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Aon plc
(NYSE: AON)
Investor Relations Overview
May 2015
0
Greg Case
Chief Executive Officer
Christa Davies
Chief Financial Officer
Scott Malchow
SVP, IR and Corporate FP&A
1
Safe Harbor Statement
This communication contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking
statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. These forward-looking statements include information about
possible or assumed future results of our operations. All statements, other than statements of historical facts that address activities, events or developments that we expect or
anticipate may occur in the future, including such things as our outlook, future capital expenditures, growth in commissions and fees, changes to the composition or level of our
revenues, cash flow and liquidity, expected tax rates, business strategies, competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, plans
and references to future successes, are forward-looking statements. Also, when we use the words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “probably”, or
similar expressions, we are making forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward looking statements: general economic and political conditions in different
countries in which Aon does business around the world; changes in the competitive environment; fluctuations in exchange and interest rates that could influence revenue and
expense; changes in global equity and fixed income markets that could affect the return on invested assets; changes in the funding status of Aon's various defined benefit pension
plans and the impact of any increased pension funding resulting from those changes; the level of Aon’s debt limiting financial flexibility; rating agency actions that could affect Aon's
ability to borrow funds; the effect of the change in global headquarters and jurisdiction of incorporation, including differences in the anticipated benefits; changes in estimates or
assumptions on our financial statements; limits on Aon’s subsidiaries to make dividend and other payments to Aon; the impact of law suits and other contingent liabilities and loss
contingencies arising from errors and omissions and other claims against Aon; the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in
which Aon operates, particularly given the global scope of Aon’s businesses and the possibility of conflicting regulatory requirements across jurisdictions in which Aon does 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 Aon; the failure to retain and attract qualified
personnel; international risks associated with Aon’s global operations; the effect or 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; Aon’s ability to develop and implement new technology; the damage to our reputation among clients, markets or third
parties; the actions taken by third parties that preform aspects of our business operations and client services; the extent to which Aon manages certain risks created in connection
with the various services, including fiduciary and investments and other advisory services and business process outsourcing services, among others, that Aon currently provides, or
will provide in the future, to clients; Aon’s ability to grow, develop and integrate companies that it acquires or new lines of business; changes in commercial property and casualty
markets, commercial premium rates or methods of compensation; changes in the health care system or our relationships with insurance carriers; Aon’s ability to implement initiatives
intended to yield cost savings, and the ability to achieve those cost savings.
Further information concerning Aon and its business, including factors that potentially could materially affect Aon's financial results, is contained in Aon's filings with the SEC. See
Aon’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for a further discussion of these and other risks and uncertainties applicable to Aon’s businesses. Aon
does not undertake, and expressly disclaims, any duty to update any forward-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 Measures
This communication includes supplemental information related to organic revenue, free cash flow, adjusted operating margin and adjusted earnings per share, that exclude the effects
of restructuring charges, intangible asset amortization, capital expenditures, transaction and integration costs and certain other noteworthy items that affected results for the
comparable periods. Organic revenue excludes from reported revenues the impact of foreign exchange, acquisitions, divestitures, transfers between business units, reimbursable
expenses and unusual items. The impact of foreign exchange is determined by translating last year's revenue, expense or net income at this year's foreign exchange rates.
Reconciliations are provided in the attached schedules. Supplemental organic revenue information and additional measures that exclude the effects of the restructuring charges and
certain other items do not affect net income or any other GAAP reported amounts. Free cash flow is cash flow from operating activity less capital expenditures. Management believes
that these measures are important to make meaningful period-to-period comparisons and that this supplemental information is helpful to investors. They should be viewed in addition
to, not in lieu of, the Company’s Consolidated Financial Statements. Industry peers provide similar supplemental information regarding their performance, although they may not
make identical adjustments.
2
Agenda
Section 1
Industry-Leading Franchise Operating in Growing Markets
• Strong Franchise Focused on Risk, Retirement and Health
• Operating in Markets Growing Long-Term in Both Size and Complexity
Section 2
Positioned the Firm and Made Progress Against Our Plan
Section 3
•
Agenda bet
•
Agenda bullet
•
Agenda bullet
Substantial Opportunity for Further Value Creation
•
Agenda bullet
•
Agenda bullet
•
Agenda bullet
3
Industry-Leading Franchise Focused on Risk, Retirement and Health
Aon plc: Total 2014 Revenue of $12 Billion
Total 2014 Revenue by Geography
 69,000 employees across the firm
APAC
10%
 +120 countries around the world
U.S.
48%
EMEA
19%
 +500 global offices
U.K.
13%
 Two industry-leading segments
Americas
(excl. U.S.)
10%
Risk Solutions: $7.8 Billion
Aon Risk Solutions
HR Solutions: $4.2 Billion
Aon Benfield
Aon Hewitt

