Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2018	Feb. 15, 2019	Jun. 29, 2018
Document and Entity Information
Entity Registrant Name	Aon plc
Entity Central Index Key	0000315293
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		239,999,442
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Entity Public Float			$ 33,332,666,779

Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue
Total revenue	$ 2,770	$ 2,349	$ 2,561	$ 3,090	$ 2,909	$ 2,340	$ 2,368	$ 2,381	$ 10,770	$ 9,998	$ 9,409
Expenses
Compensation and benefits									6,103	6,003	5,514
Information technology									484	419	386
Premises									370	348	343
Depreciation of fixed assets									176	187	162
Amortization and impairment of intangible assets									593	704	157
Other general expenses									1,500	1,272	1,036
Total operating expenses									9,226	8,933	7,598
Operating income	499	262	(16)	799	601	256	(127)	335	1,544	1,065	1,811
Interest income									5	27	9
Interest expense									(278)	(282)	(282)
Other income (expense)									(25)	(125)	(137)
Income from continuing operations before income taxes									1,246	685	1,401
Income taxes									146	250	148
Net income from continuing operations	284	155	57	604	17	196	(43)	265	1,100	435	1,253
Net income from discontinued operations	69	(2)	1	6	(29)	(4)	821	40	74	828	177
Net income	353	153	58	610	(12)	192	778	305	1,174	1,263	1,430
Less: Net income attributable to noncontrolling interests	8	6	10	16	7	7	9	14	40	37	34
Net income attributable to Aon shareholders	$ 345	$ 147	$ 48	$ 594	$ (19)	$ 185	$ 769	$ 291	$ 1,134	$ 1,226	$ 1,396
Basic net income per share attributable to Aon shareholders
Basic net income per share attributable to Aon shareholders, continuing operations (in dollars per share)	$ 1.14	$ 0.61	$ 0.19	$ 2.37	$ 0.04	$ 0.74	$ (0.20)	$ 0.95	$ 4.32	$ 1.54	$ 4.55
Basic net income per share attributable to Aon shareholders, discontinued operations (in dollars per share)	0.28	(0.01)	0.01	0.02	(0.12)	(0.02)	3.13	0.15	0.30	3.20	0.66
Basic net income per share attributable to Aon shareholders (in dollars per share)	1.42	0.60	0.20	2.39	(0.08)	0.72	2.93	1.10	4.62	4.74	5.21
Diluted net income per share attributable to Aon shareholders
Diluted net income per share attributable to Aon shareholders, continuing operations (in dollars per share)	1.13	0.61	0.19	2.35	0.04	0.73	(0.20)	0.94	4.29	1.53	4.51
Diluted net income per share attributable to Aon shareholders, discontinued operations (in dollars per share)	0.28	(0.01)	0.00	0.02	(0.11)	(0.01)	3.13	0.15	0.30	3.17	0.65
Diluted net income per share attributable to Aon shareholders (in dollars per share)	$ 1.41	$ 0.60	$ 0.19	$ 2.37	$ (0.07)	$ 0.72	$ 2.93	$ 1.09	$ 4.59	$ 4.70	$ 5.16
Weighted average ordinary shares outstanding - basic (in shares)									245.2	258.5	268.1
Weighted average ordinary shares outstanding - diluted (in shares)									247.0	260.7	270.3

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 353	$ 153	$ 58	$ 610	$ (12)	$ 192	$ 778	$ 305	$ 1,174	$ 1,263	$ 1,430
Less: Net income attributable to noncontrolling interests	8	6	10	16	7	7	9	14	40	37	34
Net income attributable to Aon shareholders	$ 345	$ 147	$ 48	$ 594	$ (19)	$ 185	$ 769	$ 291	1,134	1,226	1,396
Other comprehensive income (loss), net of tax:
Change in fair value of financial instruments									11	12	(12)
Foreign currency translation adjustments									(444)	390	(495)
Postretirement benefit obligation									17	19	16
Total other comprehensive income (loss)									(416)	421	(491)
Less: Other comprehensive income (loss) attributable to noncontrolling interests									(4)	5	(2)
Total other comprehensive income (loss) attributable to Aon shareholders									(412)	416	(489)
Comprehensive income attributable to Aon shareholders									$ 722	$ 1,642	$ 907

Consolidated Statements of Financial Position - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 656	$ 756
Short-term investments	172	529
Receivables, net	2,760	2,478
Fiduciary assets	10,166	9,625
Other current assets	618	289
Total current assets	14,372	13,677
Goodwill	8,171	8,358
Intangible assets, net	1,149	1,733
Fixed assets, net	588	564
Deferred tax assets	561	389
Prepaid pension	1,133	1,060
Other non-current assets	448	307
Total assets	26,422	26,088
Current liabilities
Accounts payable and accrued liabilities	1,943	1,961
Short-term debt and current portion of long-term debt	251	299
Fiduciary liabilities	10,166	9,625
Other current liabilities	936	870
Total current liabilities	13,296	12,755
Long-term debt	5,993	5,667
Deferred tax liabilities	181	127
Pension, other postretirement, and postemployment liabilities	1,636	1,789
Other non-current liabilities	1,097	1,102
Total liabilities	22,203	21,440
Equity
Ordinary shares - $0.01 nominal value Authorized: 750 shares (issued: 2018 - 240.1; 2017 - 247.6)	2	2
Additional paid-in capital	5,965	5,775
Retained earnings	2,093	2,302
Accumulated other comprehensive loss	(3,909)	(3,496)
Total Aon shareholders' equity	4,151	4,583
Noncontrolling interests	68	65
Total equity	4,219	4,648
Total liabilities and equity	$ 26,422	$ 26,088

Consolidated Statements of Financial Position (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Ordinary shares, nominal or par value (in dollars per share)	$ 0.01	$ 0.01
Ordinary shares, Authorized shares	750,000,000	750,000,000
Ordinary shares, issued shares	240,100,000	247,600,000

Consolidated Statements of Shareholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Ordinary Shares and Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss, Net of Tax	Non-controlling Interests
Beginning Balance (in shares) at Dec. 31, 2015		269.8
Beginning Balance at Dec. 31, 2015	$ 6,059	$ 5,412	$ 4,013	$ (3,423)	$ 57
Increase (Decrease) in Shareholders' Equity
Net income	1,430		1,396		34
Shares issued - employee stock compensation plans (in shares)		4.3
Shares issued — employee stock compensation plans	(125)	$ (125)
Shares purchased (in shares)		(12.1)
Shares purchased	(1,257)		(1,257)
Tax benefit — employee benefit plans	(4)	$ (4)
Share-based compensation expense	331	331
Dividends to shareholders ($1.56 per share)	(345)		(345)
Change in fair value of financial instruments	(12)			(12)
Net foreign currency translation adjustments	(495)			(493)	(2)
Net postretirement benefit obligation	16			16
Net purchases of shares from noncontrolling interests	(38)	$ (34)			(4)
Dividends paid to noncontrolling interests on subsidiary common stock	(28)				(28)
Ending Balance (in shares) at Dec. 31, 2016		262.0
Ending Balance at Dec. 31, 2016	5,532	$ 5,580	3,807	(3,912)	57
Increase (Decrease) in Shareholders' Equity
Net income	1,263		1,226		37
Shares issued - employee stock compensation plans (in shares)		3.6
Shares issued — employee stock compensation plans	(121)	$ (120)	(1)
Shares purchased (in shares)		(18.0)
Shares purchased	(2,415)		(2,415)
Share-based compensation expense	321	$ 321
Dividends to shareholders ($1.56 per share)	(364)		(364)
Change in fair value of financial instruments	12			12
Net foreign currency translation adjustments	390			385	5
Net postretirement benefit obligation	19			19
Net purchases of shares from noncontrolling interests	(11)	$ (4)			(7)
Dividends paid to noncontrolling interests on subsidiary common stock	$ (27)				(27)
Ending Balance (in shares) at Dec. 31, 2017	247.6	247.6
Ending Balance at Dec. 31, 2017	$ 4,648	$ 5,777	2,302	(3,496)	65
Increase (Decrease) in Shareholders' Equity
Net income	1,174		1,134		40
Shares issued - employee stock compensation plans (in shares)		2.5
Shares issued — employee stock compensation plans	(148)	$ (148)	0
Shares purchased (in shares)		(10.0)
Shares purchased	(1,454)		(1,454)
Share-based compensation expense	338	$ 338
Dividends to shareholders ($1.56 per share)	(382)		(382)
Change in fair value of financial instruments	11			11
Net foreign currency translation adjustments	(444)			(440)	(4)
Net postretirement benefit obligation	17			17
Net purchases of shares from noncontrolling interests	(1)	$ 0			(1)
Dividends paid to noncontrolling interests on subsidiary common stock	$ (32)				(32)
Ending Balance (in shares) at Dec. 31, 2018	240.1	240.1
Ending Balance at Dec. 31, 2018	$ 4,219	$ 5,967	$ 2,093	$ (3,909)	$ 68

Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Stockholders' Equity [Abstract]
Dividends (in dollars per share)	$ 1.56	$ 1.41	$ 1.29

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities
Net income	$ 1,174	$ 1,263	$ 1,430
Net income from discontinued operations	74	828	177
Adjustments to reconcile net income to cash provided by operating activities:
Loss (gain) from sales of businesses and investments, net	6	16	(39)
Depreciation of fixed assets	176	187	162
Amortization and impairment of intangible assets	593	704	157
Share-based compensation expense	338	319	306
Deferred income taxes	(225)	(18)	(24)
Change in assets and liabilities:
Fiduciary receivables	(679)	171	595
Short-term investments — funds held on behalf of clients	(320)	(135)	(540)
Fiduciary liabilities	999	(36)	(55)
Receivables, net	(127)	(254)	(105)
Accounts payable and accrued liabilities	25	96	53
Restructuring reserves	23	172	0
Current income taxes	34	(914)	(42)
Pension, other postretirement and other postemployment liabilities	(259)	(66)	42
Other assets and liabilities	2	(8)	66
Cash provided by operating activities - continuing operations	1,686	669	1,829
Cash provided by operating activities - discontinued operations	0	65	497
Cash provided by operating activities	1,686	734	2,326
Cash flows from investing activities
Proceeds from investments	71	68	43
Payments for investments	(80)	(64)	(64)
Net sales (purchases) of short-term investments — non-fiduciary	348	(232)	61
Acquisition of businesses, net of cash acquired	(58)	(1,029)	(879)
Sale of businesses, net of cash sold	(10)	4,246	107
Capital expenditures	(240)	(183)	(156)
Cash provided by (used for) investing activities - continuing operations	31	2,806	(888)
Cash used for investing activities - discontinued operations	0	(19)	(66)
Cash provided by (used for) investing activities	31	2,787	(954)
Cash flows from financing activities
Share repurchase	(1,470)	(2,399)	(1,257)
Issuance of shares for employee benefit plans	(149)	(121)	(129)
Issuance of debt	5,754	1,654	3,467
Repayment of debt	(5,417)	(1,999)	(2,945)
Cash dividends to shareholders	(382)	(364)	(345)
Noncontrolling interests and other financing activities	(35)	(36)	(77)
Cash used for financing activities - continuing operations	(1,699)	(3,265)	(1,286)
Cash used for financing activities - discontinued operations	0	0	0
Cash used for financing activities	(1,699)	(3,265)	(1,286)
Effect of exchange rates on cash and cash equivalents	(118)	69	(39)
Net increase (decrease) in cash and cash equivalents	(100)	325	47
Cash and cash equivalents at beginning of period	756	431	384
Cash and cash equivalents at end of period	656	756	431
Supplemental disclosures:
Interest paid	266	272	272
Income taxes paid, net of refunds	$ 337	$ 1,182	$ 218

Basis of Presentation	12 Months Ended
Basis of Presentation	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Financial Statements include the accounts of Aon and its controlled subsidiaries. Intercompany accounts and transactions have been eliminated. The Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented. Use of Estimates The preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the Financial Statements in future periods.

Summary of Significant Accounting Principles and Practices

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Principles and Practices

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Aon plc and those entities in which the Company has a controlling financial interest. To determine if Aon holds a controlling financial interest in an entity, the Company first evaluates if it is required to apply the variable interest entity (VIE) model to the entity, otherwise, the entity is evaluated under the voting interest model. Where Aon holds rights that give it the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, combined with a variable interest that gives the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company has a controlling financial interest in that VIE. Aon holds a controlling financial interest in entities that are not VIEs where it, directly or indirectly, holds more than 50% of the voting rights or where it exercises control through substantive participating rights or as a general partner.

Revenue Recognition

The Company generates revenues primarily through commissions, compensation from insurance and reinsurance companies for services provided to them, and fees from customers. Commissions and fees for brokerage services vary depending upon several factors, which may include the amount of premium, the type of insurance or reinsurance coverage provided, the particular services provided to a client, insurer, or reinsurer, and the capacity in which the Company acts. Compensation from insurance and reinsurance companies includes: (1) fees for consulting and analytics services and (2) fees and commissions for administrative and other services provided to or on behalf of insurers. In Aon’s capacity as an insurance and reinsurance broker, the service promised to the customer is placement of an effective insurance or reinsurance policy, respectively. At the completion of the insurance or reinsurance policy placement process once coverage is effective, the customer has obtained control over the services promised by the Company. Judgment is not typically required when assessing whether the coverage is effective. Fees from clients for advice and consulting services are dependent on the extent and value of the services provided. Payment terms for the Company’s principal service lines are discussed below; the Company believes these terms are consistent with current industry practices. Significant financing components are typically not present in Aon’s arrangements.

The Company recognizes revenue when control of the promised services is transferred to the customer in the amount that best reflects the consideration to which the Company expects to be entitled in exchange for those services. For arrangements where control is transferred over time, an input or output method is applied that represents a faithful depiction of the progress towards completion of the performance obligation. For arrangements that include variable consideration, the Company assesses whether any amounts should be constrained. For arrangements that include multiple performance obligations, the Company allocates consideration based on their relative fair values.

Costs incurred by the Company in obtaining a contract are capitalized and amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates, considering anticipated renewals when applicable. Certain contract related costs, including pre-placement brokerage costs, are capitalized as a cost to fulfill and are amortized on a systematic basis consistent with the transfer of control of the services to which the asset relates, which is generally less than one year.

The Company has elected to apply practical expedients to not disclose the revenue related to unsatisfied performance obligations if (1) the contract has an original duration of 1 year or less, (2) the Company has recognized revenue for the amount in which it has the right to bill, and (3) the variable consideration is allocated entirely to an unsatisfied performance obligation which is recognized as a series of distinct goods or services that form a single performance obligation.

