q1 presentation - final › ... › 1q12-presentation-final.pdf · 2015-10-16 · earnings per...

Aon plcFirst Quarter 2012 ResultsM 4 2012May 4, 2012

Greg CaseGreg CaseChief Executive Officer

Christa DaviesChief Financial OfficerChief Financial Officer

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Safe Harbor StatementThis communication contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which areforward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certainrisks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potentialfactors that could impact results include: the change in global headquarters and jurisdiction of incorporation (the “Reorganization”) may effect our operations andfinancial results, including the reaction of clients, employees and other constituents, compliance with U.K. regulatory regimes or the failure to realize some of theanticipated benefits; changes in circumstances beyond Aon’s control, including changes in foreign or domestic laws, regulatory actions, orders or rulings by foreignor domestic governmental entities; the possibility that the expected efficiencies and cost savings from the merger with Hewitt Associates Inc. (“Hewitt”) will not berealized, or will not be realized within the expected time period; the risk that the Aon and Hewitt businesses will not be integrated successfully; general economicg y gconditions in different countries in which Aon does business around the world; changes in global equity and fixed income markets that could affect the return oninvested assets; fluctuations in exchange and interest rates that could influence revenue and expense; rating agency actions that could affect Aon's ability toborrow funds; funding of Aon's various pension plans; our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, and theability to achieve those cost savings; changes in the competitive environment; changes in commercial property and casualty markets and commercial premiumrates that could impact revenues; continued compliance with settlement agreements related to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws; the impact of investigations brought by U.S. state attorneys general, U.S. state insurance regulators, U.S. federal prosecutors, U.S.federal regulators, and regulatory authorities in the U.K. and other countries; the impact of class actions and individual lawsuits including client class actions,securities class actions, derivative actions and ERISA class actions; the cost of resolution of other contingent liabilities and loss contingencies, including potential, ; g g , g pliabilities arising from error and omissions claims against Aon; the extent to which Aon retains existing clients and attracts new businesses; the extent to which Aonmanages certain risks created in connection with the various services, including fiduciary and advisory services, among others, that Aon currently provides, or willprovide in the future, to clients; the extent to which Aon retains existing employees and attracts new personnel, including potential difficulties in executivesuccession planning related to our need to attract talent to London; Aon’s ability to maintain the security and privacy of confidential information belonging to itsclients or their personnel; Aon’s ability to innovate and keep pace with rapid and continuing changes in technology, industry standards and client preferences; theimpact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which Aon operates, particularly given the global scope ofAon’s businesses and the possibility of conflicting regulatory requirements across jurisdictions in which Aon does business; changes in costs or assumptionsassociated with our outsourcing and consulting engagements that affect the profitability of these engagements; and the implementation of changes to the methodsg g g g p y g g ; p gin which Aon internally process and monitors transactions. Further information concerning Aon and its business, including factors that potentially could materiallyaffect Aon's financial results, is contained in Aon's filings with the SEC. See Aon’s Annual Report on Form 10-K and Annual Report to Stockholders for the fiscalyear ended December 31, 2011 and Quarterly Reports on Form 10-Q for the subsequent fiscal quarters and other public filings with the SEC for a furtherdiscussion of these and other risks and uncertainties applicable to our businesses. Aon does not undertake, and expressly disclaims, any duty to update anyforward-looking statement whether as a result of new information, future events or changes in their respective expectations, except as required by law.

Explanation of Non-GAAP MeasuresThis communication includes supplemental information related to organic revenue and several additional measures including expenses, margins and income pershare, that exclude the effects of restructuring charges, transaction and integration costs and certain other noteworthy items that affected results for thecomparable periods. Organic revenue excludes from reported revenues the impact of foreign exchange, acquisitions, divestitures, transfers between businessunits, reimbursable expenses and unusual items. The impact of foreign exchange is determined by translating last year's revenue, expense or net income at thisyear's foreign exchange rates. Reconciliations are provided in the attached schedules. Supplemental organic revenue information and additional measures thatexclude the effects of the restructuring charges and certain other items do not affect net income or any other GAAP reported amounts. Management believes thatthese measures are important to make meaningful period-to-period comparisons and that this supplemental information is helpful to investors. They should beviewed in addition to, not in lieu of, the Company’s Consolidated Financial Statements. Industry peers provide similar supplemental information regarding their

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, , p y y p p pp g gperformance, although they may not make identical adjustments.

