 2018 | |||||||
Weighted average commercial paper outstanding | $ | $ | ||||||
Weighted average interest rate of commercial paper outstanding | % | ( | )% | |||||
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Shares repurchased | |||||||
Average price per share | $ | $ | |||||
Costs recorded to retained earnings: | |||||||
Total repurchase cost | $ | $ | |||||
Additional associated costs | |||||||
Total costs recorded to retained earnings | $ | $ | |||||
Three Months Ended March 31 | |||||
2019 | 2018 | ||||
Basic weighted average ordinary shares outstanding | |||||
Dilutive effect of potentially issuable shares | |||||
Diluted weighted average ordinary shares outstanding | |||||
Change in Fair Value of Financial Instruments (1) | Foreign Currency Translation Adjustments | Postretirement Benefit Obligation (2) | Total | ||||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Other comprehensive income before reclassifications, net | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income | |||||||||||||||
Tax expense | ( | ) | ( | ) | ( | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income, net | |||||||||||||||
Net current period other comprehensive income | |||||||||||||||
Balance at March 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
(1) | Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Revenue, Interest expense, and Compensation and benefits. Refer to Note 15 “Derivatives and Hedging” for further information regarding the Company’s derivative and hedging activity. |
(2) |
Three Months Ended March 31 | |||||||||||||||||||||||
U.K. | U.S. | Other | |||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Interest cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Expected return on plan assets, net of administration expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Amortization of prior-service cost | |||||||||||||||||||||||
Amortization of net actuarial loss | |||||||||||||||||||||||
Net periodic (benefit) cost | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Loss on pension settlement | |||||||||||||||||||||||
Total net periodic (benefit) cost | $ | ( | ) | $ | ( | ) | $ | $ | $ | $ | ( | ) | |||||||||||
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Restricted share units (“RSUs”) | $ | $ | |||||
Performance share awards (“PSAs”) | |||||||
Employee share purchase plans | |||||||
Total share-based compensation expense | $ | $ | |||||
2019 | 2018 | ||||||||||||
Shares | Fair Value (1) | Shares | Fair Value (1) | ||||||||||
Non-vested at beginning of period | $ | $ | |||||||||||
Granted | $ | $ | |||||||||||
Vested | ( | ) | $ | ( | ) | $ | |||||||
Forfeited | ( | ) | $ | ( | ) | $ | |||||||
Non-vested at end of period | $ | $ | |||||||||||
(1) |
March 31, 2019 | December 31, 2018 | December 31, 2017 | |||||||||
Target PSAs granted during period | |||||||||||
Weighted average fair value per share at date of grant | $ | $ | $ | ||||||||
Number of shares that would be issued based on current performance levels | |||||||||||
Unamortized expense, based on current performance levels | $ | $ | $ | ||||||||
Notional Amount | Net Amount of Derivative Assets Presented in the Statements of Financial Position (1) | Net Amount of Derivative Liabilities Presented in the Statements of Financial Position (2) | |||||||||||||||||||||
March 31, 2019 | December 31, 2018 | March 31, 2019 | December 31, 2018 | March 31, 2019 | December 31, 2018 | ||||||||||||||||||
Foreign exchange contracts | |||||||||||||||||||||||
Accounted for as hedges | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Not accounted for as hedges (3) | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||
(1) | Included within Other current assets ($ |
(2) | Included within Other current liabilities ($ |
(3) | These contracts typically are for |
Three Months Ended | ||||||||
March 31, 2019 | March 31, 2018 | |||||||
Gain (Loss) recognized in Accumulated other comprehensive loss | $ | $ | ||||||
Three Months Ended | ||||||||
March 31, 2019 | March 31, 2018 | |||||||
Compensation and benefits | $ | $ | ||||||
Other general expenses | ( | ) | ||||||
Interest expense | ( | ) | ( | ) | ||||
Revenue (1) | ( | ) | ||||||
Other income (expense) (1) | ( | ) | ||||||
Total | $ | ( | ) | $ | ( | ) | ||
(1) |
• | 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 March 31, 2019 | 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) | $ | $ | $ | $ | |||||||||||
Other investments | |||||||||||||||
Government bonds | $ | $ | $ | $ | |||||||||||
Equity investments | $ | $ | $ | $ | |||||||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | $ | $ | $ | |||||||||||
Liabilities | |||||||||||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | $ | $ | $ | |||||||||||
(1) | Included within Fiduciary assets or Short-term investments in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. |
(2) | Refer to Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity. |
Fair Value Measurements Using | |||||||||||||||
Balance at December 31, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets | |||||||||||||||
Money market funds (1) | $ | $ | $ | $ | |||||||||||
Other investments | |||||||||||||||
Government bonds | $ | $ | $ | $ | |||||||||||
Equity investments | $ | $ | $ | $ | |||||||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | $ | $ | $ | |||||||||||
Liabilities | |||||||||||||||
Derivatives (2) | |||||||||||||||
Gross foreign exchange contracts | $ | $ | $ | $ | |||||||||||
(1) | Included within Fiduciary assets or Short-term investments in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity. |
(2) |
March 31, 2019 | December 31, 2018 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Long-term debt | $ | $ | $ | $ | |||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | |||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | ||||||||||||||||||||
Information technology | ||||||||||||||||||||
Premises | ||||||||||||||||||||
Depreciation of fixed assets | ||||||||||||||||||||
Amortization and impairment of intangible assets | ||||||||||||||||||||
Other general expenses (income) | ( | ) | ||||||||||||||||||
Total operating expenses | ||||||||||||||||||||
Operating income (loss) | ( | ) | ( | ) | ||||||||||||||||
Interest income | ( | ) | ||||||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Intercompany interest income (expense) | ( | ) | ||||||||||||||||||
Intercompany other income (expense) | ( | ) | ||||||||||||||||||
Other income (expense) | ( | ) | ( | ) | ||||||||||||||||
Income (loss) from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||||||
Net income (loss) from continuing operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
Net income from discontinued operations | ||||||||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | ( | ) | ( | ) | ( | ) | ||||||||||||||
Equity in earnings of subsidiaries | ( | ) | ||||||||||||||||||
Net income | ( | ) | ||||||||||||||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||
Net income attributable to Aon shareholders | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Revenue | ||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | |||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | ||||||||||||||||||||
Information technology | ||||||||||||||||||||
Premises | ||||||||||||||||||||
Depreciation of fixed assets | ||||||||||||||||||||
Amortization and impairment of intangible assets | ||||||||||||||||||||
Other general expenses (income) | ||||||||||||||||||||
Total operating expenses | ||||||||||||||||||||
Operating income (loss) | ( | ) | ( | ) | ||||||||||||||||
Interest income | ( | ) | ||||||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Intercompany interest income (expense) | ( | ) | ||||||||||||||||||
Intercompany other income (expense) | ( | ) | ( | ) | ||||||||||||||||
Other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Income (loss) from continuing operations before income taxes | ( | ) | ( | ) | ||||||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||||||
Net income (loss) from continuing operations | ( | ) | ( | ) | ||||||||||||||||
Net income from discontinued operations | ||||||||||||||||||||
Net income (loss) before equity in earnings of subsidiaries | ( | ) | ( | ) | ||||||||||||||||
Equity in earnings of subsidiaries | ( | ) | ||||||||||||||||||
Net income | ( | ) | ||||||||||||||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||
Net income attributable to Aon shareholders | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||
Net income attributable to Aon shareholders | ( | ) | ||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | ||||||||||||||||||||
Foreign currency translation adjustments | ||||||||||||||||||||
Postretirement benefit obligation | ||||||||||||||||||||
Total other comprehensive income | ||||||||||||||||||||
Equity in other comprehensive income of subsidiaries, net of tax | ( | ) | ||||||||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | ||||||||||||||||||||
Total other comprehensive income attributable to Aon shareholders | ( | ) | ||||||||||||||||||
Comprehensive income attributable to Aon shareholders | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||
Net income attributable to Aon shareholders | ( | ) | ||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||
Change in fair value of financial instruments | ||||||||||||||||||||
Foreign currency translation adjustments | ( | ) | ||||||||||||||||||
Postretirement benefit obligation | ||||||||||||||||||||
Total other comprehensive income | ( | ) | ||||||||||||||||||
Equity in other comprehensive income of subsidiaries, net of tax | ( | ) | ||||||||||||||||||
Less: Other comprehensive income attributable to noncontrolling interests | ||||||||||||||||||||
Total other comprehensive income attributable to Aon shareholders | ( | ) | ||||||||||||||||||
Comprehensive income attributable to Aon shareholders | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
As of March 31, 2019 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Short-term investments | ||||||||||||||||||||
Receivables, net | ||||||||||||||||||||
Fiduciary assets | ||||||||||||||||||||
Current intercompany receivables | ( | ) | ||||||||||||||||||
Other current assets | ||||||||||||||||||||
Total current assets | ( | ) | ||||||||||||||||||
Goodwill | ||||||||||||||||||||
Intangible assets, net | ||||||||||||||||||||
Fixed assets, net | ||||||||||||||||||||
Operating lease right-of-use assets | ||||||||||||||||||||
Deferred tax assets | ( | ) | ||||||||||||||||||
Prepaid pension | ||||||||||||||||||||
Non-current intercompany receivables | ( | ) | ||||||||||||||||||
Other non-current assets | ||||||||||||||||||||
Investment in subsidiary | ( | ) | ( | ) | ||||||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Short-term debt and current portion of long-term debt | ||||||||||||||||||||
Fiduciary liabilities | ||||||||||||||||||||
Current intercompany payables | ( | ) | ||||||||||||||||||
Other current liabilities | ||||||||||||||||||||
Total current liabilities | ( | ) | ||||||||||||||||||
Long-term debt | ||||||||||||||||||||
Non-current operating lease liabilities | ||||||||||||||||||||
Deferred tax liabilities | ( | ) | ||||||||||||||||||
Pension, other postretirement and postemployment liabilities | ||||||||||||||||||||
Non-current intercompany payables | ( | ) | ||||||||||||||||||
Other non-current liabilities | ||||||||||||||||||||
Total liabilities | ( | ) | ||||||||||||||||||
Equity | ||||||||||||||||||||
Total Aon shareholders’ equity | ( | ) | ( | ) | ||||||||||||||||
Noncontrolling interests | ||||||||||||||||||||
Total equity | ( | ) | ( | ) | ||||||||||||||||
Total liabilities and equity | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
As of December 31, 2018 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Assets | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Short-term investments | ||||||||||||||||||||
Receivables, net | ||||||||||||||||||||
Fiduciary assets | ||||||||||||||||||||
Current intercompany receivables | ( | ) | ||||||||||||||||||
Other current assets | ||||||||||||||||||||
Total current assets | ( | ) | ||||||||||||||||||
Goodwill | ||||||||||||||||||||
Intangible assets, net | ||||||||||||||||||||
Fixed assets, net | ||||||||||||||||||||
Operating lease right-of-use assets | — | — | — | — | — | |||||||||||||||
Deferred tax assets | ( | ) | ||||||||||||||||||
Prepaid pension | ||||||||||||||||||||
Non-current intercompany receivables | ( | ) | ||||||||||||||||||
Other non-current assets | ||||||||||||||||||||
Investment in subsidiary | ( | ) | ( | ) | ||||||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Accounts payable and accrued liabilities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Short-term debt and current portion of long-term debt | ||||||||||||||||||||
Fiduciary liabilities | ||||||||||||||||||||
Current intercompany payables | ( | ) | ||||||||||||||||||
Other current liabilities | ||||||||||||||||||||
Total current liabilities | ( | ) | ||||||||||||||||||
Long-term debt | ||||||||||||||||||||
Non-current operating lease liabilities | — | — | — | — | — | |||||||||||||||
Deferred tax liabilities | ( | ) | ||||||||||||||||||
Pension, other postretirement and postemployment liabilities | ||||||||||||||||||||
Non-current intercompany payables | ( | ) | ||||||||||||||||||
Other non-current liabilities | ||||||||||||||||||||
Total liabilities | ( | ) | ||||||||||||||||||
Equity | ||||||||||||||||||||
Total Aon shareholders’ equity | ( | ) | ( | ) | ||||||||||||||||
Noncontrolling interests | ||||||||||||||||||||
Total equity | ( | ) | ( | ) | ||||||||||||||||
Total liabilities and equity | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Cash provided by (used for) operating activities | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||
Cash flows from investing activities | ||||||||||||||||||||
Proceeds from investments | ||||||||||||||||||||
Payments for investments | ( | ) | ( | ) | ( | ) | ||||||||||||||
Net sales of short-term investments - non-fiduciary | ||||||||||||||||||||
Acquisition of businesses, net of cash acquired | ( | ) | — | ( | ) | |||||||||||||||
Sale of businesses, net of cash sold | ||||||||||||||||||||
Capital expenditures | ( | ) | ( | ) | ||||||||||||||||
Cash provided by (used for) investing activities | ( | ) | ( | ) | ||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Share repurchase | ( | ) | ( | ) | ||||||||||||||||
Advances from (to) affiliates | ( | ) | ( | ) | ||||||||||||||||
Issuance of shares for employee benefit plans | ( | ) | ( | ) | ||||||||||||||||
Issuance of debt | ||||||||||||||||||||
Repayment of debt | ( | ) | ( | ) | ( | ) | ||||||||||||||
Cash dividends to shareholders | ( | ) | ( | ) | ||||||||||||||||
Noncontrolling interests and other financing activities | ( | ) | ( | ) | ||||||||||||||||
Cash provided by (used for) financing activities | ( | ) | ( | ) | ( | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | ||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||||||||||
Cash and cash equivalents at beginning of period | ( | ) | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||||||
(millions) | Aon plc | Aon Corporation | Other Non-Guarantor Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Cash provided by (used for) operating activities | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Proceeds from investments | ||||||||||||||||||||
Payments for investments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Net sales of short-term investments - non-fiduciary | ||||||||||||||||||||
Acquisition of businesses, net of cash acquired | ( | ) | ( | ) | ||||||||||||||||
Sale of businesses, net of cash sold | ( | ) | ( | ) | ||||||||||||||||
Capital expenditures | ( | ) | ( | ) | ||||||||||||||||
Cash provided by (used for) investing activities | ( | ) | ( | ) | ||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Share repurchase | ( | ) | ( | ) | ||||||||||||||||
Advances from (to) affiliates | ( | ) | ( | ) | ||||||||||||||||
Issuance of shares for employee benefit plans | ( | ) | ( | ) | ||||||||||||||||
Issuance of debt | ||||||||||||||||||||
Repayment of debt | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Cash dividends to shareholders | ( | ) | ( | ) | ||||||||||||||||
Noncontrolling interests and other financing activities | ||||||||||||||||||||
Cash provided by (used for) financing activities | ( | ) | ( | ) | ( | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | ||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Cash and cash equivalents at beginning of period | ( | ) | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
As of | March 31, 2019 | |||
Assets | ||||
Operating lease assets | Operating lease right-of-use assets | $ | ||
Finance lease assets | Other non-current assets | |||
Total lease assets | $ | |||
Liabilities | ||||
Current lease liabilities | ||||
Operating | Other current liabilities | $ | ||
Finance | Other current liabilities | |||
Non-current lease liabilities | ||||
Operating | Non-current operating lease liabilities | |||
Finance | Other non-current liabilities | |||
Total lease liabilities | $ | |||
Three Months Ended March 31, 2019 | |||
Operating lease cost | $ | ||
Finance lease cost | |||
Amortization of leased assets | |||
Interest on lease liabilities | |||
Variable lease cost | |||
Short-term lease cost (1) | |||
Sublease income | ( | ) | |
Net lease cost | $ | ||
Operating | Finance | Less: | |||||||||||||
Leases | Leases | Subleases | Total | ||||||||||||
Remainder of 2019 | $ | $ | $ | ( | ) | $ | |||||||||
2020 | ( | ) | |||||||||||||
2021 | ( | ) | |||||||||||||
2022 | ( | ) | |||||||||||||
2023 | ( | ) | |||||||||||||
Thereafter | ( | ) | |||||||||||||