Disaggregation of Revenue

The following is a description of principal service lines from which the Company generates its revenue:

Commercial Risk Solutions includes retail brokerage, cyber solutions, global risk consulting, and captives. Revenue primarily includes insurance commissions and fees for services rendered. Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy, or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. For arrangements recognized over time, various output measures, including units transferred and time elapsed, are utilized to provide a faithful depiction of the progress towards completion of the performance obligation. Revenue is recorded net of allowances for estimated policy cancellations, which are determined based on an evaluation of historical and current cancellation data. Commissions and fees for brokerage services may be invoiced near the effective date of the underlying policy or over the term of the arrangement in installments during the policy period.

Reinsurance Solutions includes treaty and facultative reinsurance brokerage and capital markets. Revenue primarily includes reinsurance commissions and fees for services rendered. Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. For arrangements recognized over time, various output measures, including units delivered and time elapsed, are utilized to provide a faithful depiction of the progress towards completion of the performance obligation. Commissions and fees for brokerage services may be invoiced at the inception of the reinsurance period for certain reinsurance brokerage, or more commonly, over the term of the arrangement in installments based on deposit or minimum premiums for most treaty reinsurance arrangements.

Retirement Solutions includes core retirement, investment consulting, and talent, rewards & performance. Revenue consists primarily of fees paid by customers for consulting services, such as risk management strategies, health and benefits, and human capital consulting services. Revenue recognized for these arrangements is predominantly recognized over the term of the arrangement using input or output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services, or for certain arrangements, at a point in time upon completion of the services. For consulting arrangements recognized over time, revenue will be recognized based on a measure of progress that depicts the transfer of control of the services to the customer, utilizing an appropriate input or output measure to provide a reasonable assessment of the progress towards completion of the performance obligation including units delivered or time elapsed. Fees paid by customers for consulting services are typically charged on an hourly, project or fixed-fee basis, and revenue for these arrangements is typically recognized based on time incurred, days elapsed, or reports delivered. Revenue from time-and-materials or cost-plus arrangements are recognized as services are performed using input or output measures to provide a reasonable assessment of the progress towards completion of the performance obligation including hours worked, and revenue for these arrangements is typically recognized based on time and materials incurred. Reimbursements received for out-of-pocket expenses are recorded as a component of revenue. Payment terms vary but are typically over the contract term in installments.

Health Solutions includes health and benefits brokerage and health care exchanges. Revenue primarily includes insurance commissions and fees for services rendered. For brokerage commissions, revenue is predominantly recognized at the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services using input or output measures, including units delivered or time elapsed, to provide a faithful depiction of the progress towards completion of the performance obligation. Revenue from health care exchange arrangements are typically recognized upon successful enrollment of participants, net of a reserve for estimated cancellations. Commissions and fees for brokerage services may be invoiced at the effective date of the underlying policy or over the term of the arrangement in installments during the policy period. Payment terms for other services vary but are typically over the contract term in installments.

Data & Analytic Services includes Affinity, Aon InPoint, and ReView. Revenue consists primarily of fees for services rendered and is generally recognized over the term of the arrangement to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Payment terms vary but are typically over the contract term in installments. For Data & Analytic Services arrangements recognized over time, revenue will be recognized based on a measure of progress that depicts the transfer of control of the services to the customer, utilizing an appropriate input or output measure to provide a faithful depiction of the progress towards completion of the performance obligation, including units delivered or time elapsed. Input and output measures utilized vary based on the arrangement but typically include reports provided or days elapsed.

Share-Based Compensation Costs

Share-based payments to employees, including grants of restricted share units and performance share awards, are measured based on estimated grant date fair value. The Company recognizes compensation expense over the requisite service period for awards expected to ultimately vest. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.

Pension and Other Postretirement Benefits

The Company records net periodic cost relating to its pension and other postretirement benefit plans based on calculations that include various actuarial assumptions, including discount rates, assumed rates of return on plan assets, inflation rates, mortality rates, compensation increases, and turnover rates. The Company reviews its actuarial assumptions on an annual basis and modifies these assumptions based on current rates and trends. The effects of gains, losses, and prior service costs and credits are amortized over future service periods or future estimated lives if the plans are frozen. The funded status of each plan, calculated as the fair value of plan assets less the benefit obligation, is reflected in the Company’s Consolidated Statements of Financial Position using a December 31 measurement date.

Net Income per Share

Basic net income per share is computed by dividing net income available to ordinary shareholders by the weighted-average number of ordinary shares outstanding, including participating securities, which consist of unvested share awards with non-forfeitable rights to dividends. Diluted net income per share is computed by dividing net income available to ordinary shareholders by the weighted-average number of ordinary shares outstanding, which have been adjusted for the dilutive effect of potentially issuable ordinary shares, including certain contingently issuable shares. The diluted earnings per share calculation reflects the more dilutive effect of either (1) the two-class method that assumes that the participating securities have not been exercised, or (2) the treasury stock method.

Potentially issuable shares are not included in the computation of diluted income per share if their inclusion would be antidilutive.

Cash and Cash Equivalents and Short-term Investments

Cash and cash equivalents include cash balances and all highly liquid investments with initial maturities of three months or less. Short-term investments consist of money market funds. The estimated fair value of Cash and cash equivalents and Short-term investments approximates their carrying values.

At December 31, 2018, Cash and cash equivalents and Short-term investments totaled $828 million compared to $1,285 million at December 31, 2017. Of the total balance, $91 million and $96 million was restricted as to its use at December 31, 2018 and 2017, respectively. Included within the December 31, 2018 and 2017 balances, respectively, were £42.7 million ($53.9 million at December 31, 2018 exchanges rates) and £42.7 million ($57.1 million at December 31, 2017 exchange rates) of operating funds required to be held by the Company in the U.K. by the FCA, which were included in Short-term investments.

Fiduciary Assets and Liabilities

In its capacity as an insurance agent and broker, Aon collects premiums from insureds and, after deducting its commission, remits the premiums to the respective insurers. Aon also collects claims or refunds from insurers on behalf of insureds. Uncollected premiums from insureds and uncollected claims or refunds from insurers are recorded as Fiduciary assets in the Company’s Consolidated Statements of Financial Position. Unremitted insurance premiums and claims are held in a fiduciary capacity and the obligation to remit these funds is recorded as Fiduciary liabilities in the Company’s Consolidated Statements of Financial Position.

Aon held fiduciary assets for premiums collected from insureds but not yet remitted to insurance companies and claims collected from insurance companies but not yet remitted to insureds of $3.9 billion and $3.7 billion at December 31, 2018 and 2017, respectively. These funds and a corresponding liability are included in Fiduciary assets and Fiduciary liabilities, respectively, in the accompanying Consolidated Statements of Financial Position.

Allowance for Doubtful Accounts

The Company’s allowance for doubtful accounts with respect to receivables is based on a combination of factors, including evaluation of historical write-offs, aging of balances, and other qualitative and quantitative analyses. Receivables, net included an allowance for doubtful accounts of $62 million and $59 million at December 31, 2018 and 2017, respectively.

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Included in this category is internal use software, which is software that is acquired, internally-developed or modified solely to meet internal needs, with no plan to market externally. Costs related to directly obtaining, developing, or upgrading internal use software are capitalized. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which are generally as follows:



Asset Description		Expected Life
Software		Lesser of the life of an associated license, or 4 to 7 years
Leasehold improvements		Lesser of estimated useful life or lease term, not to exceed 10 years
Furniture, fixtures and equipment		4 to 10 years
Computer equipment		4 to 6 years
Buildings		35 years
Automobiles		6 years

Goodwill and Intangible Assets

Goodwill represents the excess of acquisition cost over the fair value of the net assets in the acquisition of a business. Goodwill is allocated to various reporting units. Upon disposition of a business entity, goodwill is allocated to the disposed entity based on the fair value of that entity compared to the fair value of the reporting unit in which it was included. Goodwill is not amortized, but instead is tested for impairment at least annually. The goodwill impairment test is performed at the reporting unit level. The Company may initially perform a qualitative analysis to determine if it is more likely than not that the goodwill balance is impaired. If a qualitative assessment is not performed or if a determination is made that it is not more likely than not that their value of the reporting unit exceeds its carrying amount, then the Company will perform a two-step quantitative analysis. First, the fair value of each reporting unit is compared to its carrying value. If the fair value of the reporting unit is less than its carrying value, the Company performs a hypothetical purchase price allocation based on the reporting unit’s fair value to determine the fair value of the reporting unit’s goodwill. Any resulting difference will be a charge to Amortization and impairment of intangible assets in the Consolidated Statements of Income in the period in which the determination is made. Fair value is determined using a combination of present value techniques and market prices of comparable businesses.

We classify our intangible assets acquired as either tradenames, customer-related and contract-based, or technology and other. Amortization basis and estimated useful lives by intangible asset type are generally as follows:



Intangible Asset Description	Amortization Basis	Expected Life
Customer-related and contract-based	In line with underlying cash flows	7 to 20 years
Tradenames	Straight-line	1 to 3 years
Technology and other	Straight-line	5 to 7 years

Derivatives

Derivative instruments are recognized in the Consolidated Statements of Financial Position at fair value. Where the Company has entered into master netting agreements with counterparties, the derivative positions are netted by counterparties and are reported accordingly in Other assets or Other liabilities. Changes in the fair value of derivative instruments are recognized in earnings each period, unless the derivative is designated and qualifies as a cash flow or net investment hedge.

The Company has historically designated the following hedging relationships for certain transactions: (1) a hedge of the change in fair value of a recognized asset or liability or firm commitment (“fair value hedge”), (2) a hedge of the variability in cash flows from a recognized variable-rate asset or liability or forecasted transaction (“cash flow hedge”), and (3) a hedge of the net investment in a foreign operation (“net investment hedge”).

In order for a derivative to qualify for hedge accounting, the derivative must be formally designated as a fair value, cash flow, or a net investment hedge by documenting the relationship between the derivative and the hedged item. The documentation must include a description of the hedging instrument, the hedged item, the risk being hedged, Aon’s risk management objective and strategy for undertaking the hedge, the method for assessing the effectiveness of the hedge, and the method for measuring hedge ineffectiveness. Additionally, the hedge relationship must be expected to be highly effective at offsetting changes in either the fair value or cash flows of the hedged item at both the inception of the hedge and on an ongoing basis. Aon assesses the ongoing effectiveness of its hedges and measures and records hedge ineffectiveness, if any, at the end of each quarter or more frequently if facts and circumstances require.

For a derivative designated as a fair value hedging instrument, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. The effect is to reflect in earnings the extent to which the hedge is not effective in achieving offsetting changes in fair value. For a cash flow hedge that qualifies for hedge accounting, the effective portion of the change in fair value of a hedging instrument is recognized in Other comprehensive income (“OCI”) and subsequently reclassified to earnings in the same period the hedged item impacts earnings. The ineffective portion of the change in fair value is recognized immediately in earnings. For a net investment hedge, the effective portion of the change in fair value of the hedging instrument is recognized in OCI as part of the cumulative translation adjustment, while the ineffective portion is recognized immediately in earnings.

Changes in the fair value of a derivative that is not designated as part of a hedging relationship (commonly referred to as an “economic hedge”) are recorded in Other income (expense) in the Consolidated Statements of Income.

The Company discontinues hedge accounting prospectively when (1) the derivative expires or is sold, terminated, or exercised, (2) the qualifying criteria are no longer met, or (3) management removes the designation of the hedging relationship.

Foreign Currency

Certain of the Company’s non-U.S. operations use their respective local currency as their functional currency. These operations that do not have the U.S. dollar as their functional currency translate their financial statements at the current rates of exchange in effect at the balance sheet date and revenues and expenses using rates that approximate those in effect during the period. The resulting translation adjustments are included in Net foreign currency translation adjustments within the Consolidated Statements of Shareholders’ Equity. Further, for all entities, gains and losses from the remeasurement of monetary assets and liabilities that are denominated in a non-functional currency of that entity are included in Other income (expense) within the Consolidated Statements of Income.

Income Taxes

Deferred income taxes are recognized for the effect of temporary differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted marginal tax rates and laws that are currently in effect. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in the period when the rate change is enacted.

Deferred tax assets are reduced by valuation allowances if, based on the consideration of all available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. Significant weight is given to evidence that can be objectively verified. Deferred tax assets are realized by having sufficient future taxable income to allow the related tax benefits to reduce taxes otherwise payable. The sources of taxable income that may be available to realize the benefit of deferred tax assets are future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carry-forwards, taxable income in carry-back years, and tax planning strategies that are both prudent and feasible.

The Company recognizes the effect of income tax positions only if sustaining those positions is more likely than not. Tax positions that meet the more likely than not recognition threshold but are not highly certain are initially and subsequently measured based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement with the taxing authority. Only information that is available at the reporting date is considered in the Company’s recognition and measurement analysis, and events or changes in facts and circumstances are accounted for in the period in which the event or change in circumstance occurs.

The Company records penalties and interest related to unrecognized tax benefits in Income taxes in the Company’s Consolidated Statements of Income.

New Accounting Pronouncements

Adoption of New Accounting Standards

Presentation of Net Periodic Pension and Postretirement Benefit Costs

In March 2017, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Additionally, only the service cost component is eligible for capitalization, when applicable. The Company has applied the new guidance retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the Consolidated Statement of Income, and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension costs and net periodic postretirement benefit cost in assets. The new guidance allows a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company did not apply the practical expedient upon adoption of this guidance. The new guidance was effective for Aon in the first quarter of 2018. The adoption of this guidance had no impact on the net income of the Company.

Upon adoption of the guidance, the presentation of the results reflect a change in Operating income (loss) offset by an equal and offsetting change in Other income (expense) for each period, as follows:



	Years ended December 31
	2017									2016
	As Reported			Adjustments			As Adjusted			As Reported		Adjustments			As Adjusted
Operating income (loss) ⁽¹⁾	$	979		$	86		$	1,065		$	1,638	$	173		$	1,811
Other income (expense)	$	(39	)	$	(86	)	$	(125	)	$	36	$	(173	)	$	(137	)


(1)	Reclassification from Operating income is recorded in Compensation and benefits.

Income Tax Consequences of Intercompany Transactions

In October 2016, the FASB issued new accounting guidance on the income tax consequences of intra-entity asset transfers other than inventory. The guidance requires that the seller and buyer recognize the consolidated current and deferred income tax consequences of a transaction in the period the transaction occurs rather than deferring to a future period and recognizing those consequences when the asset has been sold to an outside party or otherwise recovered through use (i.e. depreciated, amortized, or impaired). The Company has applied the new guidance on a modified retrospective basis with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The new guidance was effective for Aon in the first quarter of 2018. Upon the adoption of this guidance on January 1, 2018, the Company recognized an increase to Deferred tax assets of $23 million, an increase to Deferred tax liabilities of $12 million, and a decrease to Other non-current assets of $26 million on the Consolidated Statement of Financial Position through a cumulative adjustment of $15 million decrease to Retained earnings. For the twelve months ended December 31, 2018, the impact of adopting this guidance on the Consolidated Statement of Income was insignificant.