Key Metrics – Solid Growth Offset by F(X) and Investments

Q1’12 Highest rate of organic revenue growth since the

second quarter of 2007

Q1’11 Q1’12

1 Organic Revenue1 +2% +4% Solid growth across both Risk and HR Solutions

Reinsurance organic revenue increased +5%

1. Organic Revenue1 +2% +4%

Q1’12 Significant investments in HR Solutions and in key

talent across Asia and GRIP services in Risk

F(X) negatively impacted margin by (-10 bps)2. Operating Margin2 19.4% 18.6%

Y-o-Y change -80 bps

Delivering on remaining restructuring savings

Q1’12 F(X) negatively impacted EPS by (-$0.06)F(X) negatively impacted EPS by ( $0.06)

F(X) and investments, partially offset by restructuring savings and effective capital management

Repurchased approximately $100 million of stock

3. Earnings per Share2 $0.99 $0.98Y-o-Y change -1%

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1 Organic revenue excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items. Change in organic revenue, a non-GAAP measure, is reconciled to the corresponding U.S. GAAP percent change in revenue in Appendix A of this presentation

2 Certain noteworthy items impacted Operating Income and Earnings Per Share in the first quarter of 2012 and 2011. A Reconciliation of Non-GAAP Measures for Operating income and Diluted Earnings per Share is in Appendix B of this presentation

Organic Revenue¹ – Growth Across Every Major Business

Q1 Americas: Solid management of the renewal book

portfolio across all regions and strong new business

Q1’11 Q1’12

Risk Solutionsportfolio across all regions and strong new business growth in Latin America

International: Strong growth in Asia, New Zealand and emerging markets; Improved management of the renewal book portfolio across continental Europe despite continued macro-economic pressures

Americas 3% 4%

International 4% 4%

Retail 4% 4%

Reinsurance 0% 5% despite continued macro-economic pressures

Reinsurance: Strong new business growth in global treaty placements and a modest favorable impact from pricing internationally; Treaty book delivered highest level of organic revenue since Q2 2009

Reinsurance 0% 5%

Total Risk Solutions +3% +4%

HR SolutionsConsulting 2% 1%

Outsourcing -3% 3%

Q1 Consulting: Strong growth across businesses in

Asia, compensation consulting and investment consulting, partially offset by a decline in

Total HR Solutions -1% +3%

Total Aon +2% +4%

consulting, partially offset by a decline in discretionary demand for retirement consulting

Outsourcing: Solid growth driven by new client wins in HR BPO and healthcare exchanges, partially offset by anticipated price compression and clients losses in benefits administration

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losses in benefits administration

1 Organic revenue excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items. Change in organic revenue, a non-GAAP measure, is reconciled to the corresponding U.S. GAAP percent change in revenue in Appendix A of this presentation

Investment in the Business - Positioned for Long-Term Growth“We believe Aon is in a unique position. Solid long-term operating performance, combined withexpense discipline and strong cash flow, continues to enable substantial investment in colleagues andcapabilities to better serve clients.”

Risk Solutions HR Solutions

Roll-out of the Revenue Engine and Client Promise internationally to drive greater retention / rollover rates

Significant investments in health care exchanges enabling clients to begin the shift of their participants to a market-based, defined contribution model for healthcare

Global Risk Insight Platform (GRIP), which is the world’s leading global repository of risk and insurance placement information

Aon Broking initiative to better match client needs

model for healthcare

Expanding our Outsourcing offerings in high-growth areas such as dependent eligibility audits and absence management

gwith insurer appetite for risk

Aligning our global health and benefits platform to broaden our global distribution channel and strengthen deep brokerage capabilities

Expanding our industry-leading benefits administration services platform from large-market to middle-market

Developing new delegated solutions in investment lti d i i k t th t

Investments in key talent across Asia and in our GRIP business

Expansion of content and global footprint through announced acquisitions such as GDS in Spain and

consulting and pension risk management that leverage our total capabilities across advisory and delivery services

Expansion of our international footprint to support a global workforce with investments in key talent and

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announced acquisitions such as GDS in Spain and Access Plans in Affinity

global workforce, with investments in key talent and capabilities across Asia and emerging markets

EPS – Underlying Performance Positions Firm Long-Term“Underlying performance in the quarter reflects significant steps to strengthen our industry-leadingplatform and position Aon for long-term growth, strong free cash flow generation and increasedfinancial flexibility. While first quarter EPS results were unfavorably impacted by F(X) and investmentsin new growth opportunities, we expect to improve operating performance in the second half of 2012

d ti t ff ti l ll t it l hi hli ht d b th h f $100 illi fand continue to effectively allocate capital, as highlighted by the repurchase of $100 million ofcommon stock.”