Total undiscounted future minimum lease payments | $ | $ | $ | ( | ) | $ | |||||||||
Less: Imputed interest | ( | ) | ( | ) | ( | ) | |||||||||
Present value of lease liabilities | $ | $ | $ | ( | ) | $ | |||||||||
As of | March 31, 2019 | |
Weighted average remaining lease term (years) | ||
Operating leases | ||
Finance leases | ||
Weighted average discount rate | ||
Operating leases | % | |
Finance leases | % | |
Three Months Ended March 31, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ | ||
ROU assets obtained in exchange for new operating lease liabilities | $ | ||
• | For the first quarter of 2019, revenue increased 2%, or $53 million, to $3.1 billion compared to the prior year period due primarily to organic revenue growth of 6%, partially offset by a 4% unfavorable impact from translating prior year period results at current period foreign exchange rates (“foreign currency translation”). |
• | Operating expenses for the first quarter of 2019 were $2.3 billion, a decrease of $20 million compared to the prior year period. The decrease was due primarily to a $93 million favorable impact from foreign currency translation, $45 million of incremental savings related to restructuring and other operational improvement initiatives, and a $21 million decrease in expenses related to divestitures, net of acquisitions, partially offset by a $17 million increase in restructuring charges and an increase in expenses associated with 6% organic revenue growth. |
• | Operating margin increased to 27.7% in the first quarter of 2019 from 25.9% in the prior year period. The underlying increase was driven by organic revenue growth of 6% and operational improvement. |
• | Due to the factors set forth above, net income from continuing operations increased $72 million, or 12%, to $676 million for the first quarter of 2019 compared to the prior year period. |
• | Diluted earnings per share from continuing operations was $2.70 per share for the first quarter of 2019 compared to $2.35 per share for the prior year period. |
• | Cash flow provided by operating activities was $74 million for the first three months of 2019, a decrease of $66 million from the prior year period. Strong operational improvement and working capital improvements in payables were more than offset by approximately $85 million of net cash payments related to legacy litigation and $15 million of incremental cash restructuring charges. |
• | Organic revenue growth, a non-GAAP measure defined under the caption “Review of Consolidated Results — Organic Revenue Growth,” was 6% for the first quarter of 2019, compared to 3% in the prior year period. Organic revenue growth for the quarter was driven by growth across every major revenue line, with particular strength in Reinsurance Solutions and Commercial Risk Solutions. |
• | Adjusted operating margin, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Operating Margin,” was 33.7% for the first quarter of 2019 compared to 31.8% in the prior year period. The increase in adjusted operating margin primarily reflects organic revenue growth of 6%, core operational improvement, and savings related to restructuring and other operational improvement initiatives. |
• | 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 $3.31 per share for the first quarter of 2019, compared to $2.97 per share for the respective prior year period. |
• | Free cash flow, a non-GAAP measure defined under the caption “Review of Consolidated Results — Free Cash Flow,” decreased in the first three months of 2019 by $78 million, or 82%, from the prior year period, to $17 million, driven by a decrease of $66 million in cash flow from operations and a $12 million increase in capital expenditures, including investments in our operating model. |
Three Months Ended | ||||||||
March 31, 2019 | March 31, 2018 | |||||||
Revenue | ||||||||
Total revenue | $ | 3,143 | $ | 3,090 | ||||
Expenses | ||||||||
Compensation and benefits | 1,584 | 1,616 | ||||||
Information technology | 117 | 115 | ||||||
Premises | 87 | 93 | ||||||
Depreciation of fixed assets | 40 | 39 | ||||||
Amortization and impairment of intangible assets | 97 | 110 | ||||||
Other general expenses | 346 | 318 | ||||||
Total operating expenses | 2,271 | 2,291 | ||||||
Operating income | 872 | 799 | ||||||
Interest income | 2 | 4 | ||||||
Interest expense | (72 | ) | (70 | ) | ||||
Other income (expense) | — | (15 | ) | |||||
Income from continuing operations before income taxes | 802 | 718 | ||||||
Income taxes | 126 | 114 | ||||||
Net income from continuing operations | 676 | 604 | ||||||
Net income from discontinued operations | — | 6 | ||||||
Net income | 676 | 610 | ||||||
Less: Net income attributable to noncontrolling interests | 17 | 16 | ||||||
Net income attributable to Aon shareholders | $ | 659 | $ | 594 | ||||
Diluted net income per share attributable to Aon shareholders | ||||||||
Continuing operations | $ | 2.70 | $ | 2.35 | ||||
Discontinued operations | — | 0.02 | ||||||
Net income | $ | 2.70 | $ | 2.37 | ||||
Weighted average ordinary shares outstanding - diluted | 243.7 | 250.2 | ||||||
Three Months Ended | |||||||||||||||||||||||
March 31, 2019 | March 31, 2018 | % Change | Less: Currency Impact (1) | Less: Fiduciary Investment Income (2) | Less: Acquisitions, Divestitures & Other | Organic Revenue Growth (3) | |||||||||||||||||
Commercial Risk Solutions | $ | 1,118 | $ | 1,184 | (6 | )% | (5 | )% | — | % | (7 | )% | 6 | % | |||||||||
Reinsurance Solutions | 788 | 742 | 6 | (3 | ) | — | — | 9 | |||||||||||||||
Retirement Solutions | 420 | 424 | (1 | ) | (4 | ) | — | 1 | 2 | ||||||||||||||
Health Solutions | 486 | 451 | 8 | (5 | ) | — | 8 | 5 | |||||||||||||||
Data & Analytic Services | 336 | 294 | 14 | (4 | ) | — | 13 | 5 | |||||||||||||||
Elimination | (5 | ) | (5 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||
Total revenue | $ | 3,143 | $ | 3,090 | 2 | % | (4 | )% | — | % | — | % | 6 | % | |||||||||
(1) | Currency impact is determined by translating prior period's revenue at this period's foreign exchange rates. |
(2) | Fiduciary investment income for the three months ended March 31, 2019 and 2018, respectively, was $19 million and $10 million. |
(3) | Organic revenue growth includes the impact of intercompany activity and excludes the impact of changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures, transfers between revenue lines, and gains or losses on derivatives accounted for as hedges. |
Three Months Ended | ||||||||
March 31, 2019 | March 31, 2018 | |||||||
Revenue from continuing operations | $ | 3,143 | $ | 3,090 | ||||
Operating income from continuing operations - as reported | $ | 872 | $ | 799 | ||||
Amortization and impairment of intangible assets | 97 | 110 | ||||||
Restructuring | 91 | 74 | ||||||
Operating income from continuing operations - as adjusted | $ | 1,060 | $ | 983 | ||||
Operating margin from continuing operations - as reported | 27.7 | % | 25.9 | % | ||||
Operating margin from continuing operations - as adjusted | 33.7 | % | 31.8 | % | ||||
Three Months Ended March 31, 2019 | ||||||||||||
Non-GAAP | ||||||||||||
U.S. GAAP | Adjustments | Adjusted | ||||||||||
Operating income from continuing operations | $ | 872 | $ | 188 | $ | 1,060 | ||||||
Interest income | 2 | — | 2 | |||||||||
Interest expense | (72 | ) | — | (72 | ) | |||||||
Other income (expense) | — | — | — | |||||||||
Income before income taxes from continuing operations | 802 | 188 | 990 | |||||||||
Income taxes (2) | 126 | 41 | 167 | |||||||||
Net income from continuing operations | 676 | 147 | 823 | |||||||||
Net income from discontinued operations (3) | — | — | — | |||||||||
Net income | 676 | 147 | 823 | |||||||||
Less: Net income attributable to noncontrolling interests | 17 | — | 17 | |||||||||
Net income attributable to Aon shareholders | $ | 659 | $ | 147 | $ | 806 | ||||||
Diluted net income (loss) per share attributable to Aon shareholders | ||||||||||||
Continuing operations | $ | 2.70 | $ | 0.61 | $ | 3.31 | ||||||
Discontinued operations | — | — | — | |||||||||
Net income | $ | 2.70 | $ | 0.61 | $ | 3.31 | ||||||
Weighted average ordinary shares outstanding - diluted | 243.7 | — | 243.7 | |||||||||
Effective Tax Rates (3) | ||||||||||||
Continuing Operations - U.S. GAAP | 15.7 | % | 16.9 | % | ||||||||
Discontinued Operations - U.S. GAAP | — | % | — | % | ||||||||
Three Months Ended March 31, 2018 | ||||||||||||
Non-GAAP | ||||||||||||
U.S. GAAP | Adjustments | Adjusted | ||||||||||
Operating income from continuing operations | $ | 799 | $ | 184 | $ | 983 | ||||||
Interest income | 4 | — | 4 | |||||||||
Interest expense | (70 | ) | — | (70 | ) | |||||||
Other income (expense) (1) | (15 | ) | 7 | (8 | ) | |||||||
Income before income taxes from continuing operations | 718 | 191 | 909 | |||||||||
Income taxes (2) | 114 | 36 | 150 | |||||||||
Net income from continuing operations | 604 | 155 | 759 | |||||||||
Net income from discontinued operations (3) | 6 | (8 | ) | (2 | ) | |||||||
Net income | 610 | 147 | 757 | |||||||||
Less: Net income attributable to noncontrolling interests | 16 | — | 16 | |||||||||
Net income attributable to Aon shareholders | $ | 594 | $ | 147 | $ | 741 | ||||||
Diluted net income (loss) per share attributable to Aon shareholders | ||||||||||||
Continuing operations | $ | 2.35 | $ | 0.62 | $ | 2.97 | ||||||
Discontinued operations | 0.02 | (0.03 | ) | (0.01 | ) | |||||||
Net income | $ | 2.37 | $ | 0.59 | $ | 2.96 | ||||||
Weighted average ordinary shares outstanding - diluted | 250.2 | — | 250.2 | |||||||||
Effective Tax Rates (3) | ||||||||||||
Continuing Operations - U.S. GAAP | 15.9 | % | 16.5 | % | ||||||||
Discontinued Operations - U.S. GAAP | 17.2 | % | 46.5 | % | ||||||||
(1) | Adjusted Other income (expense) excludes Pension settlement charges of $7 million for the three months ended March 31, 2018. |
(2) | Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring plan expenses, accelerated tradename amortization, and non-cash pension settlement charges, which are adjusted at the related jurisdictional rate. In addition, tax expense excludes the tax impacts of payment of certain legacy litigation and enactment date impacts of the Tax Cuts and Jobs Act of 2017. |
(3) | Adjusted income from discontinued operations, net of tax, excludes the gain on sale of discontinued operations of $8 million for the three months ended March 31, 2018. The effective tax rate was further adjusted for the applicable tax impact associated with the gain on sale, as applicable. |
Three Months Ended | ||||||||
March 31, 2019 | March 31, 2018 | |||||||
Cash Provided by Operating Activities | $ | 74 | $ | 140 | ||||
Capital Expenditures Used for Operations | (57 | ) | (45 | ) | ||||
Free Cash Flow Provided By Operations | $ | 17 | $ | 95 | ||||
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 | $ | 600 | $ | — | $ | 2,619 | $ | 3,219 | |||||||
Money market funds | — | 134 | 1,845 | 1,979 | |||||||||||
Cash and short-term investments | 600 | 134 | 4,464 | 5,198 | |||||||||||
Fiduciary receivables | — | — | 6,948 | 6,948 | |||||||||||
Total | $ | 600 | $ | 134 | $ | 11,412 | $ | 12,146 | |||||||
Three Months Ended | ||||||||
March 31, 2019 | March 31, 2018 | |||||||
Cash provided by operating activities | $ | 74 | $ | 140 | ||||
Cash provided (used for) investing activities | $ | (27 | ) | $ | 346 | |||
Cash used for financing activities | $ | (140 | ) | $ | (663 | ) | ||
Effect of exchange rates changes on cash and cash equivalents | $ | 37 | $ | 18 | ||||
Three Months Ended March 31, 2019 | Inception to Date | Estimated Remaining Costs | Estimated Total Cost (1) | |||||||||||||
Workforce reduction | $ | 24 | $ | 438 | $ | 12 | $ | 450 | ||||||||
Technology rationalization (2) | 11 | 91 | 39 | 130 | ||||||||||||
Lease consolidation (2) | 9 | 45 | 20 | 65 | ||||||||||||
Asset impairments | — | 39 | 11 | 50 | ||||||||||||
Other costs associated with restructuring and separation (2) (3) | 47 | 460 | 70 | 530 | ||||||||||||
Total restructuring and related expenses | $ | 91 | $ | 1,073 | $ | 152 | $ | 1,225 | ||||||||
(1) | Actual costs, when incurred, may vary due to changes in the assumptions built into the Restructuring Plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives. |
(2) | Total contract termination costs incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, for the three months ended March 31, 2019 were $1 million, $9 million, and $2 million; and since inception of the Restructuring Plan were $7 million, $42 million, and $90 million. Total estimated contract termination costs expected to be incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, are $15 million, $80 million, and $95 million. |
(3) | Other costs associated with the Restructuring Plan include those to separate the Divested Business, as well as moving costs and consulting and legal fees. These costs are generally recognized when incurred. |
Restructuring Plan | ||||
Balance as of December 31, 2018 | $ | 201 | ||
Expensed | 88 | |||
Cash payments | (113 | ) | ||
Foreign currency translation | (1 | ) | ||
Balance as of March 31, 2019 | $ | 175 | ||
Three Months Ended March 31 | |||||||
2019 | 2018 | ||||||
Shares repurchased | 0.6 | 3.9 | |||||
Average price per share | $ | 161.16 | $ | 140.94 | |||
Costs recorded to retained earnings: | |||||||
Total repurchase cost | $ | 100 | $ | 550 | |||
Additional associated costs | 1 | 3 | |||||
Total costs recorded to retained earnings | $ | 101 | $ | 553 | |||
Three Months Ended March 31 | ||||||||
2019 | 2018 | |||||||
Total issuances (1) | $ | 871 | $ | 805 | ||||
Total repayments | $ | (694 | ) | $ | (410 | ) | ||
Net issuances | $ | 177 | $ | 395 | ||||
(1) | The proceeds of the commercial paper issuances were used primarily for short-term working capital needs. |
Ratings | |||||
Senior Long-term Debt | Commercial Paper | Outlook | |||
Standard & Poor’s | A- | A-2 | Stable | ||
Moody’s Investor Services | Baa2 | P-2 | Stable | ||
Fitch, Inc. | BBB+ | F-2 | Stable | ||
• | general economic and political conditions in the countries in which we do business around the world, including the U.K.’s expected withdrawal from the European Union; |
• | changes in the competitive environment or damage to our reputation; |
• | fluctuations in exchange and interest rates that could influence revenues and expenses; |
• | changes in global equity and fixed income markets that could affect the return on invested assets; |
• | changes in the funding status of our various defined benefit pension plans and the impact of any increased pension funding resulting from those changes; |
• | the level of our debt limiting financial flexibility or increasing borrowing costs; |
• | rating agency actions that could affect our ability to borrow funds; |
• | volatility in our tax rate due to a variety of different factors including U.S. federal income tax reform; |
• | changes in estimates or assumptions on our financial statements; |
• | limits on our subsidiaries to make dividend and other payments to us; |
• | the impact of lawsuits and other contingent liabilities and loss contingencies arising from errors and omissions and other claims against us; |
• | the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which we operate, particularly given the global scope of our businesses and the possibility of conflicting regulatory requirements across jurisdictions in which we do business; |
• | the impact of any investigations brought by regulatory authorities in the U.S., U.K., and other countries; |
• | the impact of any inquiries relating to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws and with U.S. and non-U.S. trade sanctions regimes; |
• | failure to protect intellectual property rights or allegations that we infringe on the intellectual property rights of others; |
• | the effects of English law on our operating flexibility and the enforcement of judgments against us; |
• | the failure to retain and attract qualified personnel; |
• | international risks associated with our global operations; |
• | the effect of natural or man-made disasters; |
• | the potential of a system or network breach or disruption resulting in operational interruption or improper disclosure of personal data; |
• | our ability to develop and implement new technology; |
• | damage to our reputation among clients, markets or third parties; |
• | the actions taken by third parties that perform aspects of our business operations and client services; |
• | the extent to which we manage certain risks created in connection with the various services, including fiduciary and investment consulting and other advisory services, among others, that we currently provide, or will provide in the future, to clients; |
• | our ability to continue, and the costs and risks associated with, growing, developing and integrating companies that we acquire or new lines of business; |
• | changes in commercial property and casualty markets, commercial premium rates or methods of compensation; |
• | changes in the health care system or our relationships with insurance carriers; |
• | our ability to implement initiatives intended to yield cost savings and the ability to achieve those cost savings; |
• | our risks and uncertainties in connection with the sale of the Divested Business; and |
• | our ability to realize the expected benefits from our restructuring plan. |
Period | Total Number of Shares Purchased | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)(2) | ||||||||||
1/1/19 - 1/31/19 | 238,102 | $ | 149.47 | 238,102 | $ | 3,937,928,224 | ||||||||
2/1/19 - 2/28/19 | 189,310 | $ | 170.09 | 189,310 | $ | 3,905,727,715 | ||||||||
3/1/19 - 3/31/19 | 193,046 | $ | 166.81 | 193,046 | $ | 3,873,525,831 | ||||||||
620,458 | $ | 161.16 | 620,458 | $ | 3,873,525,831 | |||||||||