#1 Primary Insurance Brokerage

#1 Reinsurance Brokerage
 #1 Benefits Administration

#1 Employee Benefits Brokerage

 #1 HR Business Process Outsourcing

Leader in Captive Management
Place +$32 billion of global
premium flow

Leader in Affinity Programs
 Leader in HR Consulting

Place +$85 billion of global
premium flow
 Serve 70% of the Fortune 500
 #1 Health Care Exchanges
 Administer benefits for +23 million
participants around the globe
4
Operating in Markets Growing Long-Term in Both Size and Complexity
Global Non-Life P/C Written Premiums* ($ billions)
Risk

Magnitude and scrutiny of risk is increasing around the
globe

GDP growth drives insurable activity

Emerging markets – low penetration of insurance

New risks and threats enter the market – cyber,
pandemic, business continuity, global warming
$1,415
$1,046
2005
2006
Pace of regulatory changes is accelerating

Increasingly global workforce requires balancing local
needs with global consistency
Health
#
2010
2011
2012

U.S. Health Care Reform redefines the role of the
employer

Continuing rise in health care costs requires employer
action
Pace of regulatory changes is accelerating
2013
$32.3
$25.2
$17.9
$13.7
$10.3
$7.1
$10.9
$14.9
$18.6
2008
2012
2016E
Average Annual Healthcare Premiums for Covered Workers#
Single Coverage
Family Coverage
$17,625
$10,046
$6,093
$3,724
2004
*
^
2009
Companies need to manage growing risk in retirement
and pension schemes


2008
Global Retirement Assets ($ trillions)^
Retirement

2007
2005
2006
2007
2008
2009
2010
2011
Source: AXCO Insurance Information Services
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2014
Source: Global Markets 2013 – Retirement Markets 2013 (Cerulli Associates); Growth in a Flat World (Cerulli Associates); Global Defined Contribution
Pensions 2012: Identifying Market Opportunities (Cerulli Associates); Pension Markets in Focus 2013 (Organization for Economic5 Cooperation &
Development - OECD); Growth in DC Assets (Spence Johnson)
2012
2013
2014
Agenda
Section 1
Industry-Leading Franchise Operating in Growing Markets
• Agenda bullet
• da bullet
• Agenda bullet
Section 2
Section 3
Positioned the Firm and Made Progress Against Our Plan
•
Focused the Portfolio and Significantly Invested in Global Capabilities
•
Continued Progress Toward Long-Term Operational Targets
•
Strong Track Record of Delivering on Key Financial Metrics
•
Total Shareholder Returns Have Consistently Outperformed
Substantial Opportunity for Further Value Creation
•
Agenda bullet
•
Agenda bullet
•
Agenda bullet
6
Focused the Portfolio and Significantly Invested in Global Capabilities
Sold off one-third of Aon to focus strictly on
being a preeminent professional services firm
Significantly invested to position the firm for
long-term growth and increased operating leverage

Exited low-margin, capital intensive insurance
underwriting

Industry-leading innovation across Risk, Retirement
and Health solutions

Focused the portfolio towards higher-margin, capital
light businesses (Benfield and Hewitt acquisitions)

