Aon plc Fourth Quarter and Full Year 2012 Results F b February 1, - - PowerPoint PPT Presentation

Aon plc

Fourth Quarter and Full Year 2012 Results F b 1 2013 February 1, 2013

Greg Case Greg Case Chief Executive Officer Christa Davies Chief Financial Officer Chief Financial Officer

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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, business strategies, competitive strengths, goals, the benefits of new initiatives, growth of our business and

• perations, 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 conditions in different countries in which Aon does business around the world, including conditions is the European Union relating to sovereign debt and the Euro; changes in the competitive environment; 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; rating agency actions that could affect Aon's ability to borrow funds; fluctuations in exchange and interest rates that could influence revenue and expense; the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions and ERISA class actions; the impact of any investigations brought by regulatory authorities in the U.S., U.K. and other countries; the cost of resolution of other contingent liabilities and loss contingencies, including potential liabilities arising from error and omissions claims against Aon; the failure to retain and attract qualified personnel; the impact of, and potential challenges in complying with, legislation g q p p p g p y g g 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 effect of the change in global headquarters and jurisdiction of incorporation, including the failure to realize some of the anticipated benefits; the extent to which Aon retains existing clients and attracts new businesses and Aon’s ability to incentivize and retain key employees; the extent to which Aon manages certain risks created in connection with the various services, including fiduciary and advisory services, among

• thers, that Aon currently provides, or will provide in the future, to clients; the possibility that the expected efficiencies and cost savings from the merger with Hewitt

Associates Inc. (“Hewitt”) will not be realized, or will not be realized within the expected time period; the risk that the Aon and Hewitt businesses will not be integrated successfully; Aon’s ability to implement restructuring initiatives and other initiatives intended to yield cost savings, and the ability to achieve those cost savings; the potential of a system or network disruption resulting in operational interruption or improper disclosure of personal data; 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; and Aon’s ability to p g p p g ; y grow and develop companies that it acquires or new lines of business. 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 our 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 Explanation of Non-GAAP Measures This communication includes supplemental information related to organic revenue, free cash flow and several additional measures including expenses, margins and income 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

• rganic revenue information and additional measures that exclude the effects of the restructuring charges and certain other items do not affect net income or any
• ther 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 i li f th C ’ C lid t d Fi i l St t t I d t id i il l t l i f ti di th i f lth h th

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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.

Key Metrics* – Delivered Significant Progress in Q4 & 2012

Organic Revenue

• Solid growth across both Risk and HR Solutions in Q4, including

strong growth in Consulting Services of +8%

• Rate of organic revenue for 2012 has improved to +4% from

Q4 2012

• 1. Organic Revenue1

+4% +4%

• Rate of organic revenue for 2012 has improved to +4% from

+2% in 2011, 0% in ‘2010 and -1% in 2009

Operating Margin

• In Q4, a +50bps increase in HR Solutions was primarily offset by

higher unallocated expenses

Prior Year +3% +2%

• 2. Operating Margin2

19.6% 18.6%

higher unallocated expenses

• For 2012, Risk Solutions increased+10bps as organic growth

and restructuring savings more than offset significant investments in the business

EPS Y-o-Y change

• 40 bps
• 3. Earnings per Share2

$1.27 $4.21

• In Q4, organic revenue, restructuring savings, lower effective tax

rate and effective capital management drove 9% growth

• Repurchased approximately $500 million of ordinary shares in

Q4 and $1.1 billion in 2012

g p

Y-o-Y change +9% +4%

• 4. Free Cash Flow3

$484M $1.2B

Free Cash Flow Y-o-Y change +243% +48%

* The key metrics above are non-GAAP measures that are reconciled in the appendix of this presentation

• Improved working capital performance (predominantly accounts

receivable) more than offset an increase in pension contributions

• Record cash flow from operations of $1.4 billion in 2012

3 The key metrics above are non GAAP measures that are reconciled in the appendix of this presentation 1 Organic revenue excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items. Change in

• rganic 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 fourth quarter and full year 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 3 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

• f residual cash flow available for discretionary expenditures. A reconciliation can be found in Appendix A of this presentation

Organic Revenue¹ – Solid Growth Across Each Segment

Q4

• Americas: Solid growth across all regions: Latin

America, U.S. retail and Canada

Q4 2012 Risk Solutions

America, U.S. retail and Canada

• International: Strong growth across Asia and

emerging markets and modest growth in continental Europe, partly offset by a modest decline in Australia