Statement of Cash Flows

In August 2016, the FASB issued new accounting guidance on the classification of certain cash receipts and cash payments. Under the new guidance, an entity no longer has discretion to choose the classification for a number of transactions, including contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The new standard was effective for the Company in the first quarter of 2018. The adoption of this guidance had no impact on the Company’s Consolidated Statements of Cash Flows.

Financial Assets and Liabilities

In January 2016, the FASB issued new accounting guidance on recognition and measurement of financial assets and financial liabilities. The amendments in the new guidance make targeted improvements, which include the requirement to measure equity investments with readily determinable fair values at fair value through net income, simplification of the impairment assessment for equity investments without readily determinable fair values, adjustments to existing and additional disclosure requirements, and additional tax considerations. The Company applied the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with the exception of the amendments related to equity securities without readily determinable fair values, including disclosure requirements, which were applied prospectively. Upon the adoption of this guidance on January 1, 2018, the Company recognized an increase to Accumulated other comprehensive loss of $1 million on the Consolidated Statement of Financial Position through a cumulative adjustment of $1 million increase to Retained earnings. For the twelve months ended December 31, 2018, the impact of adopting this guidance on the Consolidated Statement of Income was insignificant.

Revenue Recognition

In May 2014, the FASB issued a new accounting standard on revenue from contracts with customers (the “Standard” or “ASC 606”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP (“ASC 605”). The core principal of the Standard is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Standard also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Two methods of transition were permitted upon adoption: full retrospective and modified retrospective. The Company elected to apply the modified retrospective adoption approach to all contracts. Under this approach, prior periods were not restated. Rather, revenues and other disclosures for prior periods were provided in the notes to the financial statements as previously reported under ASC 605, and the cumulative effect of initially applying the guidance was recognized as an adjustment to Retained earnings.

The following summarizes the significant changes to the Company as a result of the adoption of ASC 606 on January 1, 2018.

•

The Company previously recognized revenue either at a point in time or over a period of time based on the transfer of value to customers or as the remuneration became determinable. Under ASC 606, the revenue related to certain brokerage services recognized over a period of time is recognized on the effective date of the associated policies when control of the policy transfers to the customer. As a result, revenue from these arrangements are typically recognized in earlier periods under ASC 606 in comparison to ASC 605, changing the timing and amount of revenue recognized for annual and interim periods. This change resulted in a significant shift in timing of interim revenue for the Reinsurance Solutions revenue line and, to a lesser extent, certain other brokerage services.

•

The Standard provides guidance on accounting for certain revenue-related costs including when to capitalize costs associated with obtaining and fulfilling a contract. The majority of these costs were previously expensed as incurred under ASC 605. Assets recognized for the costs to obtain a contract, which includes certain sales commissions, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, considering anticipated renewals when applicable. For situations where the renewal period is one year or less and renewal costs are commensurate with the initial contract, the Company applied a practical expedient and recognizes the costs of obtaining a contract as an expense when incurred. Assets recognized as costs to fulfill a contract, which includes internal costs related to pre-placement broking activities, as well as other costs, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, which is generally less than one year.

As a result of applying the modified retrospective method to adopt ASC 606, the following adjustments were made to the Consolidated Statement of Financial Position as of January 1, 2018:



	December 31, 2017					January 1, 2018
(millions)	As Reported		Adjustments			As Adjusted
Assets
Receivables, net	$	2,478	$	252		$	2,730
Other current assets	$	289	$	298		$	587
Deferred tax assets	$	389	$	(128	)	$	261
Other non-current assets	$	307	$	145		$	452

Liabilities
Accounts payable and accrued liabilities	$	1,961	$	8		$	1,969
Other current liabilities	$	870	$	13		$	883
Deferred tax liabilities	$	127	$	42		$	169
Other non-current liabilities	$	1,102	$	(3	)	$	1,099

Equity
Total equity	$	4,648	$	507		$	5,155

The following tables summarize the impacts of adopting ASC 606 on the Company’s Consolidated Statement of Income, Financial Position, and Cash Flows as of and for the twelve months ended December 31, 2018.

Consolidated Statement of Income



	Twelve months ended December 31, 2018
(millions)	As Reported			Adjustments			Balances Without Adoption of ASC 606
Revenue
Total revenue	$	10,770		$	(61	)	$	10,709
Expenses
Compensation and benefits	$	6,103		$	51		$	6,154
Other general expenses	$	1,500		$	(1	)	$	1,499
Other income (expense)	$	(25	)	$	1		$	(24	)
Income taxes	$	146		$	(34	)	$	112

Adoption of ASC 606 had a favorable impact of $78 million on net income from continuing operations, or $0.32 per share, for the twelve months ended December 31, 2018.

Consolidated Statement of Financial Position



	As of December 31, 2018
(millions)	As Reported		Adjustments			Balances Without Adoption of ASC 606
Assets
Receivables, net	$	2,760	$	(301	)	$	2,459
Other current assets	$	618	$	(319	)	$	299
Deferred tax assets	$	561	$	137		$	698
Other non-current assets	$	448	$	(155	)	$	293

Liabilities
Other current liabilities	$	936	$	(43	)	$	893
Deferred tax liabilities	$	181	$	(28	)	$	153
Other non-current liabilities	$	1,097	$	2		$	1,099

Equity
Total equity	$	4,219	$	(569	)	$	3,650

Consolidated Statement of Cash Flows



	Twelve months ended December 31, 2018
(millions)	As Reported			Adjustments			Balances Without Adoption of ASC 606
Cash flows from operating activities
Net income	$	1,174		$	(78	)	$	1,096
Receivables, net	$	(127	)	$	49		$	(78	)
Accounts payable and accrued liabilities	$	25		$	8		$	33
Current income taxes	$	34		$	(34	)	$	—
Other assets and liabilities	$	2		$	55		$	57

The adoption of ASC 606 had no impact on total Cash provided by operating activities.

Refer to Note 3 “Revenue from Contracts with Customers” for further information.

Accounting Standards Issued but Not Yet Adopted

Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued new accounting guidance related to the disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. The guidance requires sponsors of these plans to provide additional disclosures, including weighted-average interest rates used in the entity’s cash balance pension plans and a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period, and eliminates certain previous disclosure requirements. The guidance is effective for Aon in the first quarter of 2021 with early adoption permitted and will be applied retrospectively. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB issued new accounting guidance related to reclassification of certain tax effects from accumulated other comprehensive income. The guidance allows a reclassification from accumulated comprehensive income to retained earnings for stranded tax effects resulting from the Tax Reform Act. In addition, the entity is required to provide certain disclosures regarding stranded tax effects. The guidance is effective for Aon in the first quarter of 2019 and early adoption is permitted, including adoption in any interim period. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. The Company does not anticipate electing to reclassify stranded tax effects in accumulated other comprehensive income to retained earnings and will adopt the disclosure guidance in the first quarter of 2019. Refer to Note 11 “Income Taxes” for further discussion of the Tax Reform Act.

Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB issued new accounting guidance on targeted improvements to accounting for hedging activities. The new guidance amends its hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and requires the effect of a hedging instrument to be presented in the same income statement line as the hedged item. Further, in December 2018, the FASB issued additional guidance which added to the list of U.S. benchmark interest rates that are eligible to be hedged, the Overnight Index Swap (“OIS”) rate based on the Secured Overnight Financing Rate. Thus, entities may designate the OIS rate in hedging relationships they enter into on or after the date of adoption of this guidance. An entity will apply the new guidance on a modified retrospective basis with a cumulative effect adjustment to accumulated other comprehensive income with a corresponding adjustment to retained earnings as of the beginning of the period of adoption. Changes to income statement presentation and financial statement disclosures will be applied prospectively. The new guidance is effective for Aon in the first quarter of 2019 and early adoption is permitted. The Company will adopt the new guidance in the first quarter of 2019 and does not expect a significant impact on the Financial Statements.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued new accounting guidance on simplifying the test for goodwill impairment. Currently the standard requires an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The new guidance removes Step 2, resulting in an entity applying a line-step quantitative test and will record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. An entity will apply the new guidance on a prospective basis. The new guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. The Company is currently evaluating the period of adoption, but does not expect a significant impact on the Financial Statements.

Credit Losses

In June 2016, the FASB issued new accounting guidance on the measurement of credit losses on financial instruments. The new guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. The Company is currently evaluating the impact that the standard will have on the Financial Statements and period of adoption.

Leases

In February 2016, the FASB issued a new accounting standard on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new standard, a lessee is required to recognize in the Consolidated Statement of Financial Position liabilities to make future lease payments and right-of-use assets representing its right to use the underlying assets for the lease term. The recognition, measurement, timing, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current U.S. GAAP standards. The new standard is effective for the Company in the first quarter of 2019, with early adoption permitted and must be applied using a modified retrospective transition approach. In July 2018, the FASB amended this guidance and provided an additional transition method with which to adopt the guidance. Under the additional transition method, entities may elect to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. Under this transition method, an entity's reporting for the comparative periods prior to adoption presented in the financial statements would continue to be in accordance with current lease guidance and thus not restated. The Company will adopt the new standard as of January 1, 2019 using the cumulative-effect adjustment transition method approved by the FASB. Additionally, the Company will provide expanded lease disclosures required under the new standard in the first quarter of 2019, including both qualitative and quantitative information.

The modified retrospective approach includes several optional practical expedients that entities may elect to apply upon transition. The Company has determined it will elect the package of practical expedients permitted under the transition guidance within the new standard, which allows a lessee to carryforward their population of existing leases, the classification of each lease, as well as the treatment of initial direct costs as of the period of adoption. In addition, the Company will elect the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. Furthermore, the Company has made a policy election to not recognize right-of-use assets and lease liabilities that arise from leases with an initial term of twelve months or less on the Consolidated Statements of Financial Position. Lastly, the Company has determined it will not elect the practical expedient related to hindsight in determining the lease term and in assessing impairment of right-of-use assets.

The Company will implement the standard as of January 1, 2019 and has executed a comprehensive approach to identify arrangements that may contain a lease, has performed completeness assessments over the identified lease population, and has implemented system solutions and processes to appropriately account for the lease right-of-use assets and lease liabilities upon transition and an ongoing basis. Further, control activities related to the adoption of this standard as well as ongoing transactional processes and procedures have been designed and begun to be implemented to ensure compliance with the new standard.

The Company expects to recognize lease liabilities ranging from approximately $1.3 billion to $1.5 billion and corresponding right-of-use assets ranging from $1.1 billion to $1.3 billion on the Consolidated Statements of Financial Position upon the adoption of this standard. The Company does not anticipate that the new standard will have a significant impact on the Consolidated Statements of Income or the Consolidated Statements of Cash Flows.

Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers by principal service line (in millions):



	Years ended December 31
	2018			2017			2016
Commercial Risk Solutions	$	4,652		$	4,169		$	3,929
Reinsurance Solutions	1,563			1,429			1,361
Retirement Solutions	1,865			1,755			1,707
Health Solutions	1,596			1,515			1,370
Data & Analytic Services	1,105			1,140			1,050
Elimination	(11		)	(10		)	(8		)
Total revenue	$	10,770		$	9,998		$	9,409

Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):



	Years ended December 31
	2018		2017		2016
United States	$	4,677	$	4,425	$	3,981
Americas other than United States	940		976		899
United Kingdom	1,555		1,436		1,354
Europe, Middle East, & Africa other than United Kingdom	2,413		2,025		1,760
Asia Pacific	1,185		1,136		1,415
Total revenue	$	10,770	$	9,998	$	9,409

Contract Costs

The Company recognizes an asset for costs incurred to fulfill a contract for costs that are specifically identified and relate to a contract or anticipated contract, generate or enhance resources used in satisfying the Company’s performance obligations, and are expected to be recovered. Assets recognized as costs to fulfill a contract, which includes internal costs related to pre-placement broking activities, as well as other costs, are amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates. The amortization is primarily included in Compensation and benefits on the Consolidated Statements of Income.

An analysis of the changes in the net carrying amount of costs to fulfill contracts with customers is as follows (in millions):



	2018
Balance at beginning of period ⁽¹⁾	$	298
Additions	1,504
Amortization	(1,465		)
Impairment	—
Foreign currency translation and other	(8		)
Balance at end of period	$	329


(1)	Upon adoption of the new revenue recognition standard on January 1, 2018, Aon capitalized $298 million of costs to fulfill contracts with customers.

The Company capitalizes incremental costs to obtain a contract with a customer that are expected to be recovered. Assets recognized for the costs to obtain a contract, which includes certain sales commissions, will be amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates, considering anticipated renewals when applicable. For situations where the renewal period is one year or less and renewal costs are commensurate with the initial contract, the Company has applied a practical expedient and recognized the costs of obtaining a contract as an expense when incurred. The amortization is primarily included in Compensation and benefits on the Consolidated Statements of Income.

An analysis of the changes in the net carrying amount of costs to obtain contracts with customers is as follows (in millions):



	2018
Balance at beginning of period ⁽¹⁾	$	145
Additions	53
Amortization	(41		)
Impairment	—
Foreign currency translation and other	(1		)
Balance at end of period	$	156


(1)	Upon adoption of the new revenue recognition standard on January 1, 2018, Aon capitalized $145 million of costs to obtain contracts with customers.

Please refer to Note 2 “Summary of Significant Accounting Principles and Practices” for further information regarding the Company’s revenue recognition policy.

Other Financial Data

12 Months Ended

Dec. 31, 2018

Other Financial Data [Abstract]

Other Financial Data

Consolidated Statements of Income Information

Other Income (Expense)

Other income (expense) consists of the following (in millions):



	Years ended December 31
	2018			2017			2016
Foreign currency remeasurement	$	25		$	(37	)	$	(2	)
Disposal of business	(6		)	(16		)	39
Pension and other postretirement	1			(86		)	(173		)
Equity earnings	4			12			13
Financial instruments	(49		)	2			(14		)
Total	$	(25	)	$	(125	)	$	(137	)

Consolidated Statements of Financial Position Information

Allowance for Doubtful Accounts

An analysis of the allowance for doubtful accounts is as follows (in millions):



	2018			2017			2016
Balance at January 1	$	59		$	56		$	58
Provision charged to Other general expenses	24			18			10
Accounts written off, net of recoveries	(25		)	(18		)	(15		)
Foreign currency translation	4			3			3
Balance at December 31	$	62		$	59		$	56

Other Current Assets

The components of Other current assets are as follows (in millions):



As of December 31	2018		2017
Costs to fulfill contracts with customers ⁽¹⁾	$	329	$	—
Taxes receivable	113		114
Prepaid expenses	97		126
Receivables from the Divested Business ⁽²⁾	12		28
Other	67		21
Total	$	618	$	289


(1)	Refer to Note 3 “Revenue from Contracts with Customers” for further information.