(1) | Does not include commissions or other costs paid to repurchase shares. |
(2) | The Repurchase Program was established in April 2012 with $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014 and February 2017 for a total of $15.0 billion in repurchase authorizations. |
Aon plc | ||
(Registrant) | ||
April 26, 2019 | By: | /s/ Michael Neller |
Michael Neller | ||
SENIOR VICE PRESIDENT AND | ||
GLOBAL CONTROLLER | ||
(Principal Accounting Officer and duly authorized officer of Registrant) | ||
Exhibit Number | Description of Exhibit | |
10.1# | ||
10.2# | ||
10.3 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101 | Interactive Data Files. The following materials are filed electronically with this Quarterly Report on Form 10-Q: | |
101.INS XBRL Report Instance Document | ||
101.SCH XBRL Taxonomy Extension Schema Document | ||
101.CAL XBRL Taxonomy Calculation Linkbase Document | ||
101.DEF XBRL Taxonomy Definition Linkbase Document | ||
101.PRE XBRL Taxonomy Presentation Linkbase Document | ||
101.LAB XBRL Taxonomy Calculation Linkbase Document | ||
1. | Overview |
2. | Performance Cycle |
3. | Eligibility |
4. | Participation |
5. | Performance-Based Compensation |
6. | Performance Share Units |
7. | Rules Applicable to Performance Share Units |
(a) | To the extent earned, the Performance Share Units will vest as of the date the Committee determines and certifies in writing whether and to what extent the applicable performance criteria have been achieved and the resulting payout (the “Settlement Date”), which shall occur as soon as administratively practicable following the end of the Performance Cycle. |
(b) | The number of Ordinary Shares into which the Performance Share Units settle upon vesting of such Performance Share Units (i) will be determined based on the Company’s actual cumulative Adjusted Earnings Per Share during the Performance Cycle, as compared to the Target Earnings Per Share, and (ii) will range from 0% to 200% of the target number of Performance Share Units awarded, as set forth in the Payout Scale. |
(c) | The Performance Share Units will settle into Ordinary Shares during the calendar year immediately following the end of the Performance Cycle. |
(d) | The Company shall have the right to satisfy all federal, state and local withholding tax requirements with respect to a settled Award by withholding Ordinary Shares equivalent in value to the amount of the required withholding (based on the Fair Market Value of an Ordinary Share on the Settlement Date). |
(e) | The Performance Share Units are not transferable and may not be sold, assigned, pledged, hypothecated or otherwise encumbered. |
(f) | Until the Settlement Date, the Participant will not be treated as a shareholder as to those Ordinary Shares relating to the Performance Share Units. No cash payments will be provided for dividend equivalents or other distributions. |
(g) | Each Award will be evidenced by a Performance Award Certificate (the “Certificate”) issued to the Participant. The Certificate, inclusive of its appendices, will set forth the target number of Performance Share Units granted to the Participant, among other terms and conditions. The Participant must sign and return to the Company the Certificate to indicate that he or she agrees to be bound by the provisions of the Program, including any restrictive covenants set forth in the Certificate. Failure to return a signed Certificate to the Company will result in forfeiture of the Performance Share Units. |
(h) | Notwithstanding anything herein to the contrary, if a Participant’s employment with the Company terminates before the last day of the Performance Cycle, the following rules will apply to the vesting and settlement of the Performance Share Units: |
Termination Event | Impact on Performance Share Units |
Retirement (solely for Participants whose principal place of work is outside the EU or UK) Termination by Company without Cause Termination by Participant for Good Reason | The Participant will vest in a fraction (determined based on the number of full calendar quarters completed in the Performance Cycle as of the Participant’s termination date, as compared to the total number of calendar quarters in the Performance Cycle) of the Performance Share Units that would have vested and settled following the end of the Performance Cycle based on actual cumulative Adjusted EPS achieved during the Performance Cycle determined in accordance with the Payout Scale, as follows: To the extent earned, Performance Share Units will be settled in Ordinary Shares in accordance with Section 7(c) above. |
Death or Total and Permanent Disability | If the Participant’s death or Total and Permanent Disability occurs in the first or second calendar years of the Performance Cycle, the Participant (or his or her estate) will vest in the target number of Performance Share Units, which will be settled in Ordinary Shares as soon as administratively feasible following such death or Total and Permanent Disability. If the Participant’s death or Total Permanent Disability occurs in the third calendar year of the Performance Cycle, the Participant (or his or her estate) will vest in the target number of Performance Share Units or, if greater, the number of Performance Share Units earned based on actual cumulative Adjusted EPS during the Performance Cycle, determined in accordance with the Payout Scale. Performance Share Units will be settled in Ordinary Shares in accordance with Section 7(c) above. |
Voluntary Resignation (other than for Good Reason) | Performance Share Units will be forfeited in their entirety. |
Termination by Company for Cause | Performance Share Units will be forfeited in their entirety. |
Certain Terminations Following a Change in Control | Following a Change in Control, the Performance Share Units will be subject to the following rules: If the Participant’s employment is terminated by the Company without Cause or by the Participant for Good Reason after the Change in Control but prior to the end of the Performance Cycle, the Participant’s Performance Share Units will immediately vest at the greater of the target Performance Share Units or the number of units that would have been earned based on the proportion of achievement of the Target Earnings Per Share as of the last full calendar quarter preceding or on the Participant’s termination date. Performance Share Units will be settled in Ordinary Shares upon, or as soon as administratively feasible following, the Participant’s termination of employment. If the Participant’s employment is terminated by the Company for Cause, by the Participant other than for Good Reason, or by reason of the Participant’s death or Total and Permanent Disability, the terms of the Program shall continue to apply to the Performance Share Units as if the Change in Control had not occurred. If the Company is not the ultimate parent entity following the Change in Control, then all Performance Share Units will be converted into rights to acquire shares of the ultimate parent entity in accordance with Section 5.2 of the Stock Plan, and performance measures will be based on performance of the ultimate parent company (subject to adjustment in accordance with Section 5.2 of the Stock Plan), and not the Company. |
(i) | Notwithstanding the foregoing, in the event an employment agreement or other binding written arrangement between a Participant and the Company provides for more favorable vesting of Performance Share Units upon termination of employment or includes restrictive covenants specifically intended to apply to Awards under the Program, the provisions |
(j) | Notwithstanding the foregoing, if the successor to the Company in connection with a Change in Control does not assume and continue this Program substantially in its current form, the Performance Share Units shall become immediately vested at the greater of the target Performance Share Units or the number of units that would have been earned based on the proportion of achievement of the Target Earnings Per Share as of the last full calendar quarter as of or preceding the effective date of the Change in Control. Such Units will be settled in Ordinary Shares upon, or as soon as practicable following, the Change in Control. |
(k) | In the event that the Company’s Chief Executive Officer determines (or, in the case of the Chief Executive Officer as Participant, the Board of Directors of the Company determines), in his or its sole discretion, as applicable, that forfeiture is appropriate based on the finding that (i) the Participant has materially violated Company policies and procedures, including (but not limited to) performing an act of race, sex, national origin, religion, disability, or age-based discrimination, or sexual harassment or any other material violation of the Aon Code of Business Conduct, or (ii) the Participant is in breach of any non-competition, non-solicitation, and/or confidentiality provisions or other restrictive covenants that apply to the Participant, all unvested Performance Share Units shall be forfeited. |
8. | Performance Measure for Performance Share Units |
9. | Adjustments to Performance Measures or Results |
10. | Nominal Value |
11. | Restrictive Covenants |
12. | Administration |
13. | General Provisions |
14. | Reservation and Retention of Company Rights |
15. | Code Section 409A |
16. | Definitions |
(a) | “Adjusted Earnings Per Share” or “Adjusted EPS” means the Company’s adjusted earnings per share from continuing operations as publicly reported each quarter, and on an annual basis, in the Company’s earnings release and Form 10-K. |
(b) | “Cause” means such term as defined in any written binding employment agreement entered into between the Participant and the Company and approved by the Committee prior to the Grant Date, or, in the absence of any such agreement or defined term, means the Participant’s: (1) performance of a deliberate act of dishonesty, fraud, theft, embezzlement or misappropriation involving the Participant’s employment with the Company, or breach of the duty of loyalty to the Company; (2) performance of an act of race, sex, national origin, religion, disability, or age-based discrimination which, after investigation, counsel to the Company reasonably concludes will result in liability being imposed on the Company and/or the Participant; (3) material violation of Company policies and procedures including, but not limited to, the Aon Code of Business Conduct; or (4) performance of a criminal act resulting in a criminal felony charge (or equivalent offense in a non-US jurisdiction) brought against the Participant or a criminal conviction of the Participant (other than a conviction of a minor traffic violation). The existence of “Cause” shall be determined by the Committee in its sole discretion. |
(c) | “Code Section 162(m)” means Section 162(m) of the Internal Revenue Code of 1986, as amended, and all regulatory or other interpretive guidance issued thereunder. |
(d) | “Code Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and all regulatory or other interpretive guidance issued thereunder. |
(e) | “Fair Market Value” means the per share value of the Ordinary Shares as determined by using the closing price of such shares as reported by the New York Stock Exchange on such date (or, if the New York Stock Exchange was not open for trading or the shares were not traded on that day, the next preceding day that the New York Stock Exchange was open for trading and Ordinary Shares were traded). |
(f) | “Good Reason” means such term as defined in any written binding employment agreement entered into between the Participant and the Company and approved by the Committee prior to the Grant Date. If there is no such agreement, or such agreement does not define “Good Reason,” the Participant’s voluntary termination of employment shall be treated as a voluntary resignation. |
(g) | “Retirement” means, solely with respect to a Participant whose principal place of work is outside the European Union or United Kingdom, a voluntary termination of employment upon or after the Participant’s attainment of age 55. For purposes of this definition, the principal place of work for a Participant on secondment shall be considered to be the Participant’s home country. With respect to a Participant whose principal place of work is within the European Union |
(h) | “Total and Permanent Disability” means (1) for US employees, entitlement to long-term disability benefits under the Company’s long-term disability program, as amended from time to time, and (2) for non-US employees, such term as established by applicable Company policy or as required by applicable local law or regulations. |
1. | Grant of Restricted Stock Units. The Company grants under the Plan an award of RSUs on _______________ (the “Grant Date”). The Participant understands and agrees that the Participant has no obligation to accept this Award (as a condition of employment or otherwise), and that the Participant’s decision to do so by signing or accepting this Agreement, and thereby to accept all of the terms and conditions of this Agreement, is the Participant’s knowing and voluntary choice after having had a full and fair opportunity to consult with legal counsel (at the Participant’s cost). |
2. | Vesting of Restricted Stock Units. The RSUs will vest in accordance with the schedule set forth in the Participant’s account. The Participant must access the www.netbenefits.com website and follow the instructions in order to view the vesting schedule. Notwithstanding anything herein to the contrary, the Committee may cause the RSUs to vest prior to the date(s) set forth in the vesting schedule in order to satisfy any Tax-Related Items (as defined below) that arise prior to the date of settlement of the RSUs, subject to the limitations set forth in Section 3(d) of this Agreement. |
3. | Tax Withholding Obligations. The Participant acknowledges that, regardless of any action taken by the Company and/or the Participant’s employer (the “Employer”), the ultimate liability for all income tax, social insurance contributions, payroll tax, payments on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer: (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including, but not limited to, the grant, vesting or settlement of the RSUs, the issuance of Shares upon settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such vesting/settlement and the receipt of any dividends and/or dividend equivalents; and (b) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. |
a) | Prior to any relevant taxable or tax withholding event, as applicable, the Participant agrees to make adequate arrangements satisfactory to the Company or the Employer, to satisfy all Tax-Related Items. In this regard, the Participant authorises the Company and/or the Employer, or their respective agents, at the Company’s discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: |
(i) | withholding from any wages or other cash compensation paid to the Participant by the Company and/or the Employer; or |
(ii) | withholding in Shares to be issued upon vesting/settlement of the RSUs; or |
(iii) | withholding from the proceeds of the sale of Shares acquired upon vesting/settlement of the RSUs either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorisation without further consent); provided, however, that if the Participant is a Section 16 officer under the Exchange Act, the Committee shall establish the method of withholding from alternatives (i) - (iii) herein. |
b) | The Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable statutory withholding rates or other applicable withholding rates in the Participant’s jurisdiction(s), including maximum applicable rates. If Tax-Related Items are withheld in excess of the Participant’s actual tax liability, any over-withheld amount may be refunded to the Participant in cash by the Company or the Employer (with |
c) | Finally, the Participant shall pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to withhold as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items. |
d) | Notwithstanding anything in this Section 3 to the contrary, to avoid a prohibited distribution under Code Section 409A in the case of a Participant who is subject to U.S. federal income tax (a “U.S. Taxpayer”), if Shares underlying the RSUs will be withheld (or sold on the Participant’s behalf) to satisfy any Tax-Related Items arising prior to the date of settlement of the RSUs for any portion of the RSUs that is considered “nonqualified deferred compensation” subject to Code Section 409A (“Deferred Compensation”), then the number of Shares withheld (or sold on the Participant’s behalf) shall not exceed the number of Shares that equals the liability for the Tax-Related Items. |
4. | Nominal Value. At the time of settlement, this Award will be subject to the Participant’s appropriate undertaking to pay to the Company a nominal value of $.01 per share (as determined in the sole discretion of the Company, subject to the provisions of the Company’s articles of association and the U.K. Companies Act 2006, as amended from time to time), and such obligation may be satisfied by the Participant in cash in any manner to be established by the Company in its sole discretion, including but not limited to withholding from any wages or other cash compensation paid to the Participant by the Company and/or the Employer. |