Unmatched data and analytics for better insight and
value proposition for clients

High recurring revenue streams

Unified approach to serving clients across the firm

Strong free cash flow generation

United as one firm capable of delivering the
best of Aon to any client around the globe
Revenue Composition
Risk Solutions
HR Solutions
Underwriting
Exchange
Solutions
32%
17%
35%
13%
83%
65%
55%
2004
2009
2014
7
Continued Progress Towards Long-Term Operating Margin Targets
Risk Solutions Operating Margin*
26.0%
21.6%
22.4%
21.6% 21.7%
22.5% 22.9%
18.2% 18.7%
16.6%
Drivers Within Our Control:
1.
Return on investments in data and analytics,
including Aon Broking and GRIP related initiatives
2.
Continued rollout of Revenue Engine internationally
3.
Expense discipline and optimization of global cost
structure, including IT and Real Estate costs
Upside Opportunity:
1.
Increases in short-term interest rates
2006
2007
2008
2009
2010
2011
2012
2013
2014
Target
2.
Improvements in global GDP or insurance pricing
HR Solutions Operating Margin*
22.0%
17.6%
14.9% 15.2% 15.3%
16.6% 16.7% 17.1%
Drivers Within Our Control:
1.
Growth in the core business and return on
incremental investments, including health care
exchanges and investment consulting
2.
Improvement in HR Business Process Outsourcing
3.
Expense discipline and optimization of global cost
structure, including IT and Real Estate costs
11.7%
5.8%
2006
*
2007
2008
2009
2010
2011
2012
2013
2014
Target
The results above represent non-GAAP measures. See Appendix for a reconciliation of non-GAAP measures to the corresponding U.S. GAAP measure.
8
Delivered Strong Financial Results and Record Free Cash Flow
Organic Revenue
Operating Margin*
19.7% 19.6%
4%
3%
3%
2%
2%
19.0%
18.6%
19.0%
19.5%
3%
16.9%
2%
15.9%
14.1%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014
-1%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Earnings Per Share*
Free Cash Flow* ($ millions)
$1,404 $1,386
$5.71
$4.89
$3.02
$3.34 $3.48
$2.37
$1,150
$1,093
$4.06 $4.21
$816
$865
$777
$1.69
$603
$360
2006 2007 2008 2009 2010 2011 2012 2013 2014
*
2006 2007 2008 2009 2010 2011 2012 2013 2014
The results above represent non-GAAP measures. See Appendix for a reconciliation of non-GAAP measures to the corresponding U.S. GAAP measure.
9
Total Return has Consistently Outperformed the Market and Peer Set
Annualized Total Shareholder Returns* (CAGR %)
Peers^
S&P Index
AON
35%
31%
Consistent outperformance with
double-digit total returns over
the long-term
30%
25%
23%
15%
10%
20%
20%
20%
14%
16% 15%
14%
15%
13%
8%
8%
7%
5%
5%
4%
0%
1-year
*
^
2-years
5-years
8-years
Total shareholder returns were calculated as of December 31, 2014.
The peer set average total return includes MMC, WSH, BRO and AJG. The detailed CAGR for each peer can be found in Appendix D.
10
10-years
Agenda
Section 1
Industry-Leading Franchise Operating in Growing Markets
• Agenda bullet
• Agenda bullet
• Agenda bullet
Section 2
Positioned the Firm and Made Progress Against Our Plan
Section 3
•
Agenda bullet
•
Agenda bulletAnda bullet
Substantial Opportunity for Further Value Creation
•
Significantly Increasing Free Cash Flow Generation
•
Strong Financial Flexibility with Full Access to Growing Free Cash Flow
•
Effectively Allocate Capital to Maximize Total Shareholder Return
•
Opportunity for Additional Leverage Further Increasing Cash Available
11
Significantly Increasing Free Cash Flow* Generation
Free Cash Flow ($ millions)
$2,300
$1,404
$1,386
$1,150
$777
$603
Key Drivers:
1.
Operational improvement as the firm makes
progress towards its long-term operating margin
targets
2.
Declining required uses of cash for pensions and
restructuring
3.
Lower cash tax payments reflecting the lower
effective tax rate
4.
Working capital improvements as the firm focuses
on closing the gap between receivables and
payables
$360
2009
2010
2011
2012
2013
2014
2017
Target
Declining Required Uses of Cash ($ millions)
Anticipated increase of $230
million annually to FCF
$654
$82
$521
$477
$31
$316
$220
^
$424
$12
$212
$160
$256
$270
$245
$252
2014
2015e
2016e
2017e
Capital Expenditures
*
$20
Pension Contributions^
Restructuring - Cash
Free cash flow is defined as cash flow from operations less capital expenditures. This non-GAAP measure does not imply or represent a precise calculation
of residual cash flow available for discretionary expenditures.
Estimate based on current actuarial assumptions as of 12/31/14 measurement date.
12
Financial Flexibility with Full Access to Growing Free Cash Flow
Aon has significant financial flexibility with access to cash generated around the globe