($ millions) Q1’11 Q1’12

N t I f C ti i O ti 1 $341 $330Net Income from Continuing Operations1 $341 $330Y-o-Y change -3%

Earnings Per Share1 $0.99 $0.98 Y-o-Y change -1%

$341 $330

o c a ge %

$0.99 $0.98

Net Income¹ EPS¹Q1’11 Q1’12

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1 Certain noteworthy items impacted Earnings Per Share in the first quarter of 2012 and 2011. A Reconciliation of Non-GAAP Measures for Diluted Earnings per Share is in Appendix B of this presentation

Operating Margins – Underlying Progress Against Targets

Positive Impact Organic revenue growth of +4% Restructuring savings of ~$13 million

D li i l t i ti t

Q1’11 Q1’12Risk Solutions

($ millions)

Decline in lease termination costs

Negative Impact Integration of Glenrand and project-

related costs of $11 million (-60bps) Significant investments in key talent

Operating Income1 $399 $407Y-o-Y change +2%

Operating Margin1 21.6% 21.4%Y o Y change 20 bps Significant investments in key talent

across Asia and our GRIP platform F(X) impact of $8 million (-10 bps)

Y-o-Y change -20 bps

HR Solutions Positive ImpactHR Solutions

Operating Income1 $ 167 $ 156Y-o-Y change -7%

Operating Margin1 18.3% 16.5%

Positive Impact Organic revenue growth of +3% Restructuring and synergy savings of

~$26 million

Negative Impactg gY-o-Y change -180 bps

g p Significant investments primarily in

health care exchanges and HR BPO of ~$20 million (-210 bps)

Unfavorable revenue mix shift Impact of deferred costs of $13 million

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Long-Term Operating Margin Targets

21 1%22.1% 21.6%

26%Risk Solutions*

1. Deliver $47 million of remaining restructuring savings

and other operational improvements as of Q1’12

2 Continued rollout of Revenue Engine internationally

16.6%18.4%

19.3%21.1% 21.6% 2. Continued rollout of Revenue Engine internationally

3. Aon Broking and GRIP related initiatives

4. Increases in short-term interest rates

5. Improvements in GDP or insurance pricing

2006 2007 2008 2009 2010 2011 Target

11 4%

15.2% 15.1% 15.3%17.9%

22%HR Solutions*

1. Deliver $91 million of remaining restructuring savings

by the end of 2013 (after transfer of savings related to

the H&B business)

2 G h i h b i d i l

5.9%

11.4% 2. Growth in the core business and return on incremental

investments

3. Improvement in HR Business Process Outsourcing

8* See Appendix C for Non-GAAP reconciliation

2006 2007 2008 2009 2010 2011 Target

Unallocated Expenses & Non-Operating Segment Information

Q1’11 Q1’12QuarterlyGuidance Comments

Unallocated expenses in-line with previous

($ millions)

Unallocated Expenses1 ($32) ($34) ($35)

Interest Income $ 6 $ 3 $3 to $5

Unallocated expenses in line with previous guidance

Interest income reflects lower average rate and lower outstanding cash balances

Interest expense reflects a decrease in theInterest Expense ($63) ($59) ($60)

Other Income $15 - -

Interest expense reflects a decrease in the average rate on debt outstanding and was in-line with previous guidance

Other income includes an $18 million loss due to the unfavorable impact of exchange rates on remeasurement of assets and

Effective Tax Rate 29.0% 28.0% 28.0%

Minority interest ($9) ($11) ($10)

rates on remeasurement of assets and liabilities in non-functional currencies, offset by gains on certain long-term investments