5. | Payment of Dividend Equivalents. The Participant is eligible to receive cash payments equal to any cash dividends paid with respect to a corresponding number of Shares. These payments shall be made on a quarterly basis, in a manner prescribed by the Company, and as soon as administratively practicable after the officially recorded dividend payment date. The Participant must be employed on the dividend record date in order to be entitled to receive any dividend equivalent payment. Notwithstanding the foregoing, Participants in Ireland and Germany will receive an accumulated dividend equivalent payment in a lump sum after the entire grant of RSUs is 100% vested. |
6. | Effect of Termination of Employment; Breach of Restrictive Covenants; Misconduct. |
a) | Voluntary termination (other than Retirement). In the event that the Participant’s Termination Date occurs because of the Participant’s voluntary termination that does not qualify as Retirement, the unvested portion of the RSU will be forfeited. |
b) | Termination due to death. In the event that the Participant’s Termination Date occurs due to the Participant’s death, all unvested RSUs will be fully vested immediately and the date of such termination will be considered a vesting date for purposes of the settlement provisions of Section 8 hereof. |
c) | Termination due to disability. In the event that the Participant’s Termination Date occurs due to the Participant’s disability, all unvested RSUs will be fully vested immediately and the date of such termination will be considered a vesting date for purposes of the settlement provisions of Section 8 hereof. “Disability” for purposes of this Agreement, shall mean disability pursuant to the standards set forth in, or in circumstances where the Participant qualifies for receipt of benefits under, the long-term disability plan of the Employer. In the absence of such a plan, the Committee shall have exclusive discretion to determine whether a Participant’s employment is terminated due to disability. |
d) | Involuntary termination (other than for Cause) or Retirement. In the event that the Participant’s Termination Date occurs as a result of the Participant’s involuntary termination by the Company or Employer (other than for Cause) or the Participant’s Retirement, the RSUs will continue to vest as if the Participant remained employed through each of the vesting dates specified in the schedule set forth in the Participant’s account. For purposes of this Agreement, “Retire” or “Retirement” means a voluntary termination of employment on or after the Participant’s 55th birthday for employees whose principal place of work is outside of the European Union (“EU”) or the United Kingdom. A Participant on secondment will be subject to the vesting rule applicable to his or her home country. Participants whose principal place of work is inside the EU or the United Kingdom shall not be eligible for Retirement, and their voluntary termination at any age shall be treated in accordance with Section 6(a). The Committee shall have exclusive discretion to determine a Participant’s principal place of work for purposes of this Section 6(d). |
e) | Termination for Cause. In the event that the Participant’s Termination Date occurs because the Participant is terminated by the Company or Employer for Cause, all unvested RSUs shall be forfeited. “Cause” shall mean the Participant’s (i) performing a deliberate act of dishonesty, fraud, theft, embezzlement, or misappropriation involving the Participant’s employment with the Company, its Subsidiaries or Affiliates, or breach of the duty of loyalty to the Company, its Subsidiaries or Affiliates; (ii) performing an act of race, sex, national origin, |
f) | Misconduct; Breach of Restrictive Covenants. In the event that the Company’s Chief Executive Officer determines (or, in the case of the Chief Executive Officer as Participant, the Board of Directors of the Company determines), in his or its sole discretion, as applicable, that forfeiture is appropriate based on the finding that (i) the Participant has materially violated Company policies and procedures, including (but not limited to) performing an act of race, sex, national origin, religion, disability, or age-based discrimination, or sexual harassment or any other material violation of the Aon Code of Business Conduct, or (ii) the Participant is in breach of any non-competition, non-solicitation, and/or confidentiality provisions or other restrictive covenants that apply to the Participant, all unvested RSUs shall be forfeited. |
7. | Receipt by the Participant of the Prospectus. The Participant acknowledges receipt of the Plan prospectus that contains the entire Plan and is incorporated herein by reference. The Participant represents and warrants that the Participant has read the Plan and agrees that all RSUs awarded under it shall be subject to all of the terms and conditions of the Plan. |
8. | Issuance of Shares. RSUs shall be converted to Shares as of the applicable vesting date. Shares will be issued to the Participant as soon as practicable (within 60 days) after the vesting date, subject to Sections 3 and 4 of this Agreement. Notwithstanding the foregoing, for purposes of complying with Code Section 409A, if the RSUs are considered Deferred Compensation, the Participant is a U.S. Taxpayer and the Shares are to be settled in connection with a termination of service, the Company and the Participant shall take all steps necessary (including with regard to any post-termination services by the Participant) to ensure that a termination contemplated under Section 6 constitutes a “separation from service” within the meaning of Code Section 409A. In addition, if the RSUs are Deferred Compensation, the Participant is a U.S. Taxpayer, the RSUs are payable in connection with the Participant’s separation from service and the Participant is a “specified employee” within the meaning of Code Section 409A on the date the Participant experiences a separation from service, then the RSUs shall be settled on the first business day of the seventh month following the Participant’s separation from service, or, if earlier, on the date of the Participant’s death, solely to the extent such delayed payment is required in order to avoid a prohibited distribution under Code Section 409A. |
9. | Rights as Shareholder. The Participant shall not have voting or any other rights as a shareholder of the Company with respect to the RSUs. Upon issuance of the Shares pursuant to and in accordance with Section 8, the Participant will obtain full voting and other rights as a shareholder of the Company. |
10. | Incentive Repayment Policy. If the Participant has been designated and notified by the board of directors of the Company that he or she is a reporting officer for purposes of Section 16 of the Exchange Act, the Participant is subject to Aon’s Incentive Repayment Policy (the “Policy”). The Policy provides that the Company will have the discretion to cancel or require reimbursement to the Company of the Award set forth in this Agreement if the grant or vesting was based on the achievement of financial results that were subsequently restated. The Participant can obtain a copy of the Policy from the Global Compensation team. If the Participant is subject to the Policy, by accepting this Agreement, the Participant hereby agrees and acknowledges that he or she will be bound by it. |
11. | Other Provisions. |
a) | Plan Terms Take Precedence over Agreement Terms. RSUs are granted pursuant to the Plan, the terms and conditions of which are incorporated into this Agreement by reference. If there are any inconsistencies between the terms of this Agreement and the Plan, the terms of the Plan will govern. |
b) | Prior Agreement(s) Will Not Control. The Participant’s acceptance of this Agreement will supersede provisions of any prior agreement that could be construed as governing the terms of this Award. |
c) | Code Section 409A. The RSUs and amounts payable thereunder are intended to be exempt from or compliant with Code Section 409A and the U.S. Treasury Regulations relating thereto so as not to subject the Participant to the payment of additional taxes and interest under Code Section 409A or other adverse tax consequences. In furtherance of this intent, the provisions of this Agreement will be interpreted, operated, and administered in a manner consistent with these intentions. The Committee may modify the terms of this Agreement and/or the Plan, without the consent of the Participant, in the manner that the Committee may determine to be necessary or advisable in order to comply with Code Section 409A or to mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Code Section 409A if compliance is not practical. This Section 11(c) does not create an obligation on the part of the Company to modify the terms of this Agreement or the Plan and does not guarantee that the RSUs or the delivery of Shares upon vesting/settlement of the RSUs will not be subject to taxes, interest and penalties or any other adverse tax consequences under Code Section 409A. Nothing in this Agreement shall provide a basis for any person to take any action against the Company or any of its Subsidiaries or Affiliates based on matters covered by Code Section 409A, including the tax treatment of any amounts paid under this Agreement, and neither the Company nor any of its Subsidiaries or Affiliates |
d) | Restriction on Transfer. RSUs may not be sold, transferred, pledged, assigned, or otherwise alienated at any time. |
e) | Right of Employment. Grants of RSUs under the Plan and this Agreement do not confer upon the Participant any right to continue in the employ or service of the Employer. This Agreement shall survive any termination of the Participant’s employment for any or no reason. |
f) | Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company. |
g) | Need to Accept Grant. The Participant acknowledges that this grant must be accepted within 90 days of the Grant Date in order to be eligible to receive any benefits from this grant. If this grant is not accepted within the 90-day period specified in the foregoing sentence, all benefits under this grant may be forfeited, as determined in the sole discretion of the Committee. To accept this grant, the Participant must access the www.netbenefits.com website and follow the instructions for acceptance. If this grant was distributed to the Participant via mail, the Participant must sign the Agreement and return it to the Company within 90 days. |
h) | Waiver; Section Headings. Waiver of any term or condition of this Agreement by any party shall 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. The Section headings in this Agreement are for convenience only and are not to be used in interpreting this Agreement. |
i) | Severability. To the extent that the terms set forth in this Agreement or any word, phrase, clause or sentence is found to be illegal or unenforceable by a court of competent jurisdiction for any reason, such term, word, phrase, clause or sentence shall be modified in such manner so as to afford the Company the fullest protection commensurate with making this Agreement, as modified, legal and enforceable under applicable laws. If, however, a court of competent jurisdiction finds that any such term, word, phrase, clause or sentence cannot be so modified and thus made enforceable, or otherwise declines for any reason to do so, such term, word, phrase, clause or sentence shall be deemed severed from this Agreement and of no force and effect, and the balance of this Agreement shall not be affected thereby, the balance being construed as severable and independent. |
j) | Governing Law. The validity, interpretation, instruction, performance, enforcement and remedies of or relating to this Agreement, and the rights and obligations of the parties hereunder, shall be governed by and construed in accordance with the substantive internal laws of the State of Delaware, without regard to the conflict of law principles, rules or statutes of any jurisdiction. The foregoing provisions of this subsection shall apply irrespective of whether the Participant is a party to or bound by another restrictive covenant of any kind that may be governed by the laws of another jurisdiction (if any). |
k) | Venue and Jurisdiction. Venue for any legal proceedings instituted related to this Agreement shall be exclusively in the state and/or federal courts located in Cook County, Illinois, and the Participant hereby knowingly, voluntarily and irrevocably agrees, consents and submits to the exclusive jurisdiction and venue of such courts within the State of Illinois. The Participant further hereby knowingly, voluntarily and irrevocably waives, and agrees not to assert, any objection, challenge or defense to such exclusive venue or jurisdiction (including without limitation any defense of forum non conveniens), and further agrees not to file any claim or action related to this Agreement in any other jurisdiction or venue. The foregoing provisions of this Section 11(k) shall apply irrespective of whether the Participant is a party to or bound by another restrictive covenant of any kind that may provide for or permit venue or jurisdiction with respect to such other restrictive covenant in any other court or forum (if any). |
l) | Notice. All notices given hereunder shall be in writing and, if intended for the Company, shall be addressed to it or delivered to it at its principal office in London, England to the attention of the General Counsel or its principal office in Chicago, Illinois to the attention of the Chief Human Resources Officer. If intended for the Participant, notices shall be delivered personally or shall be addressed (if sent by mail) to the Participant’s then current residence address as shown on the Company’s records, or to such other address as the Participant directs in a notice to the Company. All notices shall be deemed to be given on the date received at the address of the addressee or, if delivered personally, on the date delivered. |
m) | Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon vesting/settlement of the RSUs prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities |
n) | No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the acquisition or sale of the underlying Shares. The Participant should consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan and execution of this Agreement, before executing this Agreement or otherwise taking any action at any time related to the Plan. |
o) | Appendices. Notwithstanding any provision of this Agreement to the contrary, if the Participant resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the RSUs shall be subject to the terms and conditions set forth in Appendix A to this Agreement and to any special terms and provisions as set forth in Appendix B for the Participant’s country, if any. Moreover, if the Participant relocates to one of the countries included in Appendix B, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendices A and B constitute part of this Agreement. |
p) | Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign or accept any additional agreements or undertakings that may be necessary to accomplish the foregoing. |
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: | April 26, 2019 | /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: | April 26, 2019 | /s/ CHRISTA DAVIES |
Christa Davies Chief Financial Officer | ||
/s/ GREGORY C. CASE | |
Gregory C. Case Chief Executive Officer | |
April 26, 2019 | |
/s/ CHRISTA DAVIES | |
Christa Davies Chief Financial Officer | |
April 26, 2019 | |
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Apr. 25, 2019 |
|
| Document and Entity Information | ||
| Entity Registrant Name | Aon plc | |
| Entity Central Index Key | 0000315293 | |
| Document Type | 10-Q | |
| Document Period End Date | Mar. 31, 2019 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Emerging Growth Company | false | |
| Entity Small Business | false | |
| Entity Common Stock, Shares Outstanding | 240,521,662 | |
| Document Fiscal Year Focus | 2019 | |
| Document Fiscal Period Focus | Q1 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Statement of Comprehensive Income [Abstract] | ||
| Net income | $ 676 | $ 610 |
| Less: Net income attributable to noncontrolling interests | 17 | 16 |
| Net income attributable to Aon shareholders | 659 | 594 |
| Other comprehensive income, net of tax: | ||
| Change in fair value of financial instruments | 7 | 14 |
| Foreign currency translation adjustments | 133 | 247 |
| Postretirement benefit obligation | 31 | 48 |
| Total other comprehensive income | 171 | 309 |
| Less: Other comprehensive income attributable to noncontrolling interests | 2 | 3 |
| Total other comprehensive income attributable to Aon shareholders | 169 | 306 |
| Comprehensive income (loss) attributable to Aon shareholders | $ 828 | $ 900 |
Condensed Consolidated Statements of Financial Position (Parenthetical) - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|
| 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) | 240,900,000 | 240,100,000 |
Condensed Consolidated Statement of Shareholders' Equity Unaudited (Parenthetical) - $ / shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Statement of Stockholders' Equity [Abstract] | ||
| Dividends (in dollars per share) | $ 0.40 | $ 0.36 |
Basis of Presentation |
3 Months Ended |
|---|---|
Mar. 31, 2019 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements and Notes thereto (the “Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries (“Aon” or the “Company”). Intercompany accounts and transactions have been eliminated. The 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 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, 2018. The results for the three months ended March 31, 2019 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2019. Use of Estimates The preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.