Americas 4% 3% International 2% 3% Retail 3% 3% Reinsurance 2% 5%

• Reinsurance: Strong growth in treaty globally driven

by a favorable impact from pricing in the near-term and new business, partially offset by a significant decline in capital markets transactions and advisory business

Reinsurance 2% 5%

Total Risk Solutions +3% +4% HR Solutions

Consulting 8% 4% Outsourcing 6% 5% Q4

• Consulting: Strong growth in investment consulting,

pension administration services and talent and rewards consulting

Total HR Solutions +6% +4%

Total Aon +4% +4%

• Outsourcing: Strong growth from HC exchanges,

new client wins and demand for discretionary services in HR business process outsourcing, partly

• ffset by a modest decline in benefits administration

4 1 Organic revenue excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items. Change in

• rganic 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 with expense discipline and strong cash flow, continues to enable substantial investment in colleagues and capabilities to better serve clients.” Risk Solutions HR Solutions 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, while addressing rising  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 ith i tit f i k healthcare costs and declining population health  Expanding our Outsourcing offerings in high-growth areas such as financial advisory services for retirement plan participants with insurer appetite for risk  Aligning our global health and benefits platform to broaden our global distribution channel and strengthen deep brokerage capabilities  Expansion of our industry-leading benefits administration solutions and technology platform  Developing new delegated solutions in investment consulting and pension risk management that  Investments in key talent across Asia /Latin America and in our GRIP business  Expansion of content and global footprint through completed acquisitions such as Access Plans in 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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Affinity and the commercial insurance unit of ABN Amro Bank NV capabilities across Asia and emerging markets

EPS – Firm Positioned for Improved Long-Term EPS Growth

“Our performance in the fourth quarter reflects significant steps to strengthen our industry-leading platform and position Aon for long-term growth, strong free cash flow generation and increased financial flexibility, as highlighted by the repurchase of $500 million of ordinary shares in the quarter.”

($ millions)

Q4 2012 Net Income from Continuing Operations1 $416 $1,400 et co e

• Co t

u g Ope at o s $ 6 $ , 00

Y-o-Y change +6% +1%

Earnings Per Share1 $1.27 $4.21

Y-o-Y change +9% +4% $393 $416 $1.16 $1.27 Net Income¹ EPS¹

Q4’11 Q4’12

6 1 Certain noteworthy items impacted Earnings per Share in the fourth quarter and full year of 2012 and 2011. A Reconciliation of Non-GAAP Measures for Diluted Earnings per Share is in Appendix B of this presentation

Operating Margins – Progress Against Long-Term Targets

Comments - Q4 Positive Impact

• Organic revenue growth of +3%

R t t i i f $10 illi

Q4 2012 Risk Solutions

($ millions)

• Restructuring savings of ~$10 million

Negative Impact

• Includes $7 million or -30 bps from certain non-

recurring costs in Denmark for a prior period payroll-related issue Operating Income1 $475 $1,654

Y-o-Y change +2% +2%

Operating Margin1 23.2% 21.7%

Y o Y change +10 bps

payroll-related issue

• Unfavorable investment income impact of $7

million or -30 bps

• Significant investment in GRIP & key talent

Y-o-Y change

• +10 bps

HR Solutions

Comments Q4

HR Solutions

Operating Income1 $183 $652

Y-o-Y change +11%

• 2%

Operating Margin1 17.0% 16.6% Comments - Q4 Positive Impact

• Organic revenue growth of +6%
• Estimated restructuring and synergy savings of

~$17 million g g

Y-o-Y change +50 bps

• 100 bps

Negative Impact

• Significant investments primarily in health care

exchanges, HR BPO and investment consulting

• Unfavorable revenue mix shift

7 1 Certain noteworthy items impacted Earnings per Share in the fourth quarter of 2012 and 2011. A Reconciliation of Non-GAAP Measures for Diluted Earnings per Share is in Appendix B of this presentation

Long-Term Operating Margin Targets

21.6% 22.4% 21.6% 21.7% 26%

Risk Solutions*

1. Deliver $16 million of remaining restructuring savings and other operational improvements as of Q4’12 2 Continued rollout of Revenue Engine 16.6% 18.2% 18.7% 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 2012 Target % 11.7% 14.9% 15.2% 15.3% 17.6% 16.6% 22%

HR Solutions*

1. Deliver $32 million of remaining restructuring savings by the end of 2013 (after transfer of savings related to the H&B business) 2. Growth in the core business and return on i t l i t t i l di h lth 5.8% incremental investments including health care exchanges 3. Improvement in HR Business Process Outsourcing