Effective tax rate decreased 100 bps due primarily to changes in the geographical di t ib ti f iActual common shares

outstanding at 3-31-12 (million)

N/A 326.4 -distribution of income

Minority interest in-line with previous guidance

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Strong Balance Sheet and Cash Flow

Balance Sheet($ mil)

Cash Flow from Operations($ mil) Q1 reflects the seasonally weakest

cash flow quarter due to incentiveDec 31,2011

Mar 31,2012

Cash $272 $323

$155

$(15)

cash flow quarter due to incentive comp and 4% organic growth

Includes a $118 mil outflow due to transition of Hewitt incentives in Q4’10 to Aon’s calendar year end comp cycle in Q1’12

Short-Term Investments $785 $510

Total Debt $4 492 $4 454

Q1'11 Q1'12

Free Cash Flow 1

Q

Includes $31 mil increase in cash pension contributions

Total Debt $4,492 $4,454

Total Aon Stockholders’ Equity $8,078 $8,358

ee Cas o($ mil)

$99

Lower cash flow from operations and a $15 million increase in capital expenditures

Total Debt to Capital 35.7% 34.8% $(86)

Q1'11 Q1'12

Operating with elevated levels of invoicing and cash collections, approximately $400 million, related to a temporary delay in invoicing at Aon Hewitt, and expect this temporary increase to return to normalized levels by the end of 2012

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1 Free cash flow is defined as cash flow from operations less capital expenditures. Capital expenditures were $71 million in 1Q’12 and $56 million in 1Q’11

by the end of 2012

Decreasing Uses of Cash – Increasing Financial Flexibility

Capital Usage ($mil) 2011 2012 2013 2014 2015

Pension Contributions $477 $541 ↓ ↓ ↓

- Pension Expense (non-cash) $87 ↓ modestly ↓ ↓ ↓

R t t i C h $178 $147 $95 $39 $20Restructuring Cash $178 $147 $95 $39 $20 Capital Expenditures $241 $270Dividends $200 Share Repurchase $828- $5 billion of authorized share repurchase available

M & A $133

In addition to strategic benefits, the relocation of headquarters will drive increased shareholder value through:

1. Providing greater global access to expected increases in future cash flow as Aon delivers on its long-term operating margin targets while certain required uses of cash, such as restructuring costs and pension contributions, decline over the next several years

2. Enabling us to access approximately $300 million of excess capital held internationally on our balance sheet upon g pp y $ p y pconsummation of the transaction

3. Increasing future cash flows through a significant reduction in our global tax rate over the long term due to changes in the geographic distribution of income, similar to the reduction achieved over the last five years, allowing us to remain competitive with certain global competitors

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4. Delivering increased shareholder value as we effectively allocate capital through share repurchases and dividends

Summary – Continued Long-Term Value Creation

Positioned for growth in 2012

Significant leverage to an improving global economy and insurance pricing

Investing in colleagues and capabilities around the globe to better serve clients

Opportunity for long-term operating margin improvement

Strong balance sheet and cash flow generation

Increased financial flexibility and effective capital allocation will drive shareholder value

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A diAppendix

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Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue

(millions)Mar. 31,

2012Mar. 31,

2011Percent Change

Less: Currency Impact (1)

Less: Acquisitions, Divestitures &

Other

Organic Revenue

Growth (2)

First Quarter Ended

Commissions, Fees and OtherRisk Solutions Segment:

Retail brokerageAmericas 651$ 631$ 3 % (1) % - % 4 %International 843 822 3 (2) 1 4

Total Retail brokerage 1,494 1,453 3 (2) 1 4 g , , ( )Reinsurance brokerage 399 387 3 (1) (1) 5

Total Risk Solutions 1,893 1,840 3 (2) 1 4 HR Solutions Segment:

380 371 2 (1) 2 1 Outsourcing 568 552 3 (1) 1 3 Intrasegment (3) (8) N/A N/A N/A N/A

Consulting services

g ( ) ( )Total HR Solutions 945 915 3 (1) 1 3

Total Operating Segments 2,838$ 2,755$ 3 % (1) % - % 4 %

(1) Currency impact is determined by translating last year's revenue at this year's foreign exchange rates.

(2) Organic revenue excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items.