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Accounting Principles and Practices |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Principles and Practices | Accounting Principles and Practices Adoption of New Accounting Standards Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued new accounting guidance related to reclassification of certain tax effects from accumulated other comprehensive income. The guidance allowed a reclassification from accumulated comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The guidance was effective for the Company in the first quarter of 2019. There was no impact on the net income of the Company as Aon did not elect to reclassify stranded tax effects on the Condensed Consolidated Statement of Financial Position. It is the Company’s policy to release income tax effects from accumulated other comprehensive loss using the portfolio approach. Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued new accounting guidance on targeted improvements to accounting for hedging activities. The new guidance amended its hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The guidance eliminated the requirement to separately measure and report hedge ineffectiveness and required the effect of a hedging instrument to be presented in the same income statement line as the hedged item. The new guidance was effective for Aon in the first quarter of 2019 and the Company adopted it on a modified retrospective basis with no cumulative effect adjustment to accumulated other comprehensive income or corresponding adjustment to Retained earnings. Changes to the Condensed Consolidated Statement of Income and financial statement disclosures were applied prospectively. Under the new guidance, gains or losses on derivative hedges are recognized in revenue as compared to other income (expense) under the previous guidance. The adoption of this guidance had no impact on the net income of the Company. Leases In February 2016, the FASB issued a new accounting standard on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new standard, a lessee is required to recognize in the Consolidated Statements of Financial Position, liabilities to make future lease payments and right-of-use (“ROU”) assets representing its right to use the underlying assets for the lease term. The recognition, measurement, timing, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous U.S. GAAP. The Company adopted the new standard as of January 1, 2019, using the modified retrospective approach for all leases existing at, or entered into after, the period of adoption. Under this approach, prior periods were not restated. Rather, lease balances and other disclosures for prior periods were provided in the notes to the financial statements as previously reported, and the cumulative effect of initially applying the guidance was recognized in the Condensed Consolidated Statement of Financial Position. The modified retrospective approach includes several optional practical expedients available that entities may elect to apply upon transition. 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. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows a lessee to carryforward their population of existing leases, the classification of each lease, as well as the treatment of initial direct costs as of the period of adoption. In addition, the Company elected the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. Lastly, the Company did not elect the practical expedient related to hindsight analysis which allows a lessee to use hindsight in determining the lease term and in assessing impairment of the entity’s ROU assets. The Company has made a policy election to not recognize ROU assets and lease liabilities that arise from leases with an initial term of twelve months or less on the Condensed Consolidated Statements of Financial Position. However, the Company will recognize these lease payments in the Condensed Consolidated Statements of Income on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. The Company has chosen to apply this accounting policy across all classes of underlying assets. Additionally, upon adoption, the Company utilized a discount rate to determine the present value of the lease payments based on information available as of January 1, 2019. Beginning January 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019. Upon adoption, the Company recognized ROU assets and lease liabilities of $1.1 billion and $1.3 billion, respectively. The standard had an insignificant impact on the Condensed Consolidated Statements of Income and no impact on the Condensed Consolidated Statements of Cash Flows. Refer to Note 20 “Lease Commitments” for further information including significant assumptions and judgments made. As a result of applying the modified retrospective approach to adopt the new leasing standard, the following adjustments were made to the Condensed Consolidated Statements of Financial Position as of January 1, 2019 (in millions):
Accounting Standards Issued But Not Yet Adopted Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued new accounting guidance related to the disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. The guidance requires sponsors of these plans to provide additional disclosures, including weighted average interest rates used in the entity’s cash balance pension plans and a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period, and eliminates certain previous disclosure requirements. The guidance is effective for Aon in the first quarter of 2021 with early adoption permitted and will be applied retrospectively. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption. 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 Step 2. 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. The Company is currently evaluating the period of adoption, but does not expect a significant impact on the Financial Statements. Credit Losses In June 2016, the FASB issued a new accounting standard on the measurement of credit losses on financial instruments. The new standard 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 standard through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the standard is effective. The standard is effective for Aon in the first quarter of 2020 and early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its Financial Statements and the period of adoption.
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Revenue from Contracts with Customers |
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| Revenue from Contracts with Customers | Revenue from Contracts with Customers Disaggregation of Revenue The following table summarizes revenue from contracts with customers by principal service line (in millions):
Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):
Contract Costs An analysis of the changes in the net carrying amount of costs to fulfill contracts with customers are as follows (in millions):
An analysis of the changes in the net carrying amount of costs to obtain contracts with customers are as follows (in millions):
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Cash and Cash Equivalents and Short-term Investments |
3 Months Ended |
|---|---|
Mar. 31, 2019 | |
| 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 March 31, 2019, Cash and cash equivalents and Short-term investments were $734 million compared to $828 million at December 31, 2018, a decrease of $94 million. Of the total balances, $140 million and $91 million were restricted as to their use at March 31, 2019 and December 31, 2018, respectively. Included within Cash and cash equivalents as of March 31, 2019, was $48 million of pledged cash, which was released on April 1, 2019. Included within Short-term investments as of March 31, 2019 and December 31, 2018 was £42.7 million ($56.4 million at March 31, 2019 exchange rates and $53.9 million at December 31, 2018 exchange rates) of operating funds required to be held by the Company in the United Kingdom (the “U.K.”) by the Financial Conduct Authority (the “FCA”), a U.K.-based regulator.
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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 are 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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Discontinued Operations |
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| Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | Discontinued Operations On February 9, 2017, the Company entered into a Purchase Agreement with Tempo Acquisition, LLC (the “Purchase Agreement”) to sell its benefits administration and business process outsourcing business (the “Divested Business”) to an entity formed and controlled by affiliates of The Blackstone Group L.P. (the “Buyer”) 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 and liabilities, for a purchase price of $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and deferred consideration of up to $500 million (the “Transaction”). 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. The financial results of the Divested Business for the three months ended March 31, 2019 and 2018 are presented as Income from discontinued operations on the Company’s Condensed Consolidated Statements of Income. The following table presents the financial results of the Divested Business (in millions):
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Restructuring |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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. The Company expects these restructuring activities and related expenses to affect continuing operations through the fourth quarter of 2019, including an estimated 4,800 to 5,400 role eliminations. In the fourth quarter of 2018, Aon expanded the Restructuring Plan, which resulted in additional expected costs of approximately $200 million, consisting of $150 million of cash investment and $50 million of non-cash charges. The Restructuring Plan is expected to result in cumulative costs of approximately $1,225 million through the end of the plan, consisting of approximately $450 million in employee termination costs, $130 million in technology rationalization costs, $65 million in lease consolidation costs, $50 million in non-cash asset impairments, and $530 million in other costs, including certain separation costs associated with the sale of the Divested Business. From the inception of the Restructuring Plan through March 31, 2019, the Company has eliminated 4,491 positions and incurred total expenses of $1,073 million 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 table summarizes restructuring and separation costs by type that have been incurred through March 31, 2019 and are estimated to be incurred through the end of the Restructuring Plan (in millions). Estimated costs by type may be revised in future periods as these assumptions are updated:
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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 Completed Acquisitions The Company completed one acquisition during the three months ended March 31, 2019 and eight acquisitions during the twelve months ended December 31, 2018. The following table includes the 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 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. 2019 Acquisitions On January 1, 2019, the Company completed the transaction to acquire Chapka Assurances SAS based in France. 2018 Acquisitions On December 31, 2018, the Company completed the transaction to acquire certain assets of Bill Beatty Insurance Agency, Inc. based in the United States. On November 15, 2018, the Company completed the transaction to acquire certain business and assets of North Harbour Insurance Services (1985) Limited, a New Zealand-based firm. On October 25, 2018, the Company completed the transaction to acquire 100% capital of GEFASS S.R.L and GE.F.IT S.R.L., Italy-based firms specialized in Bancassurance schemes. On May 9, 2018, the Company completed the transaction to acquire certain assets of 601West, a division of Lee & Hayes, P.L.L.C. based in the United States. On April 24, 2018, the Company completed the transaction to acquire Inspiring Benefits, S.L., a Spain-based firm specialized in employee loyalty, wellbeing, and rewards programs. On March 1, 2018, the Company completed the transaction to acquire the business and assets of the trade credit business of Niche International Business Proprietary Limited, a trade credit brokerage based in Johannesburg, South Africa. On March 1, 2018, the Company completed the transaction to acquire Affinity Risk Partners (Brokers) Pty. Ltd., an insurance broker in Victoria, Australia. On January 19, 2018, the Company completed the transaction to acquire substantially all of the assets of The Burchfield Group, a provider in pharmacy benefit consulting, auditing, and health plan compliance services based in the United States. Completed Dispositions The Company completed one disposition during the three months ended March 31, 2019. The Company completed no dispositions during the three months ended March 31, 2018. Total pretax gain, net of losses, for the three months ended March 31, 2019 was $5 million. Total pretax losses recognized for the three months ended March 31, 2018 was $1 million. Gains and losses recognized as a result of a disposition are included in Other income (expense) in the Condensed Consolidated Statements of Income.
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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 three months ended March 31, 2019 are as follows (in millions):
Other intangible assets by asset class are as follows (in millions):
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Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | Debt Notes On December 3, 2018, Aon Corporation issued $350 million 4.50% Senior Notes due December 2028. The Company used the net proceeds of the offering to pay down a portion of outstanding commercial paper and for general corporate purposes. On March 8, 2018, the Company’s CAD 375 million ($291 million at March 8, 2018 exchange rates) 4.76% Senior Note due March 2018 issued by a Canadian subsidiary of Aon Corporation matured and was repaid in full. Revolving Credit Facilities As of March 31, 2019, Aon plc had two primary committed credit facilities outstanding: its $900 million multi-currency United States (“U.S.”) credit facility expiring in February 2022 and its $400 million multi-currency U.S. credit facility expiring in October 2022 (collectively, the “2022 Facilities”). Each of these facilities includes customary representations, warranties and covenants, including financial covenants that require Aon to maintain specified ratios of adjusted consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”) to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At March 31, 2019, Aon did not have borrowings under the 2022 Facilities, and was in compliance with the financial covenants and all other covenants contained therein during the rolling twelve months ended March 31, 2019. Commercial Paper Aon Corporation, a wholly owned subsidiary of Aon plc, has established a U.S. commercial paper program and Aon plc has established a European multi-currency commercial paper program (collectively, the “CP Programs”). Commercial paper may be issued in aggregate principal amounts of up to $600 million under the U.S. program and €525 million under the European program, not to exceed the amount of the Company’s committed credit, which was $1.3 billion at March 31, 2019. The U.S. commercial paper program is fully and unconditionally guaranteed by Aon plc and the European multi-currency commercial paper program is fully and unconditionally guaranteed by Aon Corporation. Commercial paper outstanding, which is included in Short-term debt and current portion of long-term debt in the Company’s Condensed Consolidated Statements of Financial Position, is as follows (in millions):
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Income Taxes |
3 Months Ended |
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Mar. 31, 2019 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The effective tax rate on net income from continuing operations was 15.7% for the three months ended March 31, 2019. The effective tax rate on net income from continuing operations was 15.9% for the three months ended March 31, 2018. For the three months ended March 31, 2019, the tax rate was primarily driven by the geographical distribution of income and certain discrete items, primarily the favorable impact of shared-based payments. For the three months ended March 31, 2018, the tax rate was primarily driven by the geographical distribution of income and certain discrete items including the impact of share-based payments and a decrease in uncertain tax positions related to the statute of limitations expiration following an audit.