(2)	Refer to Note 5 “Discontinued Operations” for further information.

Fixed Assets, net

The components of Fixed assets, net are as follows (in millions):



As of December 31	2018		2017
Software	$	693	$	680
Leasehold improvements	334		349
Computer equipment	279		295
Furniture, fixtures and equipment	228		240
Construction in progress	154		79
Other	45		90
Fixed assets, gross	1,733		1,733
Less: Accumulated depreciation	1,145		1,169
Fixed assets, net	$	588	$	564

Depreciation expense, which includes software amortization, was $176 million, $187 million, and $162 million for the years ended December 31, 2018, 2017, and 2016, respectively.

Other Non-Current Assets

The components of Other non-current assets are as follows (in millions):



As of December 31	2018		2017
Costs to obtain contracts with customers ⁽¹⁾	$	156	$	—
Investments	54		57
Taxes receivable	100		84
Other	138		166
Total	$	448	$	307

(1) Refer to Note 3 “Revenue from Contracts with Customers” for further information.

Other Current Liabilities

The components of Other current liabilities are as follows (in millions):



As of December 31	2018		2017
Deferred revenue ⁽¹⁾	$	251	$	311
Taxes payable ⁽²⁾	83		139
Other	602		420
Total	$	936	$	870


(1)	During the twelve months ended December 31, 2018, $487 million was recognized in the Consolidated Statements of Income.


(2)	Includes $42 million for the current portion of the Transition Tax as of December 31, 2017. Refer to Note 11 “Income Taxes” for further information on the Transition Tax.

Other Non-Current Liabilities

The components of Other non-current liabilities are as follows (in millions):



As of December 31	2018		2017
Taxes payable ⁽¹⁾	$	585	$	529
Leases	169		153
Compensation and benefits	56		67
Deferred revenue	65		49
Other	222		304
Total	$	1,097	$	1,102


(1)	Includes $240 million and $222 million for the non-current portion of the Transition Tax, as of December 31, 2018 and December 31, 2017, respectively. Refer to Note 11 “Income Taxes” for further information on the Transition Tax.

Discontinued Operations

12 Months Ended

Dec. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

On February 9, 2017, the Company entered into a Purchase Agreement with Tempo Acquisition, LLC (the “Purchase Agreement”) to sell the Divested Business to an entity formed and controlled by affiliates of The Blackstone Group L.P. (the “Buyer”) and certain designated purchasers that are direct or indirect subsidiaries of the Buyer.

On May 1, 2017, the Buyer purchased all of the outstanding equity interests of the Divested Business, plus certain related assets and liabilities, for a purchase price of $4.3 billion in cash paid at closing, subject to customary adjustments set forth in the Purchase Agreement, and deferred consideration of up to $500 million. Cash proceeds after customary adjustments and before taxes due were $4.2 billion.

Aon and the Buyer entered into certain transaction related agreements at the closing, including two commercial agreements, a transition services agreement, certain intellectual property license agreements, sub-leases, and other customary agreements. Aon expects to continue to be a significant client of the Divested Business and the Divested Business has agreed to use Aon for its broking and other services for a specified period of time.

The financial results of the Divested Business for the years ended December 31, 2018, 2017, and 2016 are presented as Net income from discontinued operations on the Company’s Consolidated Statements of Income. The following table presents the financial results of the Divested Business (in millions):



	Years ended December 31
	2018			2017		2016
Revenue
Total revenue	$	—		$	698	$	2,218
Expenses
Total operating expenses	12			656		1,950
Operating Income from discontinued operations	(12		)	42		268
Other income	—			10		—
Income from discontinued operations before income taxes	(12		)	52		268
Income tax expense (benefit)	(4		)	3		91
Net income (loss) from discontinued operations, excluding gain	(8		)	49		177
Gain on sale of discontinued operations, net of tax	82			779		—
Net income from discontinued operations	$	74		$	828	$	177

Upon triggering held for sale criteria in February 2017, Aon ceased depreciating and amortizing all long-lived assets included in discontinued operations. Total operating expenses for the years ended December 31, 2017, and 2016 include, respectively, $8 million and $70 million of depreciation of fixed assets and $11 million and $120 million of intangible asset amortization for the time prior to the Company triggering held for sale criteria.

The Company’s Consolidated Statements of Cash Flows present the operating, investing, and financing cash flows of the Divested Business as discontinued operations. Aon uses a centralized approach to cash management and financing of its operations. Prior to the closing of the Transaction, portions of the Divested Business’s cash were transferred to Aon daily, and Aon would fund the Divested Business as needed. There were no Cash and cash equivalents of discontinued operations at December 31, 2017. Total proceeds received for the sale of the Divested Business and taxes paid as a result of the sale are recognized on the Consolidated Statements of Cash Flows in Cash provided by investing activities - continuing operations and Cash provided by operating activities - continuing operations, respectively.

Restructuring

12 Months Ended

Dec. 31, 2018

Restructuring and Related Activities [Abstract]

Restructuring

In 2017, Aon initiated a global restructuring plan (the “Restructuring Plan”) in connection with the sale of the Divested Business. The Restructuring Plan is intended to streamline operations across the organization and deliver greater efficiency, insight, and connectivity. The Company expects these restructuring activities and related expenses to affect continuing operations through the fourth quarter of 2019, including an estimated 4,800 to 5,400 role eliminations. In the fourth quarter of 2018, Aon expanded the Restructuring Plan, which resulted in additional expected costs of approximately $200 million, consisting of $150 million of cash investment and $50 million of non-cash charges.

The Restructuring Plan is expected to result in cumulative costs of approximately $1,225 million through the end of the plan, consisting of approximately $450 million in employee termination costs, $130 million in technology rationalization costs, $65 million in lease consolidation costs, $50 million in non-cash asset impairments, and $530 million in other costs, including certain separation costs associated with the sale of the Divested Business.

From the inception of the Restructuring Plan through December 31, 2018, the Company has eliminated 4,366 positions and incurred total expenses of $982 million for restructuring and related separation costs. These charges are included in Compensation and benefits, Information technology, Premises, Depreciation of fixed assets, and Other general expenses in the accompanying Consolidated Statements of Income.

The following table summarizes restructuring and separation costs by type that have been incurred through December 31, 2018 and are estimated to be incurred through the end of the Restructuring Plan (in millions). Estimated costs by type may be revised in future periods as these assumptions are updated:



	Year Ended December 31, 2018		Inception to Date		Estimated Remaining Costs		Estimated Total Cost ⁽¹⁾
Workforce reduction	$	115	$	414	$	36	$	450
Technology rationalization ⁽²⁾	47		80		50		130
Lease consolidation ⁽²⁾	28		36		29		65
Asset impairments	13		39		11		50
Other costs associated with restructuring and separation ^{(2) (3)}	282		413		117		530
Total restructuring and related expenses	$	485	982		$	243	$	1,225

(1)

Actual costs, when incurred, may vary due to changes in the assumptions built into the Restructuring Plan. Significant assumptions that may change when plans are finalized and implemented include, but are not limited to, changes in severance calculations, changes in the assumptions underlying sublease loss calculations due to changing market conditions, and changes in the overall analysis that might cause the Company to add or cancel component initiatives.

(2)

Total contract termination costs incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, for the twelve months ended December 31, 2018 were $5 million, $25 million, and $85 million; and since inception of the Restructuring Plan, were $6 million, $33 million, and $88 million, respectively. Total estimated contract termination costs expected to be incurred under the Restructuring Plan associated with Technology rationalizations, Lease consolidations, and Other costs associated with restructuring and separation, respectively, are $15 million, $80 million, and $95 million.


(3)	Other costs associated with the Restructuring Plan include primarily those to separate the Divested Business, as well as moving costs and consulting and legal fees. These costs are generally recognized when incurred.

The changes in the Company’s liabilities for the Restructuring Plan as of December 31, 2018 are as follows (in millions):



	Restructuring Plan
Balance at December 31, 2017	$	186
Expensed	448
Cash payments	(425		)
Foreign currency translation and other	(8		)
Balance at December 31, 2018	$	201

Acquisitions and Dispositions of Businesses

12 Months Ended

Dec. 31, 2018

Business Combinations and Discontinued Operations and Disposal Groups [Abstract]

Acquisitions and Dispositions of Businesses

Acquisitions

The Company completed eight acquisitions during the year ended December 31, 2018 and seventeen acquisitions during the year ended December 31, 2017. The following table includes the preliminary fair values of consideration transferred, assets acquired, and liabilities assumed as a result of the Company’s acquisitions (in millions):



	For the year ended December 31, 2018
Consideration transferred
Cash	$	55
Deferred and contingent consideration	18
Aggregate consideration transferred	$	73

Assets acquired
Cash and cash equivalents	$	1
Receivables, net	4
Goodwill	38
Intangible assets, net	34
Other assets	4
Total assets acquired	81
Liabilities assumed
Current liabilities	6
Other liabilities	2
Total liabilities assumed	8
Net assets acquired	$	73

Intangible assets are primarily customer-related and contract-based assets. Those intangible assets acquired as part of a business acquisition in 2018 had a weighted average useful economic life of 7 years. Acquisition related costs incurred and recognized within Other general expenses for the year ended December 31, 2018 were $2 million. Total revenue for these acquisitions included in the Company’s Consolidated Statement of Income for the year ended December 31, 2018 was approximately $17 million.

The results of operations of these acquisitions are included in the Consolidated Financial Statements as of the respective acquisition dates. The results of operations of the Company would not have been materially different if these acquisitions had been reported from the beginning of the period in which they were acquired.

2018 Acquisitions

On December 31, 2018, the Company completed the transaction to acquire certain assets of Bill Beatty Insurance Agency, Inc. based in the United States.

On November 15, 2018, the Company completed the transaction to acquire certain business and assets of North Harbour Insurance Services (1985) Limited, a New Zealand-based firm.

On October 25, 2018, the Company completed the transaction to acquire 100% capital of GEFASS S.R.L and GE.F.IT S.R.L., Italy-based firms specialized in Bancassurance schemes.

On May 9, 2018, the Company completed the transaction to acquire certain assets of 601West, a division of Lee & Hayes, P.L.L.C. based in the United States.

On April 24, 2018, the Company completed the transaction to acquire Inspiring Benefits, S.L., a Spain-based firm specialized in employee loyalty, wellbeing, and rewards programs.

On March 1, 2018, the Company completed the transaction to acquire the business and assets of the trade credit business of Niche International Business Proprietary Limited, a trade credit brokerage based in Johannesburg, South Africa.

On March 1, 2018, the Company completed the transaction to acquire Affinity Risk Partners (Brokers) Pty. Ltd., an insurance broker in Victoria, Australia.

On January 19, 2018, the Company completed the transaction to acquire substantially all of the assets of The Burchfield Group, a provider in pharmacy benefit consulting, auditing, and health plan compliance services based in the United States.

2017 Acquisitions

On December 29, 2017, the Company completed the transaction to acquire the Townsend Group, a U.S.-based provider of global investment management and advisory services primarily focused on real estate.

On December 29, 2017, the Company completed the transaction to acquire Baltolink UADBB, a regional broker based in Lithuania.

On December 19, 2017, the Company completed the transaction to acquire a client register of Grant Liddell Financial Advisor Services Pty Ltd in Australia.

On December 1, 2017, the Company completed the transaction to acquire Henderson Insurance Brokers Limited, an independent insurance broking firm based in the United Kingdom.

On November 30, 2017, the Company completed the transaction to acquire Unidelta AG, an insurance broker located in Switzerland.

On October 31, 2017, the Company completed the transaction to acquire Unirobe Meeùs Groep, an insurance broker based in the Netherlands.

On October 31, 2017, the Company completed the transaction to acquire Lenzi Paolo Broker di Assicurazioni S.r.l., an insurance broker based in Italy.

On October 26, 2017, the Company completed the transaction to acquire Nauman Insurance Brokers Limited, an insurance broker based in New Zealand.

On October 2, 2017, the Company completed the transaction to acquire Portus Consulting, an independent employee benefits firm based in the United Kingdom.

On August 31, 2017, the Company completed the transaction to acquire Mark Kelly Insurance and Financial Services PTY LTD, an Australia-based broker servicing the insurance needs of commercial clients in and around the Townsville regional center.

On August 28, 2017, the Company completed the transaction to acquire a certain portfolio in the Charlotte office of The Hays Group, Inc. d/b/a Hays Companies.

On July 27, 2017, the Company completed the transaction to acquire Grupo Innovac Sociedad de Correduría de Seguros, S.A, an insurance broker based in Valencia, Spain.

On July 3, 2017, the Company completed the transaction to acquire PWZ AG, an independent insurance broker based in Zurich, Switzerland.

On May 31, 2017, the Company completed the transaction to acquire SchneiderGolling IFFOXX Assekuranzmakler AG and SchneiderGolling Industrie Assekuranzmaklergesellschaft mbH from SchneiderGolling Gruppe, a property and casualty broker based in Southern Germany.

On May 2, 2017, the Company completed the transaction to acquire cut-e Assessment Global Holdings Limited, a high-volume online psychometric assessments provider based in Ireland.

On March 3, 2017, the Company completed the transaction to acquire Finaccord Limited, a market research, publishing and consulting company based in the United Kingdom.

On January 19, 2017, the Company completed the transaction to acquire VERO Management AG, an insurance broker and risk advisor based in Austria.

Dispositions

The Company completed four dispositions during the year ended December 31, 2018. The Company completed nine dispositions during the year ended December 31, 2017, excluding the sale of the Divested Business, and five dispositions during the year ended December 31, 2016.

Total pretax losses, net of gains, for the year ended December 31, 2018 was $6 million. Total pretax gains, net of losses, for the years ended December 31, 2017, and 2016, were $16 million and $39 million, respectively. Gains and losses recognized as a result of a disposition are included in Other income (expense) in the Consolidated Statements of Income.

During the third quarter of 2018, Aon disposed of certain assets and liabilities that were previously classified as held for sale due to management’s decision to exit certain operations. In the second quarter of 2018, a non-cash impairment charge of $176 million was recognized to write down the assets and liabilities to a fair value less cost-to-sell of $47 million and $41 million, respectively. The impairment charge was recognized in Amortization and impairment of intangible assets on the Consolidated Statement of Income. Adjustments to the non-cash impairment charge in the third and fourth quarters were insignificant.