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Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings per ShareAon plcReconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings Per Share (Unaudited) (1)

(millions)Risk

SolutionsHR

Solutions

Unallocated Income & Expense Total

Revenue 1,905$ 945$ (9)$ 2,841$

Operating income (loss) - as reported (2) 366$ 73$ (37)$ 402$

First Quarter Ended March 31, 2012

Operating income (loss) - as reported (2) 366$ 73$ (37)$ 402$ Restructuring charges 11 9 - 20 Intangible asset amortization 30 74 - 104 Headquarters relocation costs - - 3 3

Operating income (loss) - as adjusted 407$ 156$ (34)$ 529$

Operating margins - as adjusted 21.4% 16.5% N/A 18.6%

Risk HRUnallocated

Income &

First Quarter Ended March 31, 2011

(millions)Risk

SolutionsHR

SolutionsIncome & Expense Total

Revenue 1,851$ 915$ (7)$ 2,759$

Operating income (loss) - as reported (2) 347$ 83$ (32)$ 398$ Restructuring charges 21 9 - 30 Intangible asset amortization 31 60 - 91 Hewitt related costs - 15 - 15

Operating income (loss) - as adjusted 399$ 167$ (32)$ 534$

Operating margins - as adjusted 21.6% 18.3% N/A 19.4%Operating margins as adjusted 21.6% 18.3% N/A 19.4%

(millions except per share data) 2012 2011Operating income - as adjusted 529$ 534$

Interest income 3 6 Interest expense (59) (63) Other income (2) - 15

Income from continuing operations before income taxes -

First Quarter EndedMarch 31,

as adjusted 473 492 Income taxes (3) 132 142

Income from continuing operations - as adjusted 341 350 Less: Net income attributable to noncontrolling interests 11 9

Income from continuing operations attributable to Aon stockholders - as adjusted 330$ 341$

Diluted earnings per share from continuing operations - as adjusted 0.98$ 0.99$

Weighted average common shares outstanding - diluted 336 6 345 4

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Weighted average common shares outstanding diluted 336.6 345.4

(1) Certain noteworthy items impacting operating income in 2011 and 2010 are described in this schedule. The items shown with the caption "as adjusted" are non-GAAP measures.

(2) Beginning in Q1 2012, amounts related to gains and losses on foreign currency transactions have been inlcuded in Other income. These amounts in prior periods, which werehistorically included in Other general expenses, have been reclassified to conform with current presentation. The amount reclassified in Q1 2011 was $2 million of expense inthe Risk Solutions segment.

(3) The effective tax rate for continuing operations is 28.0% and 29.0% for the first quarters ended March 31, 2012 and 2011, respectively. Adjusting items are generally taxed atthe effective tax rate.

Appendix C: Reconciliation of Non-GAAP Measures

Full Year ended December 31, 2006 Full Year ended December 31, 2007 Full Year ended December 31, 2008 Full Year ended December 31, 2009 Full Year ended December 31, 2010 Full Year ended December 31, 2011

(millions except per share data) Risk Solutions

HR Solutions Unallocated Continuing

Risk Solutions


Risk Solutions


Risk Solutions


Risk Solutions


Risk Solutions


SegmentsReportedCommissions, fee and other $ 5,327 $ 1,278 $ (59) $ 6,546 $ 5,741 $ 1,342 $ (29) $ 7,054 $ 6,029 $ 1,353 $ (25) $ 7,357 $ 6,232 $ 1,266 $ 23 $ 7,521 $ 6,369 $ 2,110 $ (22) $ 8,457 $ 6,766 $ 4,500 $ (31) $ 11,235 Investment income 140 2 - 142 177 3 - 180 168 3 - 171 73 1 - 74 54 1 - 55 51 1 - 52

Total revenue 5,467 1,280 (59) 6,688 5,918 1,345 (29) 7,234 6,197 1,356 (25) 7,528 6,305 1,267 23 7,595 6,423 2,111 (22) 8,512 6,817 4,501 (31) 11,287

Compensation and benefits 3,320 811 41 4,172 3,457 823 61 4,341 3,707 815 59 4,581 3,777 754 66 4,597 3,664 1,316 117 5,097 3,825 2,640 102 6,567 Other general expenses 1,422 351 (17) 1,756 1,507 342 41 1,890 1,644 333 30 2,007 1,628 310 39 1,977 1,565 561 63 2,189 1,678 1,413 23 3,114