8 * See Appendix C for Non-GAAP reconciliation

2006 2007 2008 2009 2010 2011 2012 Target

Unallocated Expenses & Non-Operating Segment Information

Q4’11 Q4’12 Quarterly Guidance Comments

• Unallocated expenses includes $3 mil of costs

($ millions)

Unallocated Expenses1 ($41) ($48) ($40) Interest Income $4 $4 $1

Unallocated expenses includes $3 mil of costs related to the debt exchange offering in December and certain expenses related to the relocation of the Company’s headquarters to London

• Forward guidance for interest income reflects lower

average rate and lower outstanding cash balances

Interest Expense ($59) ($55) ($57) Other Income (Expense)1 $9

• average rate and lower outstanding cash balances
• Interest expense reflects a decrease in the average

rate on debt outstanding and lower total outstanding debt

• Effective tax rate for the fourth quarter 2012 was

Effective Tax Rate 27.0% 25.2% 26.0% Minority interest ($3) ($2) ($7)

• Effective tax rate for the fourth quarter 2012 was

favorably impacted by certain discrete tax

• adjustments. The Company currently expects an

effective tax rate on continuing operations of 26% for 2013 A t l h t t di d li d d

Actual common shares

• utstanding at 12-31-12

(million) N/A 310.9

• Actual common shares outstanding declined due

to the Company’s share repurchase program. The Company repurchased $500 mil or 8.9 mil of ordinary shares in the fourth quarter. Estimated Q1’13 dilutive share count is ~322.4 mil subject to share price movement, share issuance and share repurchase

9 1 Certain noteworthy items impacted Earnings per Share in the fourth quarter of 2012 and 2011. A Reconciliation of Non-GAAP Measures for Diluted Earnings per Share is in Appendix B of this presentation

Solid Balance Sheet with Strong Free Cash Flow Growth

Balance Sheet ($ mil) Cash Flow from Operations ($ mil)

• Q4 and 2012 reflects

Sep 30, 2012 Dec 31, 2012 Cash $290 $291

significantly improved working capital performance despite a higher rate of

• rganic growth
• Includes a $106 million

i i h i

$231 $552 $1,018 $1,419

Short-Term Investments $718 $346 Total Debt $4 402 $4 165

Free Cash Flow 1

increase in cash pension contributions in Q4 and $186 million increase in total pension contributions for 2012

$231 Q4'11 Q4'12 FY'11 FY'12

Total Debt $4,402 $4,165 Total Aon Shareholders’ Equity $8,305 $7,762

ee Cas

• ($ mil)
• Both Q4 and 2012 reflect a

significant increase in cash flow from operations

$484 $1,150

q y $ , $ , Total Debt to Capital 34.6% 34.9%

• Operating with elevated

levels of invoicing and cash collections, approximately $350 million, related to Aon Hewitt

$141 $ 8 Q4'11 Q4'12 FY'11 FY'12 $777

10 1 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. A reconciliation can be found in Appendix A of this presentation

Q4'11 Q4'12 FY'11 FY'12

Decreasing Uses of Cash = Increasing Free Cash Flow

Uses of Cash ($mil) 2012 2013 2014 2015 2016 2017 2018

Pension Contributions¹ $638 $548 $463 $396 $355 $318 $231

• Pension Expense (non-cash)

$53 ↓ ↓ ↓ ↓ ↓ ↓

R t t i C h $143 $94 $38 $24 $21 $5 $ Restructuring – Cash $143 $94 $38 $24 $21 $5 $ - Capital Expenditures $269 $274 $280 $285 $291 $297 $303 Dividends $204 Share Repurchase $1,125

• $4.0 billion of authorized share repurchase available

M & A $162

In addition to strategic benefits, the redomicile will drive increased shareholder value through:

1 Providing greater global access to expected increases in future cash flow

• 1. Providing greater global access to expected increases in future cash flow
• 2. Enabled us to access approximately $300 million of excess capital held internationally on our balance sheet in 2012
• 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, more than the 500 basis point reduction achieved over the last five years, allowing us to remain competitive with certain global competitors

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

11 1 Estimate based on current actuarial assumptions as of 12/31/12 measurement date. Expect to be fully funded on a GAAP basis by end of 201 6 for qualified plans

Summary – Continued Long-Term Value Creation

• Positioned for increased long-term growth
• 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 free cash flow generation with declining uses of required cash outlays
• Increased financial flexibility and effective capital allocation will drive shareholder value