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

The changes in the net carrying amount of goodwill for the years ended December 31, 2018 and 2017, respectively, are as follows (in millions):



Balance as of January 1, 2017	$	7,410
Goodwill related to current year acquisitions	619
Goodwill related to disposals	(5		)
Goodwill related to prior year acquisitions	(13		)
Foreign currency translation	347
Balance as of December 31, 2017	$	8,358
Goodwill related to current year acquisitions	38
Goodwill related to disposals	(2		)
Goodwill related to prior year acquisitions	4
Foreign currency translation	(227		)
Balance as of December 31, 2018	$	8,171

Other intangible assets by asset class are as follows (in millions):



	As of December 31
	2018						2017
	Gross Carrying Amount		Accumulated Amortization and Impairment		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization and Impairment		Net Carrying Amount
Customer related and contract based	2,240		1,444		796		2,550		1,415		1,135
Tradenames	1,027		740		287		1,047		533		514
Technology and other	391		325		66		416		332		84
Total	$	3,658	$	2,509	$	1,149	$	4,013	$	2,280	$	1,733

In the second quarter of 2017, and in connection with the completion of the sale of the Divested Business, the Company recognized a non-cash impairment charge to the associated tradenames of $380 million. The fair value of the tradenames was determined using the Relief from Royalty Method. This impairment was included in Amortization and impairment of intangible assets on the Consolidated Statement of Income. Refer to Note 5 “Discontinued Operations” for further information.

Amortization expense and impairment charges from finite lived intangible assets were $593 million, $704 million, and $157 million for the years ended December 31, 2018, 2017, and 2016, respectively.

The estimated future amortization for finite-lived intangible assets as of December 31, 2018 is as follows (in millions):



	Estimated Future Amortization
For the years ended	Estimated Future Amortization
2019	$	385
2020	219
2021	126
2022	84
2023	72
Thereafter	263
Total	$	1,149

Debt

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt

The following is a summary of outstanding debt (in millions):



As of December 31	2018		2017
3.875% Senior Notes due December 2025	746		745
5.00% Senior Notes due September 2020	599		598
3.50% Senior Notes due June 2024	596		595
4.75% Senior Notes due May 2045	592		592
2.875% Senior Notes due May 2026 (EUR 500M)	562		587
4.60% Senior Notes due June 2044	544		544
8.205% Junior Subordinated Notes due January 2027	521		521
2.80% Senior Notes due March 2021	398		398
4.00% Senior Notes due November 2023	348		348
4.50% Senior Notes due December 2028	347		—
6.25% Senior Notes due September 2040	296		296
4.76% Senior Notes due March 2018 (CAD 375M)	—		296
4.45% Senior Notes due May 2043	246		246
4.25% Senior Notes due December 2042	198		197
Commercial paper	250		—
Other	1		3
Total debt	6,244		5,966
Less: Short-term and current portion of long-term debt	251		299
Total long-term debt	$	5,993	$	5,667

Notes

On December 3, 2018, Aon Corporation issued $350 million 4.50% Senior Notes due December 2028. The Company used the net proceeds of the offering to pay down a portion of outstanding commercial paper and for general corporate purposes.

On March 8, 2018 the Company’s CAD $375 million ($291 million at March 8, 2018 Exchange Rates) 4.76% Senior Notes due March 2018 issued by a Canadian subsidiary of Aon Corporation matured and was repaid in full.

Each of the notes issued by Aon plc is fully and unconditionally guaranteed by Aon Corporation, and each of the notes issued by Aon Corporation is fully and unconditionally guaranteed by Aon plc. Refer to Note 19 “Guarantee of Registered Securities” for additional information regarding guarantees of outstanding debt securities. Each of the notes described and identified in the table above contains customary representations, warranties, and covenants, and the Company was in compliance with all such covenants as of December 31, 2018.

Repayments of total debt are as follows (in millions):



2019	$	251
2020	600
2021	400
2022	—
2023	—
Thereafter	5,095
Total Repayments	6,346
Unamortized discounts, premiums, and debt issuance costs	(102		)
Total Debt	$	6,244

Revolving Credit Facilities

As of December 31, 2018, Aon plc had two primary committed credit facilities outstanding: its $900 million multi-currency U.S. credit facility expiring in February 2021 (the “2021 Facility”) and its $400 million multi-currency U.S. credit facility expiring in October 2022 (the “2022 Facility”). On February 2, 2019, the Company extended the 2021 Facility by one year, and it will now expire in February 2022.

Each of these facilities includes customary representations, warranties, and covenants, including financial covenants that require Aon plc to maintain specified ratios of adjusted consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”) to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At December 31, 2018, Aon plc did not have borrowings under either the 2021 Facility or the 2022 Facility, and was in compliance with all covenants contained therein during the twelve months ended December 31, 2018.

Commercial Paper

Aon Corporation, a wholly owned subsidiary of Aon plc, has established a U.S. commercial paper program, and Aon plc has established a European multi-currency commercial paper program (collectively, the “CP Programs”). Commercial paper may be issued in aggregate principal amounts of up to $600 million under the U.S. program and €525 million under the European program, not to exceed the amount of the Company’s committed credit, which was $1.3 billion at December 31, 2018. The U.S. commercial paper program is fully and unconditionally guaranteed by Aon plc and the European commercial paper program is fully and unconditionally guaranteed by Aon Corporation.

Commercial paper outstanding, which is included in Short-term debt and current portion of long-term debt in the Company’s Consolidated Statements of Financial Position, is as follows (in millions):



As of December, 31	2018		2017
Commercial paper outstanding	$	250	$	—

The weighted average commercial paper outstanding and its related interest rates are as follows:



Years ended December 31	2018			2017
Weighted average commercial paper outstanding	$	580		$	170
Weighted average interest rate of commercial paper outstanding	84		%	0.18		%

Lease Commitments

12 Months Ended

Dec. 31, 2018

Leases, Operating [Abstract]

Lease Commitments

The Company leases office facilities, equipment, and automobiles under non-cancelable operating leases. These leases expire at various dates, may contain renewal and expansion options, and do not contain restrictions concerning dividends or incurring additional debt. In addition to base rental costs, occupancy lease agreements generally provide for rent escalations resulting from increased assessments for real estate taxes and other charges. The total amount of the minimum rent is expensed on a straight-line basis over the lease term. The Company’s lease obligations are primarily for the use of office space and certain real-estate properties are subleased to third parties.

Rental expenses (including amounts applicable to taxes, insurance, and maintenance) for operating leases are as follows (in millions):



Years Ended December 31	2018			2017			2016
Rental expense	$	374		$	377		$	358
Sub lease rental income	(45		)	(57		)	(52		)
Net rental expense	$	329		$	320		$	306

At December 31, 2018, future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year are as follows (in millions):



Year Ended December 31, 2018	Gross rental commitments		Rentals from subleases			Net rental commitments
2019	$	303	$	(34	)	$	269
2020	253		(30		)	223
2021	221		(30		)	191
2022	182		(30		)	152
2023	148		(12		)	136
Thereafter	472		(5		)	467
Total minimum payments required	$	1,579	$	(141	)	$	1,438

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

On December 22, 2017, the Tax Reform Act was enacted into law and the new legislation contained several key tax provisions that impacted the Company, including a reduction of the corporate income tax rate to 21% effective for tax years beginning after December 31, 2017 and a one-time mandatory transition tax on accumulated foreign earnings (the “Transition Tax”), among others. Also on December 22, 2017, the Securities and Exchange Commission (the “SEC”) staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant did not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act in the period of enactment. SAB 118 allowed registrants to record provisional amounts during a one-year measurement period.

In the fourth quarter of 2017, a net provisional charge of $345 million was recorded which included the Transition Tax, the re-measurement of existing deferred tax balances, as well as local country income taxes, state income taxes and withholding taxes expected to be due upon repatriation of the earnings subject to the Transition Tax. In addition, at that time the Company was unable to estimate the allocation between continuing and discontinued operations of the tax benefit from foreign tax credits utilized in 2017.

In the fourth quarter of 2018, the Company finalized its accounting for enactment date income tax effects of the Tax Reform Act after analyzing guidance issued during the measurement period, completing its reviews, filing its tax returns, and evaluating the local tax rules.

The following table presents the impact of the accounting for the enactment of the Tax Reform Act on income tax expense (benefit) from continuing operations in our Consolidated Statements of Income for the years ended December 31, 2018 and 2017.



Years ended December 31	2018			2017			Total
Transition tax ⁽¹⁾	$	36		$	264		$	300
Re-measurement of deferred tax balances ⁽²⁾	(8		)	86			78
Indefinite reinvestment assertion ⁽³⁾	1			(5		)	(4		)
Allocation of tax benefit from foreign tax credits ⁽⁴⁾	59			—			59
Total income tax expense (benefit)	$	88		$	345		$	433


(1)	Reflects the Transition Tax on the post-1986 earnings and profits and related foreign tax credits of U.S.-owned foreign subsidiaries as of November 2, 2017 and December 31, 2017, whichever is higher.


(2)	Reflects the re-measurement of deferred tax assets and liabilities as a result of the reduction in the U.S. corporate income tax rate from 35% to 21%.


(3)	Reflects the accrual for local country income taxes, state income taxes and withholding taxes as a result of the change in its indefinite reinvestment assertion such that the Company is generally no longer indefinitely reinvested on the earnings subject to the Transition Tax.


(4)	Reflects the allocation of tax expense from discontinued operations to continuing operations related to the utilization of foreign tax credits in the tax year ended December 31, 2017. Without the income from discontinued operations, these foreign tax credits would have required a valuation allowance.

The payable balance for the Transition Tax was $240 million and $264 million as of December 31, 2018 and 2017, respectively. The change in liability is primarily attributable to updating the calculations pursuant to guidance issued during the measurement period and cash payments made during the year. The Company has elected to pay the liability in installments which are due through 2024.

Other significant provisions of the Tax Reform Act that impact income taxes include: additional limitations on the timing of the deductibility of interest payable to related and unrelated lenders, further limitations on the deductibility of executive compensation, an alternative Base Erosion and Anti-Abuse Tax that limits deductions for certain amounts payable to foreign affiliates, and an additional U.S. tax on certain future foreign subsidiary earnings, whether or not distributed, (i.e., global intangible low-taxed income or “GILTI”). The Company has elected to account for GILTI in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the year ended December 31, 2018.

Income before income tax from continuing operations and the provision for income tax from continuing operations consist of the following (in millions):



Years ended December 31	2018			2017			2016
Income before income taxes:
U.K.	$	(240	)	$	(420	)	$	(201	)
U.S.	(601		)	(765		)	(329		)
Other	2,087			1,870			1,931
Total	$	1,246		$	685		$	1,401
Income tax expense (benefit):
Current:
U.K.	$	21		$	1		$	(54	)
U.S. federal	101			48			88
U.S. state and local	35			18			7
Other	214			201			207
Total current tax expense	$	371		$	268		$	248
Deferred tax expense (benefit):
U.K.	$	19		$	(5	)	$	59
U.S. federal	(165		)	12			(110		)
U.S. state and local	(56		)	(35		)	(9		)
Other	(23		)	10			(40		)
Total deferred tax benefit	$	(225	)	$	(18	)	$	(100	)
Total income tax expense	$	146		$	250		$	148

Income before income taxes shown above is based on the location of the business unit to which such earnings are attributable for tax purposes. In addition, because the earnings shown above may, in some cases, be subject to taxation in more than one country, the income tax provision shown above as U.K., U.S. or Other may not correspond to the geographic attribution of the earnings.

The Company performs a reconciliation of the income tax provisions based on its domicile and statutory rate at each reporting period. The 2018, 2017, and 2016 reconciliations are based on the U.K. statutory corporate tax rate of 19.0%, 19.3%, and 20.0%, respectively. The reconciliation to the provisions from continuing operations reflected in the Consolidated Financial Statements is as follows:



Years ended December 31	2018	2017	2016
Statutory tax rate	19.0%	19.3%	20.0%
U.S. state income taxes, net of U.S. federal benefit	(0.4)	(1.5)	0.4
Taxes on international operations ⁽¹⁾	(7.3)	(30.3)	(12.2)
Nondeductible expenses	2.7	3.4	1.4
Adjustments to prior year tax requirements	0.9	2.0	(1.2)
Adjustments to valuation allowances	3.8	(1.8)	(2.2)
Change in uncertain tax positions	0.9	1.6	3.2
Excess tax benefits related to shared based compensation ⁽²⁾	(3.6)	(8.0)	—
U.S. Tax Reform impact ⁽³⁾	7.1	51.2	—
Loss on disposition	(10.2)	—	—
Other — net	(1.2)	0.6	1.2
Effective tax rate	11.7%	36.5%	10.6%

(1)

The Company determines the adjustment for taxes on international operations based on the difference between the statutory tax rate applicable to earnings in each foreign jurisdiction and the enacted rate of 19.0%, 19.3% and 20.0% at December 31, 2018, 2017, and 2016, respectively. The benefit to the Company’s effective income tax rate from taxes on international operations relates to benefits from lower-taxed global operations, primarily due to the use of global funding structures and the tax holiday in Singapore. The impact decreased from 2017 to 2018 primarily as a result of the decrease in the U.S. federal tax rate.


(2)	With the adoption of ASU 2016-09 in 2017, excess tax benefits and deficiencies from share-based payment transactions are recognized as income tax expense or benefit in the Company’s Consolidated Statements of Income.


(3)	The impact of the Tax Reform Act including the Transition Tax, the re-measurement of U.S. deferred tax assets and liabilities from 35% to 21%, withholding tax accruals, and the allocation of tax benefit between continuing operations and discontinued operations related to utilization of foreign tax credits.

For the tax impact of discontinued operations, see Note 5 “Discontinued Operations”.

The components of the Company’s deferred tax assets and liabilities are as follows (in millions):



As of December 31	2018			2017
Deferred tax assets:
Net operating loss, capital loss, interest, and tax credit carryforwards	$	563		$	362
Employee benefit plans	351			424
Other accrued expenses	98			65
Investment basis differences	28			35
Deferred revenue	29			20
Tradename liability	—			12
Lease and service guarantees	5			6
Brokerage fee arrangements	—			4
Other	46			49
Total	1,120			977
Valuation allowance on deferred tax assets	(171		)	(136		)
Total	$	949		$	841
Deferred tax liabilities:
Intangibles and property, plant and equipment	$	(310	)	$	(436	)
Deferred costs	(143		)	(32		)
Unremitted earnings	(30		)	(39		)
Unrealized foreign exchange gains	(26		)	(22		)
Other accrued expenses	(36		)	(12		)
Other	(24		)	(38		)
Total	$	(569	)	$	(579	)
Net deferred tax asset	$	380		$	262

Deferred income taxes (assets and liabilities have been netted by jurisdiction) have been classified in the Consolidated Statements of Financial Position as follows (in millions):



As of December 31	2018			2017
Deferred tax assets — non-current	$	561		$	389
Deferred tax liabilities — non-current	(181		)	(127		)
Net deferred tax asset	$	380		$	262

Valuation allowances have been established primarily with regard to the tax benefits of certain net operating loss and capital loss carryforwards. Valuation allowances increased by $35 million as of December 31, 2018, when compared to December 31, 2017. The change is primarily attributable to capital loss carryforwards generated by the 2018 tax loss on disposition for which utilization is subject to limitation.