Total operating expenses 4,742 1,162 24 5,928 4,964 1,165 102 6,231 5,351 1,148 89 6,588 5,405 1,064 105 6,574 5,229 1,877 180 7,286 5,503 4,053 125 9,681

Operating income (loss) 725$ 118$ (83)$ 760$ 954$ 180$ (131)$ 1,003$ 846$ 208$ (114)$ 940$ 900$ 203$ (82)$ 1,021$ 1,194$ 234$ (202)$ 1,226$ 1,314$ 448$ (156)$ 1,606$ Operating margin 13.3% 9.2% 11.4% 16.1% 13.4% 13.9% 13.7% 15.3% 12.5% 14.3% 16.0% 13.4% 18.6% 11.1% 14.4% 19.3% 10.0% 14.2%

Health & Benefits TransferCommissions, fee and other $ 387 $ (387) $ - $ - $ 483 $ (483) $ - $ - $ 528 $ (528) $ - $ - $ 530 $ (530) $ - $ - $ 566 $ (566) $ - $ - $ 719 $ (719) $ - $ - Investment income 1 (1) - - 2 (2) - - 3 (3) - - - - - - - - - - 1 (1) - -

Total revenue 388 (388) - - 485 (485) - - 531 (531) - - 530 (530) - - 566 (566) - - 720 (720) - - ( ) ( ) ( ) ( ) ( ) ( )

Compensation and benefits 201 (201) - - 247 (247) - - 262 (262) - - 261 (261) - - 275 (275) - - 354 (354) - - Other general expenses 105 (105) - - 145 (145) - - 168 (168) - - 166 (166) - - 178 (178) - - 266 (266) - -

Total operating expenses 306 (306) - - 392 (392) - - 430 (430) - - 427 (427) - - 453 (453) - - 620 (620) - -

Operating income (loss) 82$ (85)$ -$ -$ 93$ (93)$ -$ -$ 101$ (101)$ -$ -$ 103$ (103)$ -$ -$ 113$ (113)$ -$ -$ 100$ (100)$ -$ -$ Operating margin 21.1% 21.9% 19.2% 19.2% 19.0% 19.0% 19.4% 19.4% 20.0% 20.0% 13.9% 13.9%

RestatedCommissions, fee and other $ 5,714 $ 891 $ (59) $ 6,546 $ 6,224 $ 859 $ (29) $ 7,054 $ 6,557 $ 825 $ (25) $ 7,357 $ 6,762 $ 736 $ 23 $ 7,521 $ 6,935 $ 1,544 $ (22) $ 8,457 $ 7,485 $ 3,781 $ (31) $ 11,235 Investment income 141 1 - 142 179 1 - 180 171 - - 171 73 1 - 74 54 1 - 55 52 - - 52

Total revenue 5,855 892 (59) 6,688 6,403 860 (29) 7,234 6,728 825 (25) 7,528 6,835 737 23 7,595 6,989 1,545 (22) 8,512 7,537 3,781 (31) 11,287 , ( ) , , ( ) , , ( ) , , , , , ( ) , , , ( ) ,

Compensation and benefits 3,521 610 41 4,172 3,704 576 61 4,341 3,969 553 59 4,581 4,038 493 66 4,597 3,939 1,041 117 5,097 4,179 2,286 102 6,567 Other general expenses 1,527 246 (17) 1,756 1,652 197 41 1,890 1,812 165 30 2,007 1,794 144 39 1,977 1,743 383 63 2,189 1,944 1,147 23 3,114

Total operating expenses 5,048 856 24 5,928 5,356 773 102 6,231 5,781 718 89 6,588 5,832 637 105 6,574 5,682 1,424 180 7,286 6,123 3,433 125 9,681

Operating income (loss) 807$ 36$ (83)$ 760$ 1,047$ 87$ (131)$ 1,003$ 947$ 107$ (114)$ 940$ 1,003$ 100$ (82)$ 1,021$ 1,307$ 121$ (202)$ 1,226$ 1,414$ 348$ (156)$ 1,606$ Operating margin 13.8% 4.0% 11.4% 16.4% 10.1% 13.9% 14.1% 13.0% 12.5% 14.7% 13.6% 13.4% 18.7% 7.8% 14.4% 18.8% 9.2% 14.2%