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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 $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014 and February 2017 for a total of $15.0 billion in repurchase authorizations. 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. The following table summarizes the Company’s Share Repurchase activity (in millions, except per share data):
At March 31, 2019, the remaining authorized amount for share repurchase under the Repurchase Program was $3.9 billion. Under the Repurchase Program, the Company has repurchased a total of 118.9 million shares for an aggregate cost of approximately $11.1 billion. Net Income Per Share Weighted average ordinary shares outstanding are as follows (in millions):
Potentially issuable shares are not included in the computation of diluted net income per share if its inclusion would be antidilutive. There were 0.1 million shares excluded from the calculation for the three months ended March 31, 2019 and March 31, 2018. Accumulated Other Comprehensive Loss Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):
(2) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense).
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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 for Aon’s material U.K., U.S., and other significant international pension plans located in the Netherlands and Canada. Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (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 obligations to them. The lump sum cash payment offer closed during 2018. For the three months ended March 31, 2018, lump sum payments from plan assets of £48 million ($68 million using March 31, 2018 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the first quarter of 2018, which in aggregate resulted in a reduction to the projected benefit obligation of £44 million ($63 million using March 31, 2018 exchange rates), as well as a non-cash settlement charge of £5 million ($7 million using average March 31, 2018 exchange rates) in the first quarter of 2018. Contributions The Company expects to make cash contributions of approximately $80 million, $46 million, and $19 million, based on exchange rates as of December 31, 2018, to its significant U.K., U.S., and other significant international pension plans, respectively, during 2019. During the three months ended March 31, 2019, cash contributions of $23 million, $17 million, and $7 million were made to the Company’s significant U.K., U.S., and other significant international pension plans, respectively. During the three months ended March 31, 2018, cash contributions of $23 million, $17 million, and $8 million were made to the Company’s significant U.K., U.S., and other significant international pension plans, respectively.
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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 plc 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, except fair value):
Unamortized deferred compensation expense amounted to $366 million as of March 31, 2019, with a remaining weighted average amortization period of approximately 2 years. Performance Share Awards The vesting of PSAs is contingent upon meeting a cumulative level of earnings per share related 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 Aon plc ordinary shares 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 in the Condensed Consolidated Statements of Income, if necessary. Dividend equivalents are not paid on PSAs. The following table summarizes the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the three months ended March 31, 2019 and the years ended December 31, 2018 and 2017, respectively (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 or other transactions denominated in a currency that differs from 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 2 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 1 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):
The amounts of derivative gains (losses) recognized in the Financial Statements are as follows (in millions):
The amounts of derivative gains (losses) reclassified from Accumulated other comprehensive loss into the Condensed Consolidated Statements of Income are as follows (in millions):
The Company estimates that approximately $10 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified in to earnings in the next twelve months. During the three months ended March 31, 2019, the Company recorded a gain of $5 million in Other income (expense) for foreign exchange derivatives not accounted for as hedges. During the three months ended March 31, 2018, the Company recorded a gain of $9 million in Other income (expense) for foreign exchange derivatives not accounted for 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. The Company has 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 loss, to the extent it is effective as a hedge. The foreign currency translation adjustment of the hedged net investments is also recorded in Accumulated other comprehensive loss. Ineffective portions of net investment hedges, if any, are reclassified from Accumulated other comprehensive loss into earnings during the period of change. As of March 31, 2019, the Company has €220 million ($248 million at March 31, 2019 exchange rates) of outstanding euro-denominated commercial paper designated as a hedge of the foreign currency exposure of its net investment in its European operations. As of March 31, 2019, the unrealized gain recognized in Accumulated other comprehensive loss related to the net investment non derivative hedging instrument was $23 million. The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive loss to earnings during the three months ended March 31, 2019 and 2018.
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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 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 issuance costs, discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements. The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2019 and December 31, 2018 (in millions):
There were no transfers of assets or liabilities between fair value hierarchy levels in either the three months ended March 31, 2019 or 2018. The Company recognized no realized or unrealized gains or losses in the Condensed Consolidated Statements of Income during either the three months ended March 31, 2019 or 2018, 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 provides the carrying value and fair value for the Company’s term debt (in millions):
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Claims, Lawsuits and Other Contingencies |
3 Months Ended |
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Mar. 31, 2019 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Claims, Lawsuits and Other Contingencies | Claims, Lawsuits, and Other Contingencies Legal Aon and its subsidiaries are subject to numerous claims, tax assessments, lawsuits and proceedings that arise in the ordinary course of business, which frequently include errors and omissions (“E&O”) claims. The damages claimed in these matters are or may be substantial, including, in many instances, claims for punitive, treble or extraordinary damages. While Aon maintains meaningful E&O insurance and other insurance programs to provide protection against certain losses that arise in such matters, Aon has exhausted or materially depleted its coverage under some of the policies that protect the Company and, consequently, is self-insured or materially self-insured for some claims. Accruals for these exposures, and related insurance receivables, when applicable, are included in the Condensed Consolidated Statements of Financial Position and have been recognized in Other general expenses in the Condensed Consolidated Statements of Income to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Matters that are not probable and reasonably estimable are not accrued for in the financial statements. 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 $0.1 billion, exclusive of any insurance coverage. These estimates are based on available information as of the date of this filing. 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 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 ($59 million at March 31, 2019 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 ($92 million at March 31, 2019 exchange rates). In February 2018, the claimants instructed new lawyers and added their previous lawyers as defendants to the Aon lawsuit. Claimants have alleged that the previous lawyers were responsible for some of the losses sought from Aon because the lawyers gave negligent legal advice during the course of the High Court and Court of Appeal proceedings. 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 ($127 million at March 31, 2019 exchange rates) plus interest and costs. In April 2019, the case was settled with no admission of liability on the part of Aon. The terms of this settlement did not have a significant impact on Aon’s results of operations or financial condition. On October 3, 2017, Christchurch City Council (“CCC”) invoked arbitration to pursue a claim that it asserts against Aon New Zealand. Aon provided insurance broking services to CCC in relation to CCC’s 2010-2011 material damage and business interruption program. In December 2015, CCC settled its property and business interruption claim for its losses arising from the 2010-2011 Canterbury earthquakes against the underwriter of its material damage and business interruption program and the reinsurers of that underwriter. CCC contends that acts and omissions by Aon caused CCC to recover less in that settlement than it otherwise would have. CCC claims damages of approximately NZD 528 million ($365 million at March 31, 2019 exchange rates) plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims. A retail insurance brokerage subsidiary of Aon was sued on September 6, 2018 in the United States District Court for the Southern District of New York by a client, Pilkington North America, Inc., that sustained damage from a tornado to its Ottawa, Illinois property. The lawsuit seeks between $45 million and $85 million in property and business interruption damages from either its insurer or Aon. The insurer contends that insurance proceeds were limited to $15 million in coverage by a windstorm sub-limit purportedly contained in the policy procured by Aon for Pilkington. The insurer therefore has tendered $15 million to Pilkington and denied coverage for the remainder of the loss. Pilkington sued the insurer and Aon seeking full coverage for the loss from the insurer or, in the alternative, seeking the same damages against Aon on various theories of professional liability if the court finds that the $15 million sub-limit applies to the claim. Aon believes it has meritorious defenses and intends to vigorously defend itself against these claims. In April 2017, the FCA announced 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. The European Commission has now assumed jurisdiction over the investigation in place of the FCA. Other antitrust agencies outside the European Union are also conducting formal or informal investigations regarding these matters. Aon intends to work diligently with all antitrust agencies concerned to ensure they can carry out their work as efficiently as possible. At this time, in light of the uncertainties and many variables involved, Aon 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 the Company’s consolidated financial position, results of operations, or liquidity. Guarantees and Indemnifications 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 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. Redomestication In connection with 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), and (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). 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 such leases at any time during the remainder of the lease agreements, which expire on various dates through 2024. As of March 31, 2019, the undiscounted maximum potential future payments under the lease guarantee is $81 million, with an estimated fair value of $16 million. No cash payments were made in connection to the lease commitments during the three months ended March 31, 2019. 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 arrangements, the Company would be required to fulfill the remaining contract terms, which expire on various dates through 2023. As of March 31, 2019, the undiscounted maximum potential future payments under the performance guarantees were $179 million, with an estimated fair value of $1 million. No cash payments were made in connection to the performance guarantees during the three months ended March 31, 2019. 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 $92 million at March 31, 2019, compared to $83 million at December 31, 2018. These LOCs 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 $76 million at March 31, 2019 compared to $103 million at December 31, 2018.
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Segment Information |
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Mar. 31, 2019 | |
| Segment Reporting [Abstract] | |
| Segment Information | Segment Information The Company operates 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 Chief Operating Decision Maker (the “CODM”) assesses the performance of the Company and allocates resources based on one segment: 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. As Aon operates as one segment, segment profit or loss is consistent with consolidated reporting as disclosed on the Condensed Consolidated Statements of Income. Refer to Note 3 “Revenue from Contracts with Customers” for further information on revenue by principal service line.