The Company generally intends to limit distributions from foreign subsidiaries to earnings previously taxed in the U.S., primarily as a result of the Transition Tax, or GILTI. As of December 31, 2018, the Company has accrued $30 million for local country income taxes, withholding taxes and state income taxes on those undistributed earnings that are not indefinitely reinvested. The Company has not provided for deferred taxes on outside basis differences in our investments in our foreign subsidiaries that are unrelated to these accumulated undistributed earnings, as these outside basis differences are indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of our outside basis differences is not practicable.

The Company had the following net operating loss, capital loss, and interest carryforwards (in millions):



As of December 31	2018		2017
U.K.
Operating loss carryforwards	$	541	$	675
Capital loss carryforwards	400		415
Interest carryforwards	53		—

U.S.
Federal operating loss carryforwards	$	2	$	36
Federal capital loss carryforwards & carryback	367		—
Federal interest carryforwards	424		—

State operating loss carryforwards	$	315	$	412
State capital loss carryforwards & carryback	221		—
State interest carryforwards	227		—

Other Non-U.S.
Operating loss carryforwards	$	369	$	392
Capital loss carryforwards ⁽¹⁾	30		36
Interest carryforwards ⁽¹⁾	186		196


(1)	Prior to 2018, interest carryforwards in non-U.S. jurisdictions were classified within capital loss carryforwards. As of December 31, 2017, $196 million was reclassified from capital loss carryforwards to interest carryforwards.

The U.K. operating losses, capital losses, and interest each have an indefinite carryforward period. The federal operating loss carryforwards as of December 31, 2018 expire at various dates from 2034 to 2037 and the state operating losses as of December 31, 2018 expire at various dates from 2019 to 2038. The federal capital losses can be carried back to 2015 or carried forward until 2023. State capital losses can be carried back to 2015 in certain jurisdictions or carried forward until 2023. Federal and state interest carryforwards have indefinite carryforward periods. Operating and capital losses in other non-U.S. jurisdictions have various carryforward periods and will begin to expire in 2019. The interest carryforwards in other non-U.S. jurisdictions have indefinite carryforward periods.

During 2012, the Company was granted a tax holiday for the period from October 1, 2012 through September 30, 2022, with respect to withholding taxes and certain income derived from services in Singapore. This tax holiday and reduced withholding tax rate may be extended when certain conditions are met or may be terminated early if certain conditions are not met. The benefit realized was approximately $77 million, $45 million, and $46 million during the years ended December 31, 2018, 2017, and 2016, respectively. The impact of this tax holiday on diluted earnings per share was $0.31, $0.17, and $0.17 during the years ended December 31, 2018, 2017, and 2016, respectively.

Uncertain Tax Positions

The following is a reconciliation of the Company’s beginning and ending amount of uncertain tax positions (in millions):



	2018			2017
Balance at January 1	$	280		$	278
Additions based on tax positions related to the current year	18			25
Additions for tax positions of prior years	10			12
Reductions for tax positions of prior years	(24		)	(26		)
Settlements	—			(6		)
Business combinations	1			—
Lapse of statute of limitations	(6		)	(7		)
Foreign currency translation	—			4
Balance at December 31	$	279		$	280

The Company’s liability for uncertain tax positions as of December 31, 2018, 2017, and 2016, includes $228 million, $219 million, and $240 million, respectively, related to amounts that would impact the effective tax rate if recognized. It is possible that the amount of unrecognized tax benefits may change in the next twelve months; however, the Company does not expect the change to have a significant impact on its consolidated statements of income or consolidated balance sheets. These changes may be the result of settlements of ongoing audits. At this time, an estimate of the range of the reasonably possible outcomes within the twelve months cannot be made.

The Company recognizes interest and penalties related to uncertain tax positions in its provision for income taxes. The Company accrued potential interest and penalties of $22 million, $11 million, and $15 million in 2018, 2017, and 2016, respectively. The Company recorded a liability for interest and penalties of $77 million, $55 million, and $48 million as of December 31, 2018, 2017, and 2016, respectively.

The Company and its subsidiaries file income tax returns in their respective jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 2007. Material U.S. state and local income tax jurisdiction examinations have been concluded for years through 2005. The Company has concluded income tax examinations in its primary non-U.S. jurisdictions through 2010.

Shareholders' Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Distributable Reserves

As a company incorporated in England and Wales, Aon is required under U.K. law to have available “distributable reserves” to make share repurchases or pay dividends to shareholders. Distributable reserves may be created through the earnings of the U.K. parent company and, among other methods, through a reduction in share capital approved by the courts of England and Wales. Distributable reserves are not directly linked to a U.S. GAAP reported amount (e.g., retained earnings). As of December 31, 2018 and 2017, the Company had distributable reserves in excess of $2.2 billion and $1.2 billion, respectively.

Ordinary Shares

Aon has a share repurchase program authorized by the Company’s Board of Directors (the “Repurchase Program”). The Repurchase Program was established in April 2012 with $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014 and February 2017 for a total of $15.0 billion in repurchase authorizations.

Under the Repurchase Program, Class A Ordinary Shares may be repurchased through the open market or in privately negotiated transactions, from time to time, based on prevailing market conditions, and will be funded from available capital.

The following table summarizes the Company’s Share Repurchase activity (in millions, except per share data):



	Twelve months ended December 31
	2018		2017 ⁽¹⁾
Shares repurchased	10.0		18.0
Average price per share	$	143.94	$	133.67
Costs recorded to retained earnings
Total repurchase cost	$	1,447	$	2,403
Additional associated costs	7		12
Total costs recorded to retained earnings	$	1,454	$	2,415


(1)	Included in the 18.0 million shares repurchased during the twelve months ended December 31, 2017 were 0.1 million shares that did not settle until January 2018. These shares were settled at an average price per share of $134.41 and total cost of $15.9 million.

At December 31, 2018, the remaining authorized amount for share repurchase under the Repurchase Program was $4.0 billion. Under the Repurchase Program, the Company has repurchased a total of 118.3 million shares for an aggregate cost of approximately $11.0 billion.

Net Income Per Share

Weighted average ordinary shares outstanding are as follows (in millions):



Years ended December 31	2018	2017	2016
Basic weighted-average ordinary shares outstanding	245.2	258.5	268.1
Dilutive effect of potentially issuable shares	1.8	2.2	2.2
Diluted weighted-average ordinary shares outstanding	247.0	260.7	270.3

Potentially issuable shares are not included in the computation of diluted net income per share if its inclusion would be antidilutive. There were no shares excluded from the calculation in 2018, 2017, or 2016.

Dividends

During 2018, 2017, and 2016, the Company paid dividends of $382 million, $364 million, and $345 million, respectively, to holders of its Class A Ordinary Shares. Dividends paid per Class A Ordinary Share were $1.56, $1.41 and $1.29 for the years ended December 31, 2018, 2017, and 2016 respectively.

Accumulated Other Comprehensive Loss

Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):



	Change in Fair Value of Financial Instruments ⁽¹⁾			Foreign Currency Translation Adjustments			Postretirement Benefit Obligation ⁽²⁾			Total
Balance at January 1, 2016	$	(25	)	$	(771	)	$	(2,627	)	$	(3,423	)
Other comprehensive income (loss) before reclassifications:
Other comprehensive income (loss) before reclassifications	(25		)	(490		)	(276		)	(791		)
Tax benefit (expense)	6			(3		)	74			77
Other comprehensive income (loss) before reclassifications, net	(19		)	(493		)	(202		)	(714		)
Amounts reclassified from accumulated other comprehensive income (loss):
Amounts reclassified from accumulated other comprehensive income (loss)	10			—			322			332
Tax benefit (expense)	(3		)	—			(104		)	(107		)
Amounts reclassified from accumulated other comprehensive income (loss), net	7			—			218			225
Net current period other comprehensive income (loss)	(12		)	(493		)	16			(489		)
Balance at December 31, 2016	(37		)	(1,264		)	(2,611		)	(3,912		)
Other comprehensive income (loss) before reclassifications
Other comprehensive income (loss) before reclassifications	18			397			(220		)	195
Tax benefit (expense)	(3		)	(5		)	55			47
Other comprehensive income (loss) before reclassifications, net	15			392			(165		)	242
Amounts reclassified from accumulated other comprehensive income (loss)
Amounts reclassified from accumulated other comprehensive income (loss)	(2		)	(7		)	236			227
Tax benefit (expense)	(1		)	—			(52		)	(53		)
Amounts reclassified from accumulated other comprehensive income (loss), net	(3		)	(7		)	184			174
Net current period other comprehensive income (loss)	12			385			19			416
Balance at December 31, 2017	(25		)	(879		)	(2,592		)	(3,496		)
Adoption of new accounting guidance ⁽³⁾	(1		)	—			—			(1		)
Balance at January 1, 2018	(26		)	(879		)	(2,592		)	(3,497		)
Other comprehensive income (loss) before reclassifications
Other comprehensive income (loss) before reclassifications	(15		)	(437		)	(124		)	(576		)
Tax benefit (expense)	18			(3		)	28			43
Other comprehensive income (loss) before reclassifications, net	3			(440		)	(96		)	(533		)
Amounts reclassified from accumulated other comprehensive income (loss)
Amounts reclassified from accumulated other comprehensive income (loss)	11			—			146			157
Tax benefit (expense)	(3		)	—			(33		)	(36		)
Amounts reclassified from accumulated other comprehensive income (loss), net	8			—			113			121
Net current period other comprehensive income (loss)	11			(440		)	17			(412		)
Balance at December 31, 2018	$	(15	)	$	(1,319	)	$	(2,575	)	$	(3,909	)


(1)	Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense), Other general expenses, and Compensation and benefits. See Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivative and hedging activity.


(2)	Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense).


(3)	Refer to Note 2 “Summary of Significant Accounting Principles and Practices ” for further information.

Employee Benefits

12 Months Ended

Dec. 31, 2018

Retirement Benefits [Abstract]

Employee Benefits

Defined Contribution Savings Plans

Aon maintains defined contribution savings plans for the benefit of its employees. The expense recognized for these plans is included in Compensation and benefits in the Consolidated Statements of Income. The expense for the significant plans in the U.S., U.K., Netherlands and Canada is as follows (in millions):



Years ended December 31	2018		2017		2016
U.S.	$	98	$	105	$	121
U.K.	45		43		43
Netherlands and Canada	25		25		27
Total	$	168	$	173	$	191

Pension and Other Postretirement Benefits

The Company sponsors defined benefit pension and postretirement health and welfare plans that provide retirement, medical, and life insurance benefits. The postretirement health care plans are contributory, with retiree contributions adjusted annually, and the life insurance and pension plans are generally noncontributory. The significant U.S., U.K., Netherlands and Canadian pension plans are closed to new entrants.

Pension Plans

The following tables provide a reconciliation of the changes in the projected benefit obligations and fair value of assets for the years ended December 31, 2018 and 2017 and a statement of the funded status as of December 31, 2018 and 2017, for the material U.K., U.S., and other major plans, which are located in the Netherlands, and Canada. These plans represent approximately 90% of the Company’s projected benefit obligations.



	U.K.						U.S.						Other
(millions)	2018			2017			2018			2017			2018			2017
Change in projected benefit obligation
At January 1	$	4,893		$	4,874		$	3,155		$	2,902		$	1,401		$	1,227
Service cost	—			—			—			—			—			—
Interest cost	109			123			99			96			27			26
Plan amendment	13			—			—			—			—			—
Settlements	(176		)	(496		)	—			—			—			—
Actuarial loss (gain)	(297		)	100			(221		)	309			(47		)	49
Benefit payments	(160		)	(146		)	(156		)	(152		)	(43		)	(39		)
Foreign currency impact	(253		)	438			—			—			(67		)	138
At December 31	$	4,129		$	4,893		$	2,877		$	3,155		$	1,271		$	1,401
Accumulated benefit obligation at end of year	$	4,129		$	4,893		$	2,877		$	3,155		$	1,247		$	1,373
Change in fair value of plan assets
At January 1	$	5,906		$	5,675		$	1,958		$	1,683		$	1,256		$	1,076
Actual return on plan assets	(125		)	274			(141		)	308			(19		)	70
Employer contributions	97			86			135			119			20			21
Settlements	(176		)	(496		)	—			—			—			—
Benefit payments	(160		)	(146		)	(156		)	(152		)	(43		)	(39		)
Foreign currency impact	(317		)	513			—			—			(59		)	128
At December 31	$	5,225		$	5,906		$	1,796		$	1,958		$	1,155		$	1,256
Market related value at end of year	$	5,225		$	5,906		$	1,981		$	1,926		$	1,155		$	1,256
Amount recognized in Statement of Financial Position at December 31
Funded status	$	1,096		$	1,013		$	(1,081	)	$	(1,197	)	$	(116	)	$	(145	)
Unrecognized prior-service cost	30			19			3			5			(7		)	(7		)
Unrecognized loss	1,106			1,217			1,705			1,701			440			459
Net amount recognized	$	2,232		$	2,249		$	627		$	509		$	317		$	307

In September 2018, the Company made a cash contribution of $100 million to the qualified U.S. pension plan, which allowed the pension contribution tax deduction to be taken at the 2017 federal tax rate of 35%.

In July 2017, the Company made a non-cash contribution of approximately $80 million to its U.S. pension plan.