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A di Appendix

13

Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue and Free Cash Flow

O i R (U dit d) Organic Revenue (Unaudited) (millions)

• Dec. 31,

2012

• Dec. 31,

2011 Commissions, Fees and Other Risk Solutions Segment: Retail brokerage Organic Revenue (2) Percent Change Less: Acquisitions, Divestitures & Other Three Months Ended Less: Currency Impact (1) Retail brokerage Americas 883 $ 847 $ 4 %

• %
• %

4 % International 811 797 2

• 2

Total Retail brokerage 1,694 1,644 3

• 3

Reinsurance brokerage 349 344 1 (1)

• 2

Total Risk Solutions 2,043 1,988 3

• 3

HR Solutions Segment: 445 405 10

• 2

8 Outsourcing 649 603 8

• 2

6 Intrasegment (16) (5) N/A N/A N/A N/A T l HR S l i 1 078 1 003 7 1 6 Consulting services Total HR Solutions 1,078 1,003 7

• 1

6 Total Operating Segments 3,121 $ 2,991 $ 4 %

• %
• %

4 % (millions)

• Dec. 31,

2012

• Dec. 31,

2011 Commissions, Fees and Other Percent Change Less: Currency Impact (1) Less: Acquisitions, Divestitures & Other Organic Revenue (2) Twelve Months Ended Risk Solutions Segment: Retail brokerage Americas 3,071 $ 3,001 $ 2 % (1) %

• %

3 % International 3,018 3,021

• (4)

1 3 Total Retail brokerage 6,089 6,022 1 (3) 1 3 Reinsurance brokerage 1,505 1,463 3 (2)

• 5

Total Risk Solutions 7,594 7,485 1 (3)

• 4

HR Solutions Segment: 1,585 1,546 3 (1)

• 4

O i 2 3 2 2 2 8 (1) 1 Consulting services Outsourcing 2,372 2,258 5 (1) 1 5 Intrasegment (32) (23) N/A N/A N/A N/A Total HR Solutions 3,925 3,781 4 (1) 1 4 Total Operating Segments 11,519 $ 11,266 $ 2 % (2) % % 4 % Free Cash Flow (Unaudited)

• Dec. 31,

2012

• Dec. 31,

2011 Percent Change

• Dec. 31,

2011 Cash Provided by Operations 552 $ 231 $ 139 % 1 018 $ 39 % 1 419 $ Three Months Ended Twelve Months Ended

• Dec. 31,

2012 Percent Change

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Cash Provided by Operations 552 $ 231 $ 139 % 1,018 $ 39 % Less: Capital Expenditures (68) (90) (24) (241) 12 Free Cash Flow (3) 484 $ 141 $ 243 % 777 $ 48 % (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. (3) 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. 1,419 $ (269) 1,150 $

Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings per Share

T l M th E d d D b 31 2012 Th M th E d d D b 31 2012 (millions) Risk Solutions HR Solutions Unallocated Income & Expense Total Risk Solutions HR Solutions Unallocated Income & Expense Total Revenue 2,050 $ 1,078 $ (13) $ 3,115 $ 7,632 $ 3,925 $ (43) $ 11,514 $ Operating income (loss) - as reported (2) 434 $ 78 $ (51) $ 461 $ 1,493 $ 289 $ (186) $ 1,596 $ Restructuring charges (3) 6 30

• 36

35 66

• 101

Intangible asset amortization 35 75

• 110

126 297

• 423

Headquarters relocation costs

• 3

3

• 24

24 Operating income (loss) as adjusted 475 $ 183 $ (48) $ 610 $ 1 654 $ 652 $ (162) $ 2 144 $ Twelve Months Ended December 31, 2012 Three Months Ended December 31, 2012 Operating income (loss) - as adjusted 475 $ 183 $ (48) $ 610 $ 1,654 $ 652 $ (162) $ 2,144 $ Operating margins - as adjusted 23.2% 17.0% N/A 19.6% 21.7% 16.6% N/A 18.6% (millions) Risk Solutions HR Solutions Unallocated Income & Expense Total Risk Solutions HR Solutions Unallocated Income & Expense Total Revenue 2,002 $ 1,003 $ (11) $ 2,994 $ 7,537 $ 3,781 $ (31) $ 11,287 $ Operating income (loss) - as reported (2) 377 $ 97 $ (44) $ 430 $ 1,413 $ 336 $ (153) $ 1,596 $ Three Months Ended December 31, 2011 Twelve Months Ended December 31, 2011 Restructuring charges 37 6