Compared to select industry peers or other US-based global firms, Aon does not have large pools
of trapped international cash balances

Cash generated around the globe can be brought back to the UK without any adverse
consequences to be used for capital deployment decisions and returned to shareholders
The UK’s territorial tax
system only taxes
income within that
country’s borders,
allowing income earned
internationally to be
brought back without
adverse tax
consequences or
surcharges
13
Effectively Allocate Capital to Maximize Total Shareholder Return
Aon deploys cash based on Return on Invested Capital (ROIC) on a cash on cash basis

ROIC is the focus of how the firm allocates capital in order to maximize shareholder returns

Historically, share repurchase has provided the highest ROIC, and therefore sets the benchmark
for evaluating all capital allocation decisions

Capital allocation to M&A, dividends, organic investment, debt reduction, discretionary pension
contributions, or other uses of free cash flow must beat the return of share repurchase to warrant
deployment
Uses of Free Cash Flow ($ millions)
Record $3.0 billion of capital
deployed in 2014
$3,002
$273
$479
$1,491
$204
$162
$1,368
$212
$54
$1,125
$1,102
2012
2013
Share Repurchase*
*
^
$2,250
2014
M&A^
Dividends
The Company has $5.4 billion of remaining authorization under its share repurchase program as of March 31, 2015.
Net of cash acquired.
14
Substantial Upside for Shareholders Looking Forward
+$2.3B Free Cash Flow
for the full year 2017
Divided by future share count possibility in 2017
= Free Cash Flow / share
FCF/share x current cash multiple (5 to 6% yield)
= significant upside over three year period
15
Strong Balance Sheet with Opportunity for Additional Leverage
Aon is committed to our current credit metrics and ratings:

Debt to EBITDA ratio is used to evaluate opportunity for additional leverage
o Range on a GAAP-basis is 2.0 – 2.5x

Moody’s methodology adjusts for pension liability and 6x rent expense
o Range based on Moody’s is 3.0 – 3.5x

As EBITDA grows and pension liability declines, there is opportunity for incremental debt

Incremental debt would further increase the firm’s cash available for deployment
Total Debt Outstanding ($ millions) and Debt to EBITDA Ratio
Increased debt while maintaining
a consistent leverage ratio
1.8x
1.8x
$4,165
$4,389
2012
2013
2.1x
$5,582
2014
16
Summary

Industry-leading positions operating in markets growing in size and complexity

Operating margin improvement with increased operating leverage in the business

Significant upside to an improving global economy, interest rates and insurance pricing

Historical track record of delivering strong financial results and record free cash flow

Long-term total shareholder return has outperformed over the last decade

Positioned to significantly increase free cash flow generation going forward

Strong balance sheet with opportunity for additional leverage further increasing cash available