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Guarantee of Registered Securities |
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| Guarantee of Registered Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guarantee of Registered Securities | Guarantee of Registered Securities As described in Note 17 “Claims, Lawsuits, and Other 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 Corporation Notes”). Additionally, Aon plc has guaranteed the obligations of Aon Corporation arising under the 4.50% Senior Notes due 2028. 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 Corporation Notes. In addition, Aon Corporation entered into an agreement pursuant to which it guaranteed 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 has also guaranteed 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. In the forth quarter of 2018, Aon plc obtained direct ownership in two subsidiaries that were previously indirectly owned by Aon Corporation. In the first quarter of 2019, Aon Corporation obtained indirect ownership of subsidiaries that were previously indirectly owned by Aon plc. The financial results of both subsidiaries are included in the Other Non-Guarantor Subsidiaries column of the Condensed Consolidating Financial Statements. The Company has retrospectively reflected the impact of these transactions on the Condensed Consolidating Statements of Income and Condensed Consolidating Statements of Comprehensive Income for the periods ended March 31, 2018 and the Condensed Consolidated Statement of Financial Position as of December 31, 2018. The following tables set forth Condensed Consolidating Statements of Income and Condensed Consolidating Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018, Condensed Consolidating Statements of Financial Position as of March 31, 2019 and December 31, 2018, and Condensed Consolidating Statements of Cash Flows for the three months ended March 31, 2019 and 2018 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 Other Non-Guarantor Subsidiaries. The Condensed Consolidating Financial Statements are presented in all periods as a merger under common control. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions. Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Cash Flows
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| Lease Commitments | Lease Commitments The Company leases office facilities, equipment, and automobiles under non-cancelable operating and finance leases. The Company’s lease obligations are primarily for the use of office space. The Company evaluates if a leasing arrangement exists upon inception of a contract. A contract contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Identified property, plant, or equipment may include a physically distinct portion of a larger asset, or a portion of an asset that represents substantially all of the capacity of the asset but is not physically distinct. In addition, the Company assesses whether a contract implicitly contains the right to control the use of a tangible asset that is not already owned. In addition, the Company subleases certain real estate properties to third parties, which consist of operating leases. The Company’s leases expire at various dates and may contain renewal and expansion options. The Company’s leases do not typically contain termination options. The exercise of lease renewal and expansion options are at the Company’s sole discretion and are only included in the determination of the lease term if the Company is reasonably certain to exercise the option. The Company’s lease agreements typically do not contain any material residual value guarantees or restrictive covenants. ROU assets and lease liabilities are based on the present value of the minimum lease payments over the lease term. As stated in Note 2 “Accounting Principles and Practices”, the Company has elected the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration received in a contract as a single lease component. A portion of the Company’s lease agreements include variable lease payments which are not recorded in the initial measurement of the lease liability and ROU asset balances. For real estate arrangements, base rental payments may be escalated according to annual changes in the Consumer Price Index (“CPI”). The escalated rental payments based on the estimated CPI at the lease commencement date are included within minimum rental payments; however, changes in CPI are considered variable in nature and are recognized as variable lease costs in the period in which the obligation is incurred. Additionally, real estate lease agreements may include other variable payments related to operating expenses charged by the landlord based on actual expenditures. Information technology equipment agreements may include variable payments based on usage of the equipment. The Company utilizes discount rates to determine the present value of the lease payments based on information available at the commencement date of the lease. The Company uses an incremental borrowing rate based on factors such as the lease term and the economic environment the lease exists to determine the appropriate present value of future lease payments as the rate implicit in the lease is not always readily available. When determining the incremental borrowing rate, the Company considers the rate of interest it would pay on a secured borrowing in an amount equal to the lease payments for the underlying asset under similar terms. Operating leases are included in Operating lease right-of-use assets, Other current liabilities, and Non-current operating lease liabilities on the Condensed Consolidated Statements of Financial Position. Finance leases are included in Other non-current assets, Other current liabilities, and Other non-current liabilities on the Condensed Consolidated Statements of Financial Position. The classification of operating and finance lease asset and liability balances within the Condensed Consolidated Statements of Financial Position is as follows (in millions):
The components of lease costs are as follows (in millions):
(1) Short-term lease cost does not include expenses related to leases with a lease term of one month or less. Maturity analysis of operating and financing leases as of March 31, 2019 are as follows (in millions):
Weighted average remaining lease term and discount rate related to operating and finance leases are as follows:
Other cash and non-cash related activities are as follows (in millions):
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| Lease Commitments | Lease Commitments The Company leases office facilities, equipment, and automobiles under non-cancelable operating and finance leases. The Company’s lease obligations are primarily for the use of office space. The Company evaluates if a leasing arrangement exists upon inception of a contract. A contract contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Identified property, plant, or equipment may include a physically distinct portion of a larger asset, or a portion of an asset that represents substantially all of the capacity of the asset but is not physically distinct. In addition, the Company assesses whether a contract implicitly contains the right to control the use of a tangible asset that is not already owned. In addition, the Company subleases certain real estate properties to third parties, which consist of operating leases. The Company’s leases expire at various dates and may contain renewal and expansion options. The Company’s leases do not typically contain termination options. The exercise of lease renewal and expansion options are at the Company’s sole discretion and are only included in the determination of the lease term if the Company is reasonably certain to exercise the option. The Company’s lease agreements typically do not contain any material residual value guarantees or restrictive covenants. ROU assets and lease liabilities are based on the present value of the minimum lease payments over the lease term. As stated in Note 2 “Accounting Principles and Practices”, the Company has elected the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration received in a contract as a single lease component. A portion of the Company’s lease agreements include variable lease payments which are not recorded in the initial measurement of the lease liability and ROU asset balances. For real estate arrangements, base rental payments may be escalated according to annual changes in the Consumer Price Index (“CPI”). The escalated rental payments based on the estimated CPI at the lease commencement date are included within minimum rental payments; however, changes in CPI are considered variable in nature and are recognized as variable lease costs in the period in which the obligation is incurred. Additionally, real estate lease agreements may include other variable payments related to operating expenses charged by the landlord based on actual expenditures. Information technology equipment agreements may include variable payments based on usage of the equipment. The Company utilizes discount rates to determine the present value of the lease payments based on information available at the commencement date of the lease. The Company uses an incremental borrowing rate based on factors such as the lease term and the economic environment the lease exists to determine the appropriate present value of future lease payments as the rate implicit in the lease is not always readily available. When determining the incremental borrowing rate, the Company considers the rate of interest it would pay on a secured borrowing in an amount equal to the lease payments for the underlying asset under similar terms. Operating leases are included in Operating lease right-of-use assets, Other current liabilities, and Non-current operating lease liabilities on the Condensed Consolidated Statements of Financial Position. Finance leases are included in Other non-current assets, Other current liabilities, and Other non-current liabilities on the Condensed Consolidated Statements of Financial Position. The classification of operating and finance lease asset and liability balances within the Condensed Consolidated Statements of Financial Position is as follows (in millions):
The components of lease costs are as follows (in millions):
(1) Short-term lease cost does not include expenses related to leases with a lease term of one month or less. Maturity analysis of operating and financing leases as of March 31, 2019 are as follows (in millions):
Weighted average remaining lease term and discount rate related to operating and finance leases are as follows:
Other cash and non-cash related activities are as follows (in millions):
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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 (the “Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries (“Aon” or the “Company”). Intercompany accounts and transactions have been eliminated. The 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 EstimatesThe preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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 Standards | Adoption of New Accounting Standards Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued new accounting guidance related to reclassification of certain tax effects from accumulated other comprehensive income. The guidance allowed a reclassification from accumulated comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The guidance was effective for the Company in the first quarter of 2019. There was no impact on the net income of the Company as Aon did not elect to reclassify stranded tax effects on the Condensed Consolidated Statement of Financial Position. It is the Company’s policy to release income tax effects from accumulated other comprehensive loss using the portfolio approach. Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued new accounting guidance on targeted improvements to accounting for hedging activities. The new guidance amended its hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The guidance eliminated the requirement to separately measure and report hedge ineffectiveness and required the effect of a hedging instrument to be presented in the same income statement line as the hedged item. The new guidance was effective for Aon in the first quarter of 2019 and the Company adopted it on a modified retrospective basis with no cumulative effect adjustment to accumulated other comprehensive income or corresponding adjustment to Retained earnings. Changes to the Condensed Consolidated Statement of Income and financial statement disclosures were applied prospectively. Under the new guidance, gains or losses on derivative hedges are recognized in revenue as compared to other income (expense) under the previous guidance. The adoption of this guidance had no impact on the net income of the Company. Leases In February 2016, the FASB issued a new accounting standard on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new standard, a lessee is required to recognize in the Consolidated Statements of Financial Position, liabilities to make future lease payments and right-of-use (“ROU”) assets representing its right to use the underlying assets for the lease term. The recognition, measurement, timing, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous U.S. GAAP. The Company adopted the new standard as of January 1, 2019, using the modified retrospective approach for all leases existing at, or entered into after, the period of adoption. Under this approach, prior periods were not restated. Rather, lease balances and other disclosures for prior periods were provided in the notes to the financial statements as previously reported, and the cumulative effect of initially applying the guidance was recognized in the Condensed Consolidated Statement of Financial Position. The modified retrospective approach includes several optional practical expedients available that entities may elect to apply upon transition. 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. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows a lessee to carryforward their population of existing leases, the classification of each lease, as well as the treatment of initial direct costs as of the period of adoption. In addition, the Company elected the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. Lastly, the Company did not elect the practical expedient related to hindsight analysis which allows a lessee to use hindsight in determining the lease term and in assessing impairment of the entity’s ROU assets. The Company has made a policy election to not recognize ROU assets and lease liabilities that arise from leases with an initial term of twelve months or less on the Condensed Consolidated Statements of Financial Position. However, the Company will recognize these lease payments in the Condensed Consolidated Statements of Income on a straight-line basis over the lease term and variable lease payments in the period in which the obligation is incurred. The Company has chosen to apply this accounting policy across all classes of underlying assets. Additionally, upon adoption, the Company utilized a discount rate to determine the present value of the lease payments based on information available as of January 1, 2019. Beginning January 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019. Upon adoption, the Company recognized ROU assets and lease liabilities of $1.1 billion and $1.3 billion, respectively. The standard had an insignificant impact on the Condensed Consolidated Statements of Income and no impact on the Condensed Consolidated Statements of Cash Flows. Refer to Note 20 “Lease Commitments” for further information including significant assumptions and judgments made. As a result of applying the modified retrospective approach to adopt the new leasing standard, the following adjustments were made to the Condensed Consolidated Statements of Financial Position as of January 1, 2019 (in millions):
Accounting Standards Issued But Not Yet Adopted Changes to the Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued new accounting guidance related to the disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. The guidance requires sponsors of these plans to provide additional disclosures, including weighted average interest rates used in the entity’s cash balance pension plans and a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period, and eliminates certain previous disclosure requirements. The guidance is effective for Aon in the first quarter of 2021 with early adoption permitted and will be applied retrospectively. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption. 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 Step 2. 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. The Company is currently evaluating the period of adoption, but does not expect a significant impact on the Financial Statements. Credit Losses In June 2016, the FASB issued a new accounting standard on the measurement of credit losses on financial instruments. The new standard 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 standard through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the standard is effective. The standard is effective for Aon in the first quarter of 2020 and early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its Financial Statements and the period of adoption.
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| Revenue from Contract with Customer | Revenue from Contracts with Customers Disaggregation of Revenue The following table summarizes revenue from contracts with customers by principal service line (in millions):
Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):
Contract Costs An analysis of the changes in the net carrying amount of costs to fulfill contracts with customers are as follows (in millions):
An analysis of the changes in the net carrying amount of costs to obtain contracts with customers are as follows (in millions):
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| 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 or other transactions denominated in a currency that differs from 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 2 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 1 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.
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| 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 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 issuance costs, 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.
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Accounting Principles and Practices Accounting Principles and Practices (Tables) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of New Accounting Pronouncements and Changes in Accounting Principles | As a result of applying the modified retrospective approach to adopt the new leasing standard, the following adjustments were made to the Condensed Consolidated Statements of Financial Position as of January 1, 2019 (in millions):
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Revenue from Contracts with Customers (Tables) |
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| Disaggregation of Revenue | Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):
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| Capitalized Contract Cost | An analysis of the changes in the net carrying amount of costs to obtain contracts with customers are as follows (in millions):
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Other Financial Data (Tables) |
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| 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 are as follows (in millions):
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| Schedule of Other Current Assets | The components of Other current assets are as follows (in millions):
(2) December 31, 2018 includes $12 million previously classified as “Receivables from the Divested Business
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| Schedule of Other Non-current Assets | The components of Other non-current assets are as follows (in millions):
(2) Refer to Note 20 “Lease Commitments” for further information.
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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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Discontinued Operations (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | The following table presents the financial results of the Divested Business (in millions):
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Restructuring (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Costs | The following table summarizes restructuring and separation costs by type that have been incurred through March 31, 2019 and are estimated to be incurred through the end of the Restructuring Plan (in millions). Estimated costs by type may be revised in future periods as these assumptions are updated:
(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.
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| Schedule of Restructuring Reserve by Type of Cost | The changes in the Company’s liabilities for the Restructuring Plan as of March 31, 2019 are as follows (in millions):
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Acquisitions and Dispositions of Businesses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table includes the fair values of consideration transferred, assets acquired, and liabilities assumed as a result of the Company’s acquisitions (in millions):
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 three months ended March 31, 2019 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 March 31, 2019 is as follows (in millions):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt Instruments | The weighted average commercial paper outstanding and its related interest rates are as follows (in millions, except percentages):
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Shareholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Repurchase Agreements | The following table summarizes the Company’s Share Repurchase activity (in millions, except per share data):
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| Schedule of Components of Weighted Average Number of Shares | Weighted average ordinary 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):
(2) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense).
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Employee Benefits (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 for Aon’s material U.K., U.S., and other significant international pension plans located in the Netherlands and Canada. Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):
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Share-Based Compensation Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, except fair value):
(1) Represents per share weighted average fair value of award at date of grant.
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| Performance-based plans | during the three months ended March 31, 2019 and the years ended December 31, 2018 and 2017, respectively (shares in thousands and dollars in millions, except fair value):
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Derivatives and Hedging (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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):
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| Derivative gains (losses) | The amounts of derivative gains (losses) recognized in the Financial Statements are as follows (in millions):
The amounts of derivative gains (losses) reclassified from Accumulated other comprehensive loss into the Condensed Consolidated Statements of Income are as follows (in millions):
(1) With the adoption of new derivative guidance in 2019, gains (losses) on derivatives accounted for as hedges are recognized in Total revenue in the Company’s Condensed Consolidated Statements of Income rather than Other income (expense). Refer to Note 2 “Accounting Principles and Practices” for additional details.
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Fair Value Measurements and Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 March 31, 2019 and December 31, 2018 (in millions):
(2) Refer to Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.