• 43

65 48

• 113

Intangible asset amortization 32 57

• 89

129 233

• 362

Legacy receivables write-off 18

• 18

18

• 18

Headquarters relocation costs

• 3

3

• 3

3 Hewitt related costs

• 5
• 5
• 47
• 47

Operating income (loss) - as adjusted 464 $ 165 $ (41) $ 588 $ 1,625 $ 664 $ (150) $ 2,139 $ Operating margins - as adjusted 23.2% 16.5% N/A 19.6% 21.6% 17.6% N/A 19.0% Twelve Months Ended December 31, Three Months Ended December 31, (millions except per share data) 2012 2011 2012 2011 Operating income - as adjusted 610 $ 588 $ 2,144 $ 2,139 $ Interest income 4 4 10 18 Interest expense (55) (59) (228) (245) Other income - as reported

• 9

3 15 Headquarters relocation costs

• 2
• Loss on debt extinguishment
• 19

Other income - as adjusted (2)

• 9

5 34 Income from continuing operations before income taxes - 559 542 1 931 1 946 , , as adjusted 559 542 1,931 1,946 Income taxes (4) 141 146 504 531 Income from continuing operations - as adjusted 418 396 1,427 1,415 Less: Net income attributable to noncontrolling interests 2 3 27 31 Income from continuing operations attributable to Aon shareholders - as adjusted 416 $ 393 $ 1,400 $ 1,384 $ Diluted earnings per share from continuing operations - as adjusted 1.27 $ 1.16 $ 4.21 $ 4.06 $ Weighted average ordinary shares outstanding - diluted 327.5 337.9 332.6 340.9

15

(1) Certain noteworthy items impacting operating income in 2012 and 2011 are described in this schedule. The items shown with the caption "as adjusted" are non-GAAP measures. (2) Beginning in 2012, amounts related to gains and losses on foreign currency transactions have been included in Other income. These amounts in prior periods, which were historically included in Other general expenses, have been reclassified to conform with the current presentation. The amounts reclassified in the three and twelve months ended December 31, 2011 were $5 million and $10 million, respectively, of income from Other general expenses to Other income. (3) During the three months ended December 31, 2012, a reversal of previously recognized restructuring expense of $3 million related to the 2007 restructuring plan was recorded in the Risk Solutions segment. The 2007 plan is no longer presented in the attached restructuring disclosure. (4) Tax rate for continuing operations is 25.2% and 27.0% for the three months ended December 31, 2012 and 2011, respectively, and 26.1% and 27.3% for the twelve months ended December 31, 2012 and 2011, respectively.

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 HR Solutions Unallocated Continuing Risk Solutions HR Solutions Unallocated Continuing Risk Solutions HR Solutions Unallocated Continuing Risk Solutions HR Solutions Unallocated Continuing Risk Solutions HR Solutions Unallocated Continuing Segments Reported 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% Interest income 69 100 64 16 15 18 Interest expense (129) (138) (126) (122) (182) (245) Other income (expense) - as adjusted 38 58 1 34

• 5

Income before income taxes 738 $ 1,023 $ 879 $ 949 $ 1,059 $ 1,384 $ Reclassifications Other general expenses Foreign currency remeasurement gains (losses) $ 1 $ 1 $ - $ 2 $ 14 $ (3) $ 2 $ 13 $ 38 $ 2 $ - $ 40 $ (30) $ (1) $ 5 $ (26) $ (21) $ - $ 3 $ (18) $ 1 $ 12 $ (3) $ 10 Other income (expense) Foreign currency remeasurement gains (losses) $ 2 $ 13 $ 40 $ (26) $ (18) $ 10 Segments Restated 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 1,528 247 (17) 1,758 1,666 194 43 1,903 1,850 167 30 2,047 1,764 143 44 1,951 1,722 383 66 2,171 1,945 1,159 20 3,124 Total operating expenses 5,049 857 24 5,930 5,370 770 104 6,244 5,819 720 89 6,628 5,802 636 110 6,548 5,661 1,424 183 7,268 6,124 3,445 122 9,691 Operating income (loss) 806 $ 35 $ (83) $ 758 $ 1,033 $ 90 $ (133) $ 990 $ 909 $ 105 $ (114) $ 900 $ 1,033 $ 101 $ (87) $ 1,047 $ 1,328 $ 121 $ (205) $ 1,244 $ 1,413 $ 336 $ (153) $ 1,596 $ O ti i 13 8% 3 9% 11 3% 16 1% 10 5% 13 7% 13 5% 12 7% 12 0% 15 1% 13 7% 13 8% 19 0% 7 8% 14 6% 18 7% 8 9% 14 1% Operating margin 13.8% 3.9% 11.3% 16.1% 10.5% 13.7% 13.5% 12.7% 12.0% 15.1% 13.7% 13.8% 19.0% 7.8% 14.6% 18.7% 8.9% 14.1% Interest income 69 100 64 16 15 18 Interest expense (127) (125) (86) (148) (200) (235) Other income (expense) - as adjusted 38 58 1 34