Financial flexibility and effective capital allocation expected to drive…
….significant shareholder value creation
17
Appendix
18
Appendix
Appendix A
Reconciliation of Non-GAAP Measures – Operating Margin
Appendix B
Reconciliation of Non-GAAP Measures – Earnings Per Share
Appendix C
Reconciliation of Non-GAAP Measures – Free Cash Flow
Appendix D
Annualized Total Shareholder Returns (CAGR %)
19
Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin
(millions)
Full Year ended December 31, 2006
Risk
HR
Solutions Solutions Unallocated Continuing
GAAP Disclosures
As Reported
Total revenue
Compensation and benefits
Other general expenses
Total operating expenses
Operating income (loss)
Operating margin
$
Reclassifications
Other general expenses
Foreign currency remeasurement gains (losses) $
Compensation and benefits
Other general expenses
Total operating expenses
Operating income (loss)
Operating margin
Non-GAAP Disclosures
As Reported
Revenue - as adjusted
Operating income (loss) - as reported
Restructuring charges
Amortization of intangible assets
Hewitt related costs
Legacy receivables write-off
Transaction related costs - proxy
Headquarter relocation costs
Pension curtailment/adjustment
Anti-bribery and compliance initiatives
Resolution of U.K. balance sheet
reconciliation difference
Benfield integration costs
Reinsurance litigation
Gain on sale of Cambridge preferred stock
investment
Endurance
Contingent commissions
Operating income (loss) - as adjusted
892
(59)
6,688
6,403
860
(29)
7,234
6,728
825
(25)
7,528
6,835
737
23
7,595
610
246
856
41
(17)
24
4,172
1,756
5,928
3,704
1,652
5,356
576
197
773
61
41
102
4,341
1,890
6,231
3,969
1,812
5,781
553
165
718
59
30
89
4,581
2,007
6,588
4,038
1,794
5,832
493
144
637
66
39
105
4,597
1,977
6,574
36 $
4.0%
(83) $
760
11.4%
$
1,047 $
16.4%
87 $
10.1%
(131) $
100 $
13.6%
(82) $
1,021
13.4%
1
-
$
2
$
14
(3)
2
(1)
5
$
2
807 $
13.8%
1
$
$
Restated
Revenue, as adjusted
Operating income (loss) - as adjusted
Reclassification - Foreign currency
remeasurement gains (losses)
Operating income (loss) - as adjusted
Operating margin - adjusted
$
$
1,003
13.9%
$
947 $
14.1%
$
13
$
38
$
13
$
107 $
13.0%
2
(114) $
$
-
940
12.5%
$
1,003 $
14.7%
$
40
$
(30) $
$
40
$
$
(26)
$
(26)
5,855
892
(59)
6,688
6,403
860
(29)
7,234
6,728
825
(25)
7,528
6,835
737
23
7,595
3,521
1,528
5,049
610
247
857
41
(17)
24
4,172
1,758
5,930
3,704
1,666
5,370
576
194
770
61
43
104
4,341
1,903
6,244
3,969
1,850
5,819
553
167
720
59
30
89
4,581
2,047
6,628
4,038
1,764
5,802
493
143
636
66
44
110
4,597
1,951
6,548
(83) $
758
11.3%
$
1,033 $
16.1%
(87) $
1,047
13.8%
(59)
6,673
$
6,403
806 $
13.8%
$
5,840
$
Full Year ended December 31, 2009
Risk
HR
Solutions Solutions Unallocated Continuing
3,521
1,527
5,048
$
Operating margin - adjusted
Full Year ended December 31, 2008
Risk
HR
Solutions Solutions Unallocated Continuing
5,855
Other income (expense)