Amounts recognized in the Consolidated Statements of Financial Position consist of (in millions):



	U.K.						U.S.						Other
	2018			2017			2018			2017			2018			2017
Prepaid benefit cost ⁽¹⁾	$	1,113		$	1,034		$	—		$	—		$	—		$	—
Accrued benefit liability - current⁽²⁾	(1		)	(1		)	(46		)	(43		)	(5		)	(5		)
Accrued benefit liability - non-current⁽³⁾	(16		)	(20		)	(1,035		)	(1,154		)	(111		)	(140		)
Accumulated other comprehensive loss	1,136			1,236			1,708			1,706			433			452
Net amount recognized	$	2,232		$	2,249		$	627		$	509		$	317		$	307


(1)	Included in Prepaid pension


(2)	Included in Other current liabilities


(3)	Included in Pension, other postretirement, and postemployment liabilities

Amounts recognized in Accumulated other comprehensive loss (income) that have not yet been recognized as components of net periodic benefit cost at December 31, 2018 and 2017 consist of (in millions):



	U.K.				U.S.				Other
	2018		2017		2018		2017		2018			2017
Net loss	$	1,106	$	1,217	$	1,705	$	1,701	$	440		$	459
Prior service cost (income)	30		19		3		5		(7		)	(7		)
Total	$	1,136	$	1,236	$	1,708	$	1,706	$	433		$	452

In 2018, U.S. plans with a projected benefit obligation (“PBO”) and an accumulated benefit obligation (“ABO”) in excess of the fair value of plan assets had a PBO of $2.9 billion, an ABO of $2.9 billion, and plan assets with a fair value of $1.8 billion. U.K. plans with a PBO in excess of the fair value of plan assets had a PBO of $47 million and plan assets with a fair value of $30 million, and U.K. plans with an ABO in excess of the fair value of plan assets had an ABO of $47 million and plan assets with a fair value of $30 million. Other plans with a PBO in excess of the fair value of plan assets had a PBO of $1.2 billion and plan assets with a fair value of $1.1 billion, and other plans with an ABO in excess of the fair value of plan assets had an ABO of $363 million and plan assets with a fair value of $271 million.

In 2017, U.S. plans with a PBO and an ABO in excess of the fair value of plan assets had a PBO of $3.2 billion, an ABO of $3.2 billion, and plan assets of $2.0 billion. U.K. plans with a PBO in excess of the fair value of plan assets had a PBO of $52 million and plan assets with a fair value of $30 million, and plans with an ABO in excess of the fair value of plan assets had an ABO of $52 million and plan assets with a fair value of $30 million. Other plans with a PBO in excess of the fair value of plan assets had a PBO of $1.4 billion and plan assets with a fair value of $1.2 billion, and plans with an ABO in excess of the fair value of plan assets had an ABO of $1.3 billion and plan assets with a fair value of $1.2 billion.

Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):



	U.K.									U.S.									Other
	2018			2017			2016			2018			2017			2016			2018			2017			2016
Service cost	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Interest cost	109			123			158			99			96			111			27			26			29
Expected return on plan assets, net of administration expenses	(192		)	(199		)	(243		)	(144		)	(140		)	(156		)	(45		)	(47		)	(48		)
Amortization of prior-service cost	1			1			2			2			2			2			—			—			—
Amortization of net actuarial loss	28			31			31			59			50			50			12			11			10
Net periodic benefit (income) cost	(54		)	(44		)	(52		)	16			8			7			(6		)	(10		)	(9		)
Settlement expense	37			125			61			—			—			158			—			—			—
Total net periodic benefit cost (income)	$	(17	)	$	81		$	9		$	16		$	8		$	165		$	(6	)	$	(10	)	$	(9	)

The Company uses a full-yield curve approach in the estimation of the service and interest cost components of net periodic pension and postretirement benefit cost for its major pension and other postretirement benefit plans; this was obtained by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

In March 2017, the Company approved a plan to offer a voluntary one-time lump sum payment option to certain eligible employees of the Company’s U.K. pension plans that, if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during 2018. As of December 31, 2018, lump sum payments from plan assets of £139 million ($176 million using December 31, 2018 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the fourth quarter of 2018, which in aggregate resulted in a reduction to the projected benefit obligation of £122 million ($154 million using December 31, 2018 exchange rates) as well as a non-cash settlement charge of £28 million ($37 million using average exchange rates) for the year ended December 31, 2018.

In total for 2017, lump sum payments from plan assets of £371 million ($496 million using December 31, 2017 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the fourth quarter of 2017, which in aggregate resulted in a reduction to the projected benefit obligation of £325 million ($434 million using December 31, 2017 exchange rates) as well as a non-cash settlement charge of £93 million ($125 million using average December 31, 2017 exchange rate) in the fourth quarter of 2017.

In March 2016, the Company announced a plan to offer a voluntary one-time lump sum payment option to certain eligible former employees under one of the Company’s U.K. pension plans that, if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during the second quarter of 2016. In total, lump sum payments from plan assets of £116 million ($159 million using June 30, 2016 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the second quarter of 2016, which in aggregate resulted in a reduction to the projected benefit obligation of £103 million ($141 million using June 30, 2016 Exchange rates) as well as a non-cash settlement charge of £42 million ($61 million using average June 30, 2016 exchange rate) in the second quarter of 2016.

In August 2016, the Company announced a plan to offer a voluntary one-time lump sum payment option to certain eligible former employees under one of the Company’s U.S. pension plans, that if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during the fourth quarter of 2016. In total, lump sum payments from plan assets of $281 million were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.S. pension plan during the fourth quarter of 2016, which in aggregate resulted in a reduction to the projected benefit obligation of $325 million as well as a non-cash settlement charge of $158 million in the fourth quarter of 2016.

The weighted-average assumptions used to determine benefit obligations are as follows:



	U.K.		U.S. ⁽¹⁾		Other
	2018	2017	2018	2017	2018	2017
Discount rate	2.95%	2.63%	3.92 - 4.26%	3.27 - 3.61%	1.89 - 3.88%	1.78 - 3.39%
Rate of compensation increase	3.73 - 4.23%	3.70 - 4.20%	N/A	N/A	1.00 - 3.00%	1.00 - 3.00%
Underlying price inflation	1.88%	1.87%	N/A	N/A	2.00%	2.00%


(1)	U.S. pension plans are frozen and therefore not impacted by compensation increases or price inflation.

The weighted-average assumptions used to determine the net periodic benefit cost are as follows:



	U.K.			U.S.			Other
	2018	2017	2016	2018	2017	2016	2018	2017	2016
Discount rate	2.63%	2.77%	3.96%	3.27 - 3.61%	3.53 - 4.11%	3.69 - 4.43%	1.78 - 3.39%	1.85 - 3.81%	2.43 - 3.96%
Expected return on plan assets, net of administration expenses	3.34%	3.36%	4.55%	7.71%	7.88%	7.81%	1.70 - 4.85%	2.68 - 5.15%	3.47 - 4.95%
Rate of compensation increase	3.70 - 4.20%	3.70 - 4.20%	3.63 - 4.13%	N/A	N/A	N/A	1.00 - 3.00%	1.00 - 3.50%	2.00 - 3.50%

The amounts in Accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2019, not including voluntary one-time lump sum payments, are $55 million in the U.S. and $42 million outside the U.S.

Expected Return on Plan Assets

To determine the expected long-term rate of return on plan assets, the historical performance, investment community forecasts and current market conditions are analyzed to develop expected returns for each asset class used by the plans. The expected returns for each asset class are weighted by the target allocations of the plans. The expected return of 7.71% on U.S. plan assets reflects a portfolio that is seeking asset growth through a higher equity allocation while maintaining prudent risk levels. The portfolio contains certain assets that have historically resulted in higher returns, as well as other financial instruments to minimize downside risk.

No plan assets are expected to be returned to the Company during 2019.

Fair value of plan assets

The Company determined the fair value of plan assets through numerous procedures based on the asset class and available information. Refer to Note 16 “Fair Value Measurements and Financial Instruments” for a description of the procedures performed to determine the fair value of the plan assets.

The fair values of the Company’s U.S. pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):



				Fair Value Measurements Using
Asset Category	Balance at December 31, 2018			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	130		$	130	$	—		$	—
Equity investments:
Large cap domestic	294			294		—			—
Small cap domestic	14			14		—			—
International	76			76		—			—
Equity derivatives	(14		)	—		(14		)	—
Pooled funds:
International ⁽²⁾	235			—		—			—
Large cap domestic ⁽²⁾	8			—		—			—
Small cap domestic ⁽²⁾	42			—		—			—
Fixed income investments: ⁽³⁾
Corporate bonds	111			—		111			—
Government and agency bonds	126			95		31			—
Asset-backed securities	2			—		2			—
Pooled funds:
Government and agency bonds ⁽²⁾	95			—		—			—
Corporate bonds ⁽²⁾	322			—		—			—
Other investments:
Real estate and REITs ⁽⁴⁾	78			78		—			—
Alternative investments ^{(2) (5)}	277			—		—			—
Total	$	1,796		$	687	$	130		$	—


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of corporate and government bonds, asset-backed securities, and fixed-income derivatives.


(4)	Consists of exchange traded real estate investment trusts (“REITs”).


(5)	Consists of limited partnerships, private equity, and hedge funds.



			Fair Value Measurements Using
Asset Category	Balance at December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	56	$	56	$	—	$	—
Equity investments:
Large cap domestic	313		313		—		—
Small cap domestic	17		17		—		—
International	90		90		—		—
Equity derivatives	111		—		111		—
Pooled funds:
International ⁽²⁾	270		—		—		—
Large cap domestic ⁽²⁾	12		—		—		—
Small cap domestic ⁽²⁾	114		—		—		—
Fixed income investments: ⁽³⁾
Corporate bonds	110		—		110		—
Government and agency bonds	148		114		34		—
Pooled funds:
Corporate bonds ⁽²⁾	290		—		—		—
Other investments:
Real estate and REITs ⁽⁴⁾	82		82		—		—
Alternative investments ^{(2) (5)}	345		—		—		—
Total	$	1,958	$	672	$	255	$	—


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of corporate and government bonds, asset-backed securities, and fixed-income derivatives.


(4)	Consists of exchange traded REITs.


(5)	Consists of limited partnerships, private equity, and hedge funds.

The fair values of the Company’s major U.K. pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):



				Fair Value Measurements Using
	Balance at December 31, 2018			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	96		$	96	$	—		$	—
Equity investments:
Pooled funds:
Global ⁽²⁾	209			—		—			—
Europe ⁽²⁾	3			—		—			—
Fixed income investments: ⁽³⁾
Derivatives ⁽⁴⁾	(949		)	—		(949		)	—
Fixed income securities ⁽⁵⁾	2,446			2,079		367			—
Annuities	1,688			—		—			1,688
Pooled funds:
Derivatives ⁽²⁾	39			—		—			—
Fixed income securities ⁽²⁾	850			—		—			—
Other investments:
Real estate ^{(2) (6)}	149			—		—			—
Alternative investments ^{(2) (7)}	694			—		—			—
Total	$	5,225		$	2,175	$	(582	)	$	1,688


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles.


(4)	Consists of equity securities and equity derivatives, including repurchase agreements.


(5)	Consists of corporate and government bonds.


(6)	Consists of property funds and trusts holding direct real estate investments.


(7)	Consists of limited partnerships, private equity, and hedge funds.



				Fair Value Measurements Using
	Balance at December 31, 2017			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	209		$	209	$	—		$	—
Equity investments:
Pooled funds:
Global ⁽²⁾	401			—		—			—
Europe ⁽²⁾	6			—		—			—
Fixed income investments: ⁽³⁾
Derivatives ⁽⁴⁾	(771		)	—		(771		)	—
Fixed income securities ⁽⁵⁾	2,787			2,362		425			—
Annuities	1,909			—		—			1,909
Pooled funds:
Derivatives ⁽²⁾	57			—		—			—
Fixed income securities ⁽²⁾	251			—		—			—
Other investments:
Real estate ^{(2) (6)}	146			—		—			—
Alternative investments ^{(2) (7)}	911			—		—			—
Total	$	5,906		$	2,571	$	(346	)	$	1,909


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles.


(4)	Consists of equity securities and equity derivatives, including repurchase agreements.


(5)	Consists of corporate and government bonds.


(6)	Consists of property funds and trusts holding direct real estate investments.


(7)	Consists of limited partnerships, private equity, and hedge funds.

The following table presents the changes in the Level 3 fair-value category in the Company’s U.K. pension plans for the years ended December 31, 2018 and December 31, 2017 (in millions):



Fair Value Measurements Using Level 3 Inputs	Annuities
Balance at January 1, 2017	$	1,773
Actual return on plan assets:
Relating to assets still held at December 31, 2017	(66		)
Purchases, sales and settlements—net	45
Foreign exchange	157
Balance at December 31, 2017	1,909
Actual return on plan assets:
Relating to assets still held at December 31, 2018	(122		)
Purchases, sales and settlements—net	7
Foreign exchange	(106		)
Balance at December 31, 2018	$	1,688

The fair values of the Company’s other major pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):



			Fair Value Measurements Using
	Balance at December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	10	$	10	$	—	$	—
Equity investments:
Pooled funds:
Global ⁽¹⁾	281		—		—		—
Fixed income investments:
Derivatives ⁽²⁾	9		—		9		—
Pooled funds:
Fixed income securities ⁽¹⁾	766		—		—		—
Derivatives ⁽¹⁾⁽²⁾	16		—		—		—
Other investments:
Alternative investments ^{(1) (3)}	63		—		—		—
Pooled funds:
REITs ^{(1) (4)}	10		—		—		—
Total	$	1,155	$	10	$	9	$	—


(1)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(2)	Consists of corporate and government bonds and fixed-income derivatives.


(3)	Consists of limited partnerships, private equity, and hedge funds.


(4)	Consists of property funds and trusts holding direct real estate investments.



			Fair Value Measurements Using
	Balance at December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	11	$	11	$	—	$	—
Equity investments:
Pooled funds:
Global ⁽¹⁾	370		—		—		—
North America ⁽¹⁾	26		—		—		—
Fixed income investments:
Fixed income securities ⁽²⁾	211		—		211		—
Derivatives ⁽²⁾	40		—		40		—
Pooled funds:
Fixed income securities ⁽¹⁾	566		—		—		—
Other investments:
Alternative investments ^{(1) (3)}	26		—		—		—
Pooled funds:
REITs ^{(1) (4)}	6		—		—		—
Total	$	1,256	$	11	$	251	$	—


(1)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(2)	Consists of corporate and government bonds and fixed-income derivatives.


(3)	Consists of limited partnerships, private equity, and hedge funds.


(4)	Consists of property funds and trusts holding direct real estate investments.

Investment Policy and Strategy

The U.S. investment policy, as established by the Aon Retirement Plan Governance and Investment Committee (“RPGIC”), seeks reasonable asset growth at prudent risk levels within target allocations, which are 50% equity investments, 27% fixed income investments, and 23% other investments. Aon believes that plan assets are well-diversified and are of appropriate quality. The investment portfolio asset allocation is reviewed quarterly and re-balanced to be within policy target allocations. The investment policy is reviewed at least annually and revised, as deemed appropriate by the RPGIC. The investment policies for international plans are generally established by the local pension plan trustees and seek to maintain the plans’ ability to meet liabilities and to comply with local minimum funding requirements. Plan assets are invested in diversified portfolios that provide adequate levels of return at an acceptable level of risk. The investment policies are reviewed at least annually and revised, as deemed appropriate to ensure that the objectives are being met. At December 31, 2018, the weighted average targeted allocation for the U.K. and non-U.S. plans was 12% for equity investments, 79% for fixed income investments, and 9% for other investments.