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Appendix C: Reconciliation of Non-GAAP Measures Continued

Full Year ended December 31, 2006 Full Year ended December 31, 2007 Full Year ended December 31, 2008 Full Year ended December 31, 2009 Full Year ended December 31, 2010 Full Year ended December 31, 2011

(millions except per share data) Risk Solutions


Risk Solutions


Risk Solutions


Risk Solutions


Risk Solutions


Risk Solutions


Non-GAAPAs DisclosedRevenue $ 5,467 $ 1,280 $ (59) $ 6,688 $ 5,918 $ 1,345 $ (29) $ 7,234 $ 6,197 $ 1,356 $ (25) $ 7,528 $ 6,305 $ 1,267 $ 23 $ 7,595 $ 6,423 $ 2,111 $ (22) $ 8,512 $ 6,817 $ 4,501 $ (31) $ 11,287 Contingent commissions (15) - - (15) - - - - - - - - - - - - - - - - - - - -

Revenue - as adjusted $ 5,452 $ 1,280 $ (59) $ 6,673 $ 5,918 $ 1,345 $ (29) $ 7,234 $ 6,197 $ 1,356 $ (25) $ 7,528 $ 6,305 $ 1,267 $ 23 $ 7,595 $ 6,423 $ 2,111 $ (22) $ 8,512 $ 6,817 $ 4,501 $ (31) $ 11,287

Operating income (loss) - as reporte 725 118 (83) 760 954 180 (131) 1,003 846 208 (114) 940 900 203 (82) 1,021 1,194 234 (202) 1,226 1,314 448 (156) 1,606 Restructuring charges 136 20 3 159 74 11 - 85 237 17 - 254 377 35 - 412 110 62 - 172 24 89 - 113 Hewitt related costs - - - - - - - - 2 - - 2 - - - - - 19 21 40 - 47 - 47 Legacy receivables write-off - - - - - - - - - - - - - - - - - - - - 18 - - 18 Transaction related costs - proxy - - - - - - - - - - - - - - - - - - - - - - 3 3 Pension curtailment/adjustment - - - - - - - - 6 1 1 8 (54) (20) (4) (78) - - 49 49 - - - - Anti-bribery and compliance initia - - - - - - - - 42 - - 42 7 - - 7 9 - - 9 - - - - Resolution of U.K. balance sheet reconciliation - - - - - - 15 15 - - - - - - - - - - - - - - - - Benfield integration costs - - - - - - - - - - - - 15 - - 15 - - - - - - - - Reinsurance litigation - - - - 21 - - 21 - - - - - - - - - - - - - - - - Gain on sale of Cambridge preferred stock investmentpreferred stock investment - - - - - - - - - - - - - - - - - - - - - - - - Endurance - - - - - - - - - - - - - - - - - - - - - - - - Contingent commissions (15) - - (15) - - - - - - - - - - - - - - - - - - - -

Operating income (loss) - as adjuste $ 846 $ 138 $ (80) $ 904 $ 1,049 $ 191 $ (116) $ 1,124 $ 1,133 $ 226 $ (113) $ 1,246 $ 1,245 $ 218 $ (86) $ 1,377 $ 1,313 $ 315 $ (132) $ 1,496 $ 1,356 $ 584 $ (153) $ 1,787

Operating margin - adjusted 15.5% 10.8% 13.5% 17.7% 14.2% 15.5% 18.3% 16.7% 16.6% 19.7% 17.2% 18.1% 20.4% 14.9% 17.6% 19.9% 13.0% 15.8%Interest income 69 100 64 16 15 18 Interest expense (129) (138) (126) (122) (168) (245) Other income (expense) - as adjusted (13) 22 46 34 - 24

Income before income taxes - as adjusted $ 831 $ 1,108 $ 1,230 $ 1,305 $ 1,343 $ 1,584 Income taxes (1) 270 348 340 354 388 432 Net income attributable to non-controlling interests 10 13 16 45 26 31

Income attributable to Aon stockholders - as adjusted $ 551 $ 747 $ 874 $ 906 $ 929 $ 1,121 Diluted earnings per share - as adjusted 1.61$ 2.30$ 2.87$ 3.11$ 3.12$ 3.29$ Weighted average common shares outstanding - diluted 345.8 326.9 304.5 291.1 298.1 340.9