• 5

Income before income taxes 738 $ 1,023 $ 879 $ 949 $ 1,059 $ 1,384 $ Non-GAAP As Disclosed Revenue - as adjusted $ 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 reported 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 Restructuring charges 139 17 3 159 75 10 - 85 239 15 - 254 381 31 - 412 115 57 - 172 65 48 - 113 Amortization of intangible assets 38 - - 38 38 1 - 39 63 2 - 65 93 - - 93 114 40 - 154 129 233 - 362 Hewitt related costs

• - - -
• - - -

2 - - 2

• - - -
• 19 21 40
• 47 - 47

Legacy receivables write-off

• - - -
• - - -
• - - -
• - - -
• - - -

18 - - 18 Transaction related costs proxy 3 3 Transaction related costs - proxy

• - - -
• - -
• - -
• - -
• - -
• - 3

3 Pension curtailment/adjustment

• - - -
• - - -

6 1 1 8 (54) (20) (4) (78)

• - 49 49
• - - -

Anti-bribery and compliance initiatives

• - - -
• - - -

42 - - 42 7 - - 7 9 - - 9

• - - -

Resolution of U.K. balance sheet reconciliation difference

• - - -
• - 15 15
• - - -
• - - -
• - - -
• - - -

Benfield integration costs

• - - -
• - - -
• - - -

15 - - 15

• - - -
• - - -

Reinsurance litigation

• - - -

21 - - 21

• - - -
• - - -
• - - -
• - - -

Gain on sale of Cambridge preferred stock investment

• - - -
• - - -
• - - -
• - - -
• - - -
• - - -

Endurance

• - - -
• - - -
• - - -
• - - -
• - - -
• - - -

Contingent commissions (15) - - (15)

• - - -
• - - -
• - - -
• - - -
• - - -

Operating income (loss) - as adjusted $ 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% 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 $ 869 $ 1,147 $ 1,295 $ 1,398 $ 1,497 $ 1,946 Income taxes 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 Restated Revenue, as adjusted $ 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 adjusted $ 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 1 1 - 2 14 (3) 2 13 38 2 - 40 (30) (1) 5 (26) (21) - 3 (18) 1 12 (3) 10 Operating income (loss) - as adjusted $ 968 $ 52 $ (80) $ 940 $ 1,167 $ 101 $ (118) $ 1,150 $ 1,261 $ 123 $ (113) $ 1,271 $ 1,475 $ 112 $ (91) $ 1,496 $ 1,566 $ 237 $ (135) $ 1,668 $ 1,625 $ 664 $ (150) $ 2,139 Reclassification - Foreign currency remeasurement gains (losses)

16

Operating margin - adjusted 16.6% 5.8% 14.1% 18.2% 11.7% 15.9% 18.7% 14.9% 16.9% 21.6% 15.2% 19.7% 22.4% 15.3% 19.6% 21.6% 17.6% 19.0% 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

2 13 40 (26) (18) 10 Other income (expense) - as adjusted (11) 35 86 8 (18) 34 Income before income taxes - as adjusted $ 869 $ 1,147 $ 1,295 $ 1,398 $ 1,497 $ 1,946 Income taxes 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 Reclassification - Foreign currency remeasurement gains (losses)

Appendix D: Intangible Asset Amortization Schedule

Intangible Amortization by Segment

($ millions)

2009 2010 2011 2012 2013 2014 2015 2016

Risk Solutions $93 $114 $129 $126 $113 $98 $85 $72 HR Solutions

• $40

$233 $297 $281 $245 $214 $179 Total $93 $154 $362 $423 $394 $343 $299 $251

17

Investor Relations

Scott Malchow

scott malchow@aon com scott.malchow@aon.com Office: +44 (0) 207-086-0100

Erika Shouldice

erika.shouldice@aon.com Office: 312-381-5957