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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 provides the carrying value and fair value for the Company’s term debt (in millions):
|
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Guarantee of Registered Securities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Guarantee of Registered Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Condensed Consolidating Statements 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
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| Condensed Consolidating Statements 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
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Lease Commitments - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets And Liabilities Of Lessee | The classification of operating and finance lease asset and liability balances within the Condensed Consolidated Statements of Financial Position is as follows (in millions):
|
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| Lease, Cost | Weighted average remaining lease term and discount rate related to operating and finance leases are as follows:
Other cash and non-cash related activities are as follows (in millions):
|
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| Lessee Operating Lease Liability Maturity | Maturity analysis of operating and financing leases as of March 31, 2019 are as follows (in millions):
|
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| Finance Lease, Liability, Maturity | Maturity analysis of operating and financing leases as of March 31, 2019 are as follows (in millions):
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| Lessor, Operating Lease, Payments to be Received, Maturity | Maturity analysis of operating and financing leases as of March 31, 2019 are as follows (in millions):
|
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Accounting Principles and Practices - (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Jan. 01, 2019 |
|---|---|---|
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
| Operating lease right-of-use assets | $ 993 | |
| Present value of lease liabilities | $ 1,330 | |
| Accounting Standards Update 2016-02 | ||
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
| Operating lease right-of-use assets | $ 1,100 | |
| Present value of lease liabilities | $ 1,300 |
Revenue from Contracts with Customers - Contract Assets Rollforward (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Capitalized Cost To Fulfill Customer Contracts | ||
| Change in Capitalized Contract Costs | ||
| Balance at beginning of period | $ 329 | $ 298 |
| Additions | 346 | 1,504 |
| Amortization | (439) | (1,465) |
| Impairment | 0 | 0 |
| Foreign currency and other | 0 | (8) |
| Balance at end of period | 236 | 329 |
| Capitalized Cost To Obtain Customer Contracts | ||
| Change in Capitalized Contract Costs | ||
| Balance at beginning of period | 156 | 145 |
| Additions | 9 | 53 |
| Amortization | (11) | (41) |
| Impairment | 0 | 0 |
| Foreign currency and other | 1 | (1) |
| Balance at end of period | $ 155 | $ 156 |
Cash and Cash Equivalents and Short-term Investments (Details) £ in Millions, $ in Millions |
3 Months Ended | |||
|---|---|---|---|---|
|
Mar. 31, 2019
USD ($)
|
Mar. 31, 2019
GBP (£)
|
Mar. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
| Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||||
| Cash and cash equivalents and short-term investments | $ 734.0 | $ 828.0 | ||
| Cash and cash equivalents and short term investments, period increase (decrease) | $ (94.0) | |||
| Restricted cash and investments | 140.0 | 91.0 | ||
| Restricted cash and cash equivalents | 48.0 | |||
| Operating funds in U.K. | £ 42.7 | $ 56.4 | $ 53.9 | |
Other Financial Data - Schedule of Other Income (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Other (Expense) Income | ||
| Foreign currency remeasurement | $ (11) | $ (16) |
| Disposal of business | 5 | (1) |
| Pension and other postretirement | 4 | 2 |
| Equity earnings | 1 | 1 |
| Financial instruments | 1 | 0 |
| Other | 0 | (1) |
| Total | $ 0 | $ (15) |
Other Financial Data - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
| Balance at beginning of period | $ 64 | $ 59 |
| Provision charged to Other general expenses | 8 | 8 |
| Accounts written off, net of recoveries | (8) | (3) |
| Foreign currency translation and other | 0 | 1 |
| Balance at end of period | $ 64 | $ 65 |
Other Financial Data - Schedule of Other Current Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Other Financial Data [Abstract] | ||
| Cost to fulfill contracts with customers | $ 236 | $ 329 |
| Prepaid expenses | 108 | 97 |
| Taxes receivable | 81 | 113 |
| Other | 106 | 79 |
| Total | $ 531 | 618 |
| Receivables from divested business | $ 12 |
Other Financial Data - Schedule of Other Non-current Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Other Financial Data [Abstract] | ||
| Cost to obtain contracts with customers | $ 155 | $ 156 |
| Taxes receivable | 99 | 100 |
| Finance lease assets | 70 | |
| Investments | 55 | 54 |
| Other | 130 | 138 |
| Total | $ 509 | $ 448 |
Other Financial Data - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
| Other Financial Data [Abstract] | ||
| Deferred revenue | $ 305 | $ 251 |
| Leases | 241 | |
| Taxes payable | 158 | 83 |
| Other | 516 | 602 |
| Total | 1,220 | 936 |
| Revenue recognized from deferred revenue | $ 134 | $ 487 |
Other Financial Data - Schedule of Other Non-current Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Other Financial Data [Abstract] | ||
| Taxes payable | $ 596 | $ 585 |
| Leases | 50 | 169 |
| Deferred revenue | 60 | 65 |
| Compensation and benefits | 44 | 56 |
| Other | 223 | 222 |
| Total | 973 | 1,097 |
| Noncurrent portion of transition tax | $ 238 | $ 240 |
Discontinued Operations (Details) - Tempo Business |
May 01, 2017
USD ($)
agreement
|
Jun. 30, 2017
USD ($)
|
|---|---|---|
| Dispositions | ||
| Number of commercial agreements | agreement | 2 | |
| Discontinued Operations, Disposed of by Sale | ||
| Dispositions | ||
| Purchase price | $ 4,300,000,000 | |
| Cash and cash equivalents from discontinued operations | $ 0 | |
| Maximum | Discontinued Operations, Disposed of by Sale | ||
| Dispositions | ||
| Purchase price | 4,200,000,000 | |
| Deferred consideration | $ 500,000,000 |
Discontinued Operations Income Statement (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Expenses | ||
| Net income from discontinued operations | $ 0 | $ 6 |
| Tempo Business | Discontinued Operations, Disposed of by Sale | ||
| Expenses | ||
| Total operating expenses | 0 | 3 |
| Loss from discontinued operations before income taxes | 0 | (3) |
| Income tax benefit | 0 | (1) |
| Net loss from discontinued operations excluding gain | 0 | (2) |
| Gain on sale of discontinued operations, net of tax | 0 | 8 |
| Net income from discontinued operations | $ 0 | $ 6 |
Restructuring - Schedule of Restructuring Reserve (Details) - 2017 Plan $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
USD ($)
| |
| Restructuring Plan | |
| Balance as of December 31, 2018 | $ 201 |
| Expensed | 88 |
| Cash payments | (113) |
| Foreign currency translation | (1) |
| Balance as of March 31, 2019 | $ 175 |
Acquisitions and Dispositions of Businesses - Acquisitions (Details) $ in Millions |
3 Months Ended | 12 Months Ended |
|---|---|---|
|
Mar. 31, 2019
USD ($)
acquisition
|
Dec. 31, 2018
USD ($)
acquisition
|
|
| Business Acquisition | ||
| Number of business acquired under business combination | acquisition | 1 | 8 |
| Assets acquired | ||
| Goodwill | $ 8,219 | $ 8,171 |
| 2019 Acquisitions | ||
| Business Combination, Consideration Transferred [Abstract] | ||
| Consideration Transferred | 17 | |
| Deferred and contingent consideration | 5 | |
| Aggregate consideration transferred | 22 | |
| Assets acquired | ||
| Cash and cash equivalents | 2 | |
| Goodwill | 15 | |
| Intangible assets, net | 9 | |
| Other assets | 4 | |
| Total assets acquired | 30 | |
| Liabilities assumed | ||
| Current liabilities | 6 | |
| Other non-current liabilities | 2 | |
| Total liabilities assumed | 8 | |
| Net assets acquired | $ 22 |
Acquisitions and Dispositions of Businesses - Dispositions (Details) $ in Millions |
3 Months Ended | |
|---|---|---|
|
Mar. 31, 2019
USD ($)
disposal
|
Mar. 31, 2018
USD ($)
disposal
|
|
| Dispositions | ||
| Disposal of business | $ | $ 5 | $ (1) |
| Disposal Group, Not Discontinued Operations | ||
| Dispositions | ||
| Number of dispositions | disposal | 1 | 0 |
- Goodwill and Other Intangible Assets Rollforward (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
USD ($)
| |
| Changes in the net carrying amount of goodwill by operating segment | |
| Beginning balance | $ 8,171 |
| Goodwill related to current year acquisitions | 15 |
| Goodwill related to disposals | (1) |
| Goodwill related to prior year acquisitions | 1 |
| Foreign currency translation and other | 33 |
| Ending balance | $ 8,219 |
- Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Intangible assets with finite lives | ||
| Gross Carrying Amount | $ 3,703 | $ 3,658 |
| Accumulated Amortization and Impairment | 2,626 | 2,509 |
| Net Carrying Amount | 1,077 | 1,149 |
| Estimated amortization for intangible assets | ||
| Remainder of 2019 | 311 | |
| 2020 | 217 | |
| 2021 | 128 | |
| 2022 | 85 | |
| 2023 | 73 | |
| 2024 | 56 | |
| Thereafter | 207 | |
| Total | 1,077 | |
| Customer related and contract based | ||
| Intangible assets with finite lives | ||
| Gross Carrying Amount | 2,282 | 2,240 |
| Accumulated Amortization and Impairment | 1,501 | 1,444 |
| Net Carrying Amount | 781 | 796 |
| Tradenames | ||
| Intangible assets with finite lives | ||
| Gross Carrying Amount | 1,030 | 1,027 |
| Accumulated Amortization and Impairment | 795 | 740 |
| Net Carrying Amount | 235 | 287 |
| Technology and other | ||
| Intangible assets with finite lives | ||
| Gross Carrying Amount | 391 | 391 |
| Accumulated Amortization and Impairment | 330 | 325 |
| Net Carrying Amount | $ 61 | $ 66 |
Debt - Schedule of Commercial Paper (Details) - Commercial paper - USD ($) $ in Millions |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
| Debt Instrument [Line Items] | |||
| Commercial paper outstanding | $ 423 | $ 250 | |
| Weighted average commercial paper outstanding | $ 323 | $ 125 | |
| Weighted average interest rate of commercial paper outstanding | 0.49% | (0.50%) | |
Income Taxes (Details) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Income Tax Disclosure [Abstract] | ||
| Effective income tax rate | 15.70% | 15.90% |
Shareholders' Equity - Schedule of Stock Repurchases (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 84 Months Ended | |
|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Mar. 31, 2019 |
|
| Class of Stock [Line Items] | |||
| Shares purchased (in shares) | 118.9 | ||
| Total repurchase cost | $ 101 | $ 553 | $ 11,100 |
| 2012 - Share Repurchase Program | |||
| Class of Stock [Line Items] | |||
| Shares purchased (in shares) | 0.6 | 3.9 | |
| Average price per share of stock repurchased (in dollars per share) | $ 161.16 | $ 140.94 | |
| Total repurchase cost | $ 100 | $ 550 | |
| Additional associated costs | 1 | 3 | |
| Total repurchase and associated costs | $ 101 | $ 553 | |
Share-Based Compensation Plans - Share-based compensation expenses recognized (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Total share-based compensation expense | $ 89 | $ 77 |
| Restricted share units (“RSUs”) | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Total share-based compensation expense | 63 | 58 |
| Performance share awards (“PSAs”) | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Total share-based compensation expense | 23 | 16 |
| Employee share purchase plans | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Total share-based compensation expense | $ 3 | $ 3 |
Share-Based Compensation Plans - Performance Share Awards Narrative (Details) - Performance Shares |
3 Months Ended |
|---|---|
Mar. 31, 2019 | |
| 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 |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Target PSAs granted during period (in shares) | 467 | 564 | 548 |
| Weighted average fair value per share at date of grant (in dollars per share) | $ 165 | $ 134 | $ 114 |
| Number of shares that would be issued based on current performance levels (in shares) | 467 | 838 | 1,067 |
| Unamortized expense, based on current performance levels | $ 77 | $ 70 | $ 32 |
Derivatives and Hedging - Foreign Exchange Risk Management Narrative (Details) |
3 Months Ended |
|---|---|
Mar. 31, 2019 | |
| 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 - Notional and fair values of derivative instruments (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
| Derivatives, Fair Value | ||
| Notional Amount | $ 886 | $ 915 |
| Derivative Assets | 20 | 18 |
| Derivative Liabilities | $ 1 | 8 |
| Term of derivative contract | 30 days | |
| Other Current Assets | ||
| Derivatives, Fair Value | ||
| Derivative Assets | $ 6 | 3 |
| Other non-current assets | ||
| Derivatives, Fair Value | ||
| Derivative Assets | 14 | 15 |
| Other current liabilities | ||
| Derivatives, Fair Value | ||
| Derivative Liabilities | 1 | 5 |
| Other non-current liabilities | ||
| Derivatives, Fair Value | ||
| Derivative Liabilities | 3 | |
| Derivatives accounted for as hedges | Gross foreign exchange contracts | ||
| Derivatives, Fair Value | ||
| Notional Amount | 565 | 646 |
| Derivative Assets | 20 | 17 |
| Derivative Liabilities | 1 | 2 |
| Not Designated as Hedging Instrument | Gross foreign exchange contracts | ||
| Derivatives, Fair Value | ||
| Notional Amount | 321 | 269 |
| Derivative Assets | 0 | 1 |
| Derivative Liabilities | $ 0 | $ 6 |
Derivatives and Hedging - Interest Rate Management Risk Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
| Derivative [Line Items] | ||
| Estimated pretax losses currently included within Accumulated Other Comprehensive Loss that will be reclassified to earnings in next twelve months | $ (10) | |
| Not Designated as Hedging Instrument | Gross foreign exchange contracts | ||
| Derivative [Line Items] | ||
| Derivative gain (loss) | $ (5) | $ (9) |
Derivatives and Hedging - Foreign Hedge (Details) - 3 months ended Mar. 31, 2019 - Net Investment Hedging € in Millions, $ in Millions |
USD ($) |
EUR (€) |
|---|---|---|
| Derivatives, Fair Value | ||
| European denominated commercial paper | $ 248 | € 220 |
| Effective portion of loss reclassified from Accumulated OCI | $ 23 |
Fair Value Measurements and Financial Instruments - Schedule of financial instruments where the carrying amounts and fair values differ (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
|---|---|---|
| Carrying Value | ||
| Fair value of financial instrument | ||
| Long-term debt | $ 5,990 | $ 5,993 |
| Fair Value | Fair Value, Inputs, Level 2 | ||
| Fair value of financial instrument | ||
| Long-term debt | $ 6,344 | $ 6,159 |
Segment Information (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
segment
metric
revenue_line
| |
| Segment Reporting [Abstract] | |
| Number of reportable segments | 1 |
| Number of revenue lines | revenue_line | 5 |
| Number of performance metrics | metric | 4 |
| Number of operating segments | 1 |
Lease Commitments - Assets and Liabilities of Lessee (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
|---|---|
| Assets | |
| Operating lease right-of-use assets | $ 993 |
| Finance lease assets | 70 |
| Total lease assets | 1,063 |
| Current lease liabilities | |
| Operating | 214 |
| Finance | 27 |
| Non-current lease liabilities | |
| Operating | 978 |
| Finance | 50 |
| Total lease liabilities | $ 1,269 |
Lease Commitments - Lease Costs (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
USD ($)
| |
| Leases [Abstract] | |
| Operating lease cost | $ 68 |
| Finance lease cost | |
| Amortization of leased assets | 7 |
| Interest on lease liabilities | 1 |
| Variable lease cost | 6 |
| Short-term lease cost | 1 |
| Sublease income | (8) |
| Net lease cost | $ 75 |
Lease Commitments - Lease Maturity (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
|---|---|
| Operating Lease Liabilities, Payments Due [Abstract] | |
| Remainder of 2019 | $ 206 |
| 2020 | 244 |
| 2021 | 217 |
| 2022 | 192 |
| 2023 | 138 |
| Thereafter | 494 |
| Total undiscounted future minimum lease payments | 1,491 |
| Imputed interest | (161) |
| Present value of lease liabilities | 1,330 |
| Finance Lease Liabilities, Payments, Due [Abstract] | |
| Remainder of 2019 | 26 |
| 2020 | 27 |
| 2021 | 23 |
| 2022 | 2 |
| 2023 | 0 |
| Thereafter | 0 |
| Total undiscounted future minimum lease payments | 78 |
| Imputed interest | (1) |
| Present value of lease liabilities | 77 |
| Sublease Income, Payments Due [Abstract] | |
| Remainder of 2019 | (26) |
| 2020 | (31) |
| 2021 | (31) |
| 2022 | (32) |
| 2023 | (14) |
| Thereafter | 4 |
| Total undiscounted future minimum lease payments | (138) |
| Imputed interest | 0 |
| Present value of lease liabilities | (138) |
| Total | |
| Remainder of 2019 | 206 |
| 2020 | 240 |
| 2021 | 209 |
| 2022 | 162 |
| 2023 | 124 |
| Thereafter | 490 |
| Total undiscounted future minimum lease payments | 1,431 |
| Imputed interest | 162 |
| Present value of lease liabilities | $ 1,269 |
Lease Commitments - Lease Terms and Assumptions (Details) |
Mar. 31, 2019 |
|---|---|
| Weighted average remaining lease term (years) | |
| Operating leases | 8 years |
| Finance leases | 2 years 8 months 12 days |
| Weighted average discount rate | |
| Operating leases | 3.30% |
| Finance leases | 2.50% |
Lease Commitments - Cash Flow of Lessee (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2019
USD ($)
| |
| Cash paid for amounts included in the measurement of lease liabilities | |
| Operating cash flows from operating leases | $ 52 |
| ROU assets obtained in exchange for new operating lease liabilities | $ 26 |