RestatedRevenue, as adjusted $ 5,452 $ 1,280 $ (59) $ 6,673 $ 5,918 $ 1,345 $ (29) $ 7,234 $ 6,197 $ 1,356 $ (25) $ 7,528 $ 6,305 $ 1,267 $ 23 $ 7,595 $ 6,423 $ 2,111 $ (22) $ 8,512 $ 6,817 $ 4,501 $ (31) $ 11,287 Revenue, Health & Benefits transfer 388 (388) - - 485 (485) - - 531 (531) - - 530 (530) - - 566 (566) - - 720 (720) - -

Revenue - as restated $ 5,840 $ 892 $ (59) $ 6,673 $ 6,403 $ 860 $ (29) $ 7,234 $ 6,728 $ 825 $ (25) $ 7,528 $ 6,835 $ 737 $ 23 $ 7,595 $ 6,989 $ 1,545 $ (22) $ 8,512 $ 7,537 $ 3,781 $ (31) $ 11,287

Operating income (loss) - as adjuste $ 846 $ 138 $ (80) $ 904 $ 1,049 $ 191 $ (116) $ 1,124 $ 1,133 $ 226 $ (113) $ 1,246 $ 1,245 $ 218 $ (86) $ 1,377 $ 1,313 $ 315 $ (132) $ 1,496 $ 1,356 $ 584 $ (153) $ 1,787 Operating income (loss) - Health & B 82 (82) - - 93 (93) - - 101 (101) - - 103 (103) - - 113 (113) - - 100 (100) - - Restructuring charges (credits) - He 3 (3) - - 1 (1) - - 2 (2) - - 4 (4) - - 5 (5) - - 41 (41) - -

Amortization of intangible assets reported 36 2 38 36 3 39 61 4 65 90 3 93 109 45 154 110 252 362assets - reported 36 2 - 38 36 3 - 39 61 4 - 65 90 3 - 93 109 45 - 154 110 252 - 362 Amortization of intangible 2 (2) - - 2 (2) - - 2 (2) - - 3 (3) - - 5 (5) - - 19 (19) - -

Amortization of Intangible Assets 38 - - 38 38 1 - 39 63 2 - 65 93 - - 93 114 40 - 154 129 233 - 362 Operating income (loss) - as adju $ 969 $ 53 $ (80) $ 942 $ 1,181 $ 98 $ (116) $ 1,163 $ 1,299 $ 125 $ (113) $ 1,311 $ 1,445 $ 111 $ (86) $ 1,470 $ 1,545 $ 237 $ (132) $ 1,650 $ 1,626 $ 676 $ (153) $ 2,149

Operating margin - adjusted 16.6% 5.9% 14.1% 18.4% 11.4% 16.1% 19.3% 15.2% 17.4% 21.1% 15.1% 19.4% 22.1% 15.3% 19.4% 21.6% 17.9% 19.0%Income before income taxes - as adjusted $ 869 $ 1,147 $ 1,295 $ 1,398 $ 1,497 $ 1,946

Income taxes (1) 283 361 358 380 433 531 Net income attributable to non-controlling interests 10 13 16 45 26 31

Income attributable to Aon stockholders - as adjusted $ 576 $ 773 $ 921 $ 973 $ 1,038 $ 1,384 Diluted earnings per share - as adjusted 1.69$ 2.37$ 3.02$ 3.34$ 3.48$ 4.06$ Weighted average common shares outstanding - diluted 345.8 326.9 304.5 291.1 298.1 340.9

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Appendix D: Intangible Asset Amortization Schedule

Intangible Amortization by Segment

($ millions) 2009 2010 2011 2012 2013 2014 2015 2016

Risk Solutions $93 $114 $129 $120 $101 $91 $76 $66

HR Solutions - $40 $233 $297 $276 $239 $209 $175

Total $93 $154 $362 $417 $377 $330 $285 $241

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Investor RelationsScott Malchowscott malchow@aon [email protected]: 312-381-3983

Erika [email protected]: 312-381-5957

q1 presentation - final › ... › 1q12-presentation-final.pdf · 2015-10-16 · earnings per...

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