Foreign currency remeasurement gains (losses)
Restated
Total revenue
Full Year ended December 31, 2007
Risk
HR
Solutions Solutions Unallocated Continuing
$
35 $
3.9%
892 $
$
$
90 $
10.5%
860 $
(133) $
(29)
$
990
13.7%
$
909 $
13.5%
7,234
$
6,728
$
105 $
12.7%
(114) $
825 $
(25)
$
900
12.0%
$
1,033 $
15.1%
7,528
$
6,835
$
101 $
13.7%
737
$
23
$
7,595
807
139
38
-
36
17
-
(83)
3
-
760
159
38
-
1,047
75
38
-
87
10
1
-
(131)
-
1,003
85
39
-
947
239
63
2
6
42
107
15
2
1
-
(114)
1
-
940
254
65
2
8
42
1,003
381
93
(54)
7
100
31
(20)
-
(82)
(4)
-
1,021
412
93
(78)
7
-
-
-
-
21
-
15
-
15
21
-
-
-
-
15
-
-
-
15
-
(80)
(15)
942
1,181
1,163
1,299
125 $
(113) $
1,311
1,445
(86)
1,470
(15)
969
$
16.6%
53 $
$
5.9%
$
14.1%
5,840
$
(59)
$
6,673
$
6,403
$
$
969
$
53
$
(80)
$
942
$
1,181
$
$
1
968
$
1
52
$
(80)
$
2
940
$
14
1,167
$
5.8%
14.1%
18.2%
(116) $
11.4%
$
16.6%
892 $
$
18.4%
98 $
$
16.1%
860 $
15.2%
$
17.4%
$
15.1%
19.4%
$
7,234
$
6,728
$
825 $
$
7,528
$
6,835
$
737
$
23
$
7,595
(116) $
1,163
$
1,299
$
125 $
(113) $
1,311
$
1,445
$
111 $
(86)
$
1,470
(3)
101 $
2
(118) $
13
1,150
$
38
1,261
$
2
123 $
(113) $
40
1,271
$
(30)
1,475 $
(1)
112 $
5
(91)
$
(26)
1,496
11.7%
15.9%
18.7%
(25)
$
21.1%
$
98
(29)
$
19.3%
111 $
14.9%
16.9%
20
21.6%
15.2%
19.7%
Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin
(millions)
Full Year ended December 31, 2010
Risk
HR
Solutions Solutions Unallocated Continuing
GAAP Disclosures
As Reported
Total revenue
Compensation and benefits
Other general expenses
Total operating expenses
Operating income (loss)
Operating margin
$
Reclassifications
Other general expenses
Foreign currency remeasurement gains (losses) $
Compensation and benefits
Other general expenses
Total operating expenses
Operating income (loss)
Operating margin
Non-GAAP Disclosures
As Reported
Revenue - as adjusted
Operating income (loss) - as reported
Restructuring charges
Amortization of intangible assets
Hewitt related costs
Legacy receivables write-off
Transaction related costs - proxy
Headquarter relocation costs
Pension curtailment/adjustment
Anti-bribery and compliance initiatives
Resolution of U.K. balance sheet
reconciliation difference
Benfield integration costs
Reinsurance litigation
Gain on sale of Cambridge preferred stock
investment
Endurance
Contingent commissions
Operating income (loss) - as adjusted
1,545
(22)
8,512
7,537
3,781
(31)
11,287
7,632
3,925
3,939
1,743
5,682
1,041
383
1,424
117
63
180
5,097
2,189
7,286
4,179
1,944
6,123
2,286
1,147
3,433
102
23
125
6,567
3,114
9,681
4,260
1,879
6,139
2,360
1,276
3,636
1,307 $
18.7%
121 $
7.8%
(202) $
(21)
-
3
$
$
Restated
Revenue, as adjusted
Operating income (loss) - as adjusted
Reclassification - Foreign currency
remeasurement gains (losses)
Operating income (loss) - as adjusted
Operating margin - adjusted
$
$
(18)
$
$
(18)
1,414 $
18.8%
1
$
348 $
9.2%
12
$
(156) $
(3)
1,606
14.2%
$
10
$
10
6,989
1,545
(22)
8,512
7,537
3,781
(31)
11,287
1,041
383
1,424
117
66
183
5,097
2,171
7,268
4,179
1,945
6,124
2,286
1,159
3,445
102
20
122
6,567
3,124
9,691
1,328 $
19.0%
$
6,989
$
1,226
14.4%
3,939
1,722
5,661
$
Operating margin - adjusted
Full Year ended December 31, 2012
Risk
HR
Solutions Solutions Unallocated Continuing
6,989
Other income (expense)
Foreign currency remeasurement gains (losses)
Restated
Total revenue
Full Year ended December 31, 2011
Risk
HR
Solutions Solutions Unallocated Continuing
$
121 $
7.8%
1,545
$
(205) $
(22)
$
1,244
14.6%
$
1,413 $
18.7%
8,512
$
7,537
$
336 $
8.9%
3,781
$
(153) $
(31)
$
$
1,493 $
19.6%
$
7,632
(43)
289 $
7.4%
Full Year ended December 31, 2013
Risk
HR
Solutions Solutions Unallocated Continuing
11,514
(186) $
7,789
4,057
4,385
1,864
6,249
2,455
1,284
3,739
1,596
13.9%
$
1,540 $
19.8%
11,514
$
7,789
(31)
318 $
7.8%
11,815
(187) $
1,671
14.1%
1,596
14.1%
11,287
$
3,925
$
(43)
$
$
4,057
$
(31)
$
11,815
1,307
115
114
9
121
57
40
19
-
(202)
21
49
-
1,226
172
154
40
49
9
1,414
65
129
18
-
348
48
233
47
-
(156)
3
-
1,606
113
362
47
18
3
-
1,493
35
126
-
289
66
297
-
(186)
24
-
1,596
101
423
24
-
1,540
94
115
-
318
80
280
-
(187)
5
-
1,671
174
395
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
237 $
(132) $
1,650
1,626
676 $
(153) $
2,149
1,654
652 $
(162) $
678 $
(182) $
1,545
$
22.1%
15.3%
(22)
17.9%
6,989
$
$
8,512
$
7,537
$
$
11,287
1,545
$
237 $
(132) $
1,650
$
1,626
$
676 $
(153) $
2,149
$
(21)
1,566 $
237 $
3
(135) $
(18)
1,668
$
1
1,625
$
12
664 $
(3)
(150) $
10
2,139
19.6%
21.6%
3,781
19.0%
$
15.3%
$
$
21.6%
$
22.4%
1,545
$
19.4%
17.6%
$
(31)
$
21.7%
$
16.6%
2,144
18.6%
19.0%
21
$
1,749 $
22.5%
16.7%
2,245
19.0%
Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin
(millions)
Full Year ended December 31, 2014
Risk
HR
Solutions Solutions Unallocated Continuing
GAAP Disclosures
As Reported
Total revenue
7,834
4,264
4,396
1,790
6,186
2,518
1,261
3,779
$
1,648 $
21.0%
485 $
11.4%
(167) $
1,966
16.3%
$
7,834
$
4,264 $
(53) $
12,045
$
1,648
109
35
1,792 $
485
243
728 $
(167)
(167) $
1,966
352
35
2,353
Compensation and benefits
Other general expenses
Total operating expenses
Operating income (loss)
Operating margin
Non-GAAP Disclosures
As Reported
Revenue - as adjusted
Operating income (loss) - as reported
Amortization of intangible assets
Legal settlement
Operating income (loss) - as adjusted
Operating margin - adjusted
22.9%
17.1%
(53)
12,045
19.5%
22
Appendix B: Reconciliation of Non-GAAP Measures – EPS
(millions)
Consolidated operating income - as reported
Restructuring
Pension adjustment
Hewitt related costs
Transactions/Project costs
Legacy receivable write-off
Pension curtailment
Anti-bribery and compliance initiative
Benfield integration costs
Reinsurance Litigation
UK balance sheet reconciliation difference
Contingent commissions
Legal settlement
Amortization of Intangible Assets
Consolidated operating income - as adjusted
Interest income
Interest expense - as reported
Hewitt related costs
Interest expense - as adjusted
2006
$
$
Other income (expense) - as reported
Gain on sale of land
Gain on sale of building in Spain
Gain on sale of businesses
Gain on Sale of Cambridge preferred stock investment
Endurance
Loss on Debt Extinguishment
Transaction/Project costs
Benfield transaction costs
Other income (expense) - as adjusted
Total PTI from continuing operations - as adjusted
Provision for income tax
Effective tax rate (%)
Adjusted net income from continuing operations
Less: net income attributable to the non-controlling interest
Adjusted net income from continuing operations
Adjusted diluted net income per share
Weighted average common shares outstanding - diluted
2007
758
990
159
85
21
15
(15)
38
39
940 $ 1,150
69 $
(129)
(129)
40
(30)
(35)
14
(11)
$
869
$
283
32.6%
$
586
10
$
576
$ 1.69
345.8
2008
900
254
8
42
2
65
$ 1,271
100 $
(138)
(138)
71
(36)
35
2009
2010
1,047
1,244
412
172
49
40
(78)
7
9
15
93
154
$ 1,496 $ 1,668
64 $
(126)
(126)
16 $
(122)
(122)
41
(5)
50
86
8
8
2011
2012
2013
2014
1,596
113
47
3
18
362
$ 2,139
1,596
101
24
423
$ 2,144
1,671
174
5
395
$ 2,245
1,966
35
352
$ 2,353
15 $
(182)
14
(168)
(18)
(18)
18 $
(245)
(245)
10 $
(228)
(228)
9 $
(210)
(210)
10
(255)
(255)
15
19
34
3
2
5
68
68
44
44
$ 1,147
$ 1,295
$ 1,398
$ 1,497
$ 1,946
$ 1,931
$ 2,112
$ 2,152
$
358
27.6%
$
937
16
$
921
$ 3.02
$
$
$
$
$
$
361
31.5%
$
786
13
$
773
$ 2.37
326.9
$
304.5
380
27.2%
$ 1,018
45
$
973
$ 3.34
291.1
433
28.9%
$ 1,064
26
$ 1,038
$ 3.48
298.1
531
27.3%
$ 1,415
31
$ 1,384
$ 4.06
340.9
504
26.1%
$ 1,427
27
$ 1,400
$ 4.21
332.6
23
536
25.4%
$ 1,576
35
$ 1,541
$ 4.89
315.4
407
18.9%
$ 1,745
34
$ 1,711
$ 5.71
299.6
Appendix C: Reconciliation of Non-GAAP Measures – Free Cash Flow
(millions)
2006
Cash Provided by Operations
Less: Capital Expenditures
Free Cash Flow*
*
$968
(152)
$816
2007
$1,263
(170)
$1,093
2008
2009
2010
2011
$968
$500
$783
$1,018
(103)
(140)
(180)
(241)
$865
$360
$603
$777
2012
$1,419
2013
$1,633
(269)
$1,150
(229)
$1,404
Free cash flow is defined as cash flow from operations less capital expenditures. This non-GAAP measure does not imply or represent a precise calculation
of residual cash flow available for discretionary expenditures.
24
2014
$1,642
(256)
$1,386
Appendix D: Annualized Total Shareholder Returns (CAGR %)
Total Returns*
Indexed to Current; % CAGR
1 Year
2 Years
5 Years
8 Years
10 Years
*
AON
MMC
WSH
AJG
BRO
S&P
14.1%
20.6%
2.7%
3.4%
6.2%
13.7%
31.2%
30.1%
17.1%
18.3%
14.4%
22.7%
20.1%
21.4%
11.8%
16.6%
13.4%
15.4%
13.3%
8.4%
1.9%
6.4%
2.1%
7.0%
14.9%
5.9%
1.1%
4.1%
4.3%
7.7%
Total shareholder returns were calculated as of December 31, 2014.
25
Investor Relations
Scott Malchow
+44.207.086.0100
[email protected]
Erika Shouldice
+1.312.381.5957
[email protected]
Steven Krall
+1.312.381.3353
[email protected]
26