Cash Flows

Contributions

Based on current assumptions, in 2019, the Company expects to contribute approximately $80 million, $46 million, and $19 million to its U.K., U.S. and other significant international pension plans, respectively.

Estimated Future Benefit Payments

Estimated future benefit payments for plans, not including voluntary one-time lump sum payments, are as follows at December 31, 2018 (in millions):



	U.K.		U.S.		Other
2019	$	137	$	178	$	42
2020	139		182		43
2021	144		185		44
2022	149		187		45
2023	152		177		46
2024 – 2028	795		879		248

U.S. and Canadian Other Postretirement Benefits

The following table provides an overview of the accumulated projected benefit obligation, fair value of plan assets, funded status and net amount recognized as of December 31, 2018 and 2017 for the Company’s other significant postretirement benefit plans located in the U.S. and Canada (in millions):



	2018			2017
Accumulated projected benefit obligation	$	91		$	99
Fair value of plan assets	14			17
Funded status	(77		)	(82		)
Unrecognized prior-service credit	(1		)	(1		)
Unrecognized (gain) loss	(6		)	(3		)
Net amount recognized	$	(84	)	$	(86	)

Other information related to the Company’s other postretirement benefit plans are as follows:



	2018	2017	2016
Net periodic benefit cost recognized (millions)	$3	$1	$5
Weighted-average discount rate used to determine future benefit obligations	3.91 - 4.26%	3.32 - 3.64%	3.71 - 4.15%
Weighted-average discount rate used to determine net periodic benefit costs	3.32 - 3.64%	3.71 - 4.15%	3.99 - 4.33%

Amounts recognized in Accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost at December 31, 2018 are $1 million and $6 million of prior service credit and net gain, respectively. The amount in Accumulated other comprehensive income expected to be recognized as a component of net periodic benefit cost during 2019 is $1.7 million and $0.1 million of net gain and prior service credit, respectively.

Based on current assumptions, the Company expects:


•	To contribute $5 million to fund significant other postretirement benefit plans during 2019.


•	Estimated future benefit payments will be approximately $5 million each year for 2019 through 2023, and $25 million in aggregate for 2024-2028.

The accumulated postretirement benefit obligation is increased by $5 million and decreased by $5 million by a respective 1% increase or decrease to the assumed health care trend rate. The service cost and interest cost components of net periodic benefits cost is increased by $0.5 million and decreased by $0.4 million by a respective 1% increase or decrease to the assumed health care trend rate.

For most of the participants in the U.S. plan, Aon’s liability for future plan cost increases for pre-65 and Medical Supplement plan coverage is limited to 5% per annum. Although the net employer trend rates range from 4% to 7% per year, because of this cap, these plans are effectively limited to 5% per year in the future.

Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Plans

The following table summarizes share-based compensation expense recognized in the Consolidated Statements of Income in Compensation and benefits (in millions):



Years ended December 31	2018		2017		2016
Restricted share units (“RSUs”)	$	186	$	182	$	176
Performance share awards ("PSAs")	143		127		120
Employee share purchase plans	9		10		10
Total share-based compensation expense	338		319		306
Tax benefit	74		73		90
Share-based compensation expense, net of tax	$	264	$	246	$	216

Restricted Share Units

RSUs generally vest between three and five years. The fair value of RSUs is based upon the market value of Aon plc ordinary shares at the date of grant. With certain limited exceptions, any break in continuous employment will cause the forfeiture of all non-vested awards. Compensation expense associated with RSUs is recognized on a straight-line basis over the requisite service period. Dividend equivalents are paid on certain RSUs, based on the initial grant amount.

The following table summarizes the status of the Company’s RSUs, including shares related to the Divested Business (shares in

thousands, except fair value):



	2018				2017				2016
Years ended December 31	Shares		Fair Value at Date of Grant		Shares		Fair Value at Date of Grant		Shares		Fair Value at Date of Grant
Non-vested at beginning of year	4,849		$	104	6,195		$	89	7,167		$	77
Granted	1,500		141		1,700		123		2,252		101
Vested	(1,943	)	97		(2,407	)	82		(2,845	)	70
Forfeited	(198	)	114		(639	)	93		(379	)	82
Non-vested at end of year	4,208		$	120	4,849		$	104	6,195		$	89

The fair value of RSUs that vested during 2018, 2017 and 2016 was $189 million, $197 million, and $200 million, respectively.

Unamortized deferred compensation expense was $346 million as of December 31, 2018, with a remaining weighted-average amortization period of approximately 2.1 years.

Performance Share Awards

The vesting of PSAs is contingent upon meeting a cumulative level of earnings per share related performance over a three-year period. The actual issue of shares may range from 0-200% of the target number of PSAs granted, based on the terms of the plan and level of achievement of the related performance target. The grant date fair value of PSAs is based upon the market price of Aon plc ordinary shares at the date of grant. The performance conditions are not considered in the determination of the grant date fair value for these awards. Compensation expense is recognized over the performance period based on management’s estimate of the number of units expected to vest. Management evaluates its estimate of the actual number of shares expected to be issued at the end of the programs on a quarterly basis. The cumulative effect of the change in estimate is recognized in the period of change as an adjustment to Compensation and benefits expense in the Consolidated Statements of Income, if necessary. Dividend equivalents are not paid on PSAs.

The following table summarizes the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the years ended December 31, 2018, 2017, and 2016 (shares in thousands and dollars in millions, except fair value):



	2018		2017		2016
Target PSAs granted during period	564		548		750
Weighted average fair value per share at date of grant	$	134	$	114	$	100
Number of shares that would be issued based on current performance levels	840		1,068		1,122
Unamortized expense, based on current performance levels	$	81	$	44	$	—

During 2018, the Company issued approximately 1.0 million shares in connection with performance achievements related to the 2015-2017 Leadership Performance Plan (“LPP”) cycle. During 2017, the Company issued approximately 0.9 million shares in connection with performance achievements related to the 2014-2016 LPP cycle. During 2016, the Company issued approximately 1.3 million shares in connection with performance achievements related to the 2013-2015 LPP cycle.

Derivatives and Hedging

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging

The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes.

Foreign Exchange Risk Management

The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, enters into monetary intercompany transfers or other transactions denominated in a currency that differs from its functional currency. The Company uses foreign exchange derivatives, typically forward contracts, options and cross-currency swaps, to reduce its overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income.

The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company’s global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30-day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income (expense) in the Consolidated Statements of Income.

The notional and fair values of derivative instruments are as follows (in millions):



	Notional Amount				Net Amount of Derivative Assets Presented in the Statements of Financial Position ⁽¹⁾				Net Amount of Derivative Liabilities Presented in the Statements of Financial Position ⁽²⁾
As of December 31	2018		2017		2018		2017		2018		2017
Foreign exchange contracts
Accounted for as hedges	$	646	$	701	$	17	$	31	$	2	$	3
Not accounted for as hedges ⁽³⁾	269		254		1		1		6		3
Total	$	915	$	955	$	18	$	32	$	8	$	6


(1)	Included within Other current assets ($3 million in 2018 and $9 million in 2017) or Other non-current assets ($15 million in 2018 and $23 million in 2017).


(2)	Included within Other current liabilities ($5 million in 2018 and $3 million in 2017) or Other non-current liabilities ($3 million in 2018 and $3 million in 2017).


(3)	These contracts typically are for 30-day durations and executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date.

The amounts of derivative gains (losses) recognized in the Consolidated Financial Statements are as follows (in millions):



	2018			2017		2016
Gain (Loss) recognized in Accumulated other comprehensive loss	$	(18	)	$	18	$	(25	)

Location of future reclassification from Accumulated other comprehensive loss
Compensation and benefits	$	(5	)	$	12	$	8
Other general expenses	$	3		$	4	$	(13	)
Other income (expense) ⁽¹⁾	$	(16	)	$	2	$	(20	)


(1)	With the adoption of new derivative guidance in 2019, gains (losses) on derivatives accounted for as hedges will be recognized in Total revenue in the Company’s Consolidated Statements of Income rather than Other income (expense). Refer to Note 2 “Summary of Significant Accounting Principles and Practices” for additional details.

The amounts of derivative gains (losses) reclassified from Accumulated other comprehensive loss into Consolidated Statements of Income (effective portion) are as follows (in millions):



	Years Ended December 31
	2018			2017			2016
Compensation and benefits	$	1		$	14		$	2
Other general expenses	(2		)	(5		)	(4		)
Interest expense	(2		)	(1		)	(1		)
Other income (expense)	(8		)	(9		)	(7		)
Total	$	(11	)	$	(1	)	$	(10	)

The Company estimates that approximately $13 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified in to earnings in the next twelve months.

The amount of gain (loss) recognized in income on the ineffective portion of derivatives for 2018, 2017, and 2016 was insignificant.

The Company recorded a loss of $27 million for 2018, a gain of $7 million in 2017, and an insignificant loss in 2016 in Other income (expense) for foreign exchange derivatives not designated or qualifying as hedges.

Net Investments in Foreign Operations Risk Management

The Company uses non-derivative financial instruments to protect the value of its investments in a number of foreign subsidiaries. In 2016, the Company designated a portion of its euro-denominated commercial paper issuances as a non-derivative hedge of the foreign currency exposure of a net investment in its European operations. The change in fair value of the designated portion of the euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive loss, to the extent it is effective as a hedge. The foreign currency translation adjustment of the hedged net investments is also recorded in Accumulated other comprehensive loss. Ineffective portions of net investment hedges, if any, are reclassified from Accumulated other comprehensive loss into earnings during the period of change.

As of December 31, 2018, the Company has €220 million ($250 million at December 31, 2018 exchange rates) of outstanding euro-denominated commercial paper designated as a hedge of the foreign currency exposure of its net investment in its European operations. As of December 31, 2018, the unrealized gain recognized in Accumulated other comprehensive loss related to the net investment non derivative hedging instrument was $21 million.

The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive loss to earnings for 2018, 2017 and 2016. In addition, the Company did not incur any ineffectiveness related to net investment hedges during 2018, 2017 and 2016.

Fair Value Measurements and Financial Instruments

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements and Financial Instruments

Accounting standards establish a three tier fair value hierarchy that prioritizes the inputs used in measuring fair values as follows:


•	Level 1 — observable inputs such as quoted prices for identical assets in active markets;


•	Level 2 — inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and


•	Level 3 — unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.

The following methods and assumptions are used to estimate the fair values of the Company’s financial instruments, including pension assets (refer to Note 13 “Employee Benefits”):

Money market funds consist of institutional prime, treasury, and government money market funds. The Company reviews treasury and government money market funds to obtain reasonable assurance that the fund net asset value is $1 per share, and reviews the floating net asset value of institutional prime money market funds for reasonableness.

Cash and cash equivalents consist of cash and institutional short-term investment funds. The Company reviews the short-term investment funds to obtain reasonable assurance that the fund net asset value is $1 per share.

Equity investments consist of domestic and international equity securities and equity derivatives valued using the closing stock price on a national securities exchange. Over the counter equity derivatives are valued using observable inputs such as underlying prices of the underlying security and volatility. On a sample basis the Company reviews the listing of Level 1 equity securities in the portfolio and agrees the closing stock prices to a national securities exchange, and independently verifies the observable inputs for Level 2 equity derivatives and securities.

Fixed income investments consist of certain categories of bonds and derivatives. Corporate, government, and agency bonds are valued by pricing vendors who estimate fair value using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves, and credit risk. Asset-backed securities are valued by pricing vendors who estimate fair value using discounted cash flow models utilizing observable inputs based on trade and quote activity of securities with similar features. Fixed income derivatives are valued by pricing vendors using observable inputs such as interest rates and yield curves. The Company obtains an understanding of the models, inputs, and assumptions used in developing prices provided by its vendors through discussions with the fund managers. The Company independently verifies the observable inputs, as well as assesses assumptions used for reasonableness based on relevant market conditions and internal Company guidelines. If an assumption is deemed unreasonable, based on the Company’s guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates used in the Consolidated Financial Statements.

Pooled funds consist of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles. Pooled investment funds fair value is estimated based on the proportionate share ownership in the underlying net assets of the investment, which is based on the fair value of the underlying securities that trade on a national securities exchange. The Company gains an understanding of the investment guidelines and valuation policies of the fund and discusses fund performance with pooled fund managers. The Company obtains audited fund manager financial statements, when available. If the pooled fund is designed to replicate a publicly traded index, the Company compares the performance of the fund to the index to assess the reasonableness of the fair value measurement.

Alternative investments consist of limited partnerships, private equity, and hedge funds. Alternative investment fair value is generally estimated based on the proportionate share ownership in the underlying net assets of the investment as determined by the general partner or investment manager. The valuations are based on various factors depending on investment strategy, proprietary models, and specific financial data or projections. The Company obtains audited fund manager financial statements, when available. The Company obtains a detailed understanding of the models, inputs, and assumptions used in developing prices provided by the investment managers (or appropriate party) through regular discussions. The Company also obtains the investment manger’s valuation policies and assesses the assumptions used for reasonableness based on relevant market conditions and internal Company guidelines. If an assumption is deemed unreasonable, based on the Company’s guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates in the Consolidated Financial Statements.

Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities.

Annuity contracts consist of insurance group annuity contracts purchased to match the pension benefit payment stream owed to certain selected plan participant demographics within a few major U.K. defined benefit plans. Annuity contracts are valued using a discounted cash flow model utilizing assumptions such as discount rate, mortality, and inflation.

Real estate and REITs consist of publicly traded real estate investment trusts (“REITs”) and direct real estate investments. Level 1 REITs are valued using the closing stock price on a national securities exchange. Non Level 1 values are based on the proportionate share of ownership in the underlying net asset value as determined by the investment manager. The Company independently reviews the listing of Level 1 REIT securities in the portfolio and agrees the closing stock prices to a national securities exchange. The Company gains an understanding of the investment guidelines and valuation policies of the non Level 1 real estate funds and discusses performance with the fund managers. The Company obtains audited fund manager financial statements, when available. See the description of “Alternative investments” for further detail on valuation procedures surrounding non Level 1 REITs.

Debt is carried at outstanding principal balance, less any unamortized issuance costs, discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements.

The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2018 and December 31, 2017 (in millions):



			Fair Value Measurements Using
	Balance at December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market funds ⁽¹⁾	$	1,759	$	1,759	$	—	$	—
Other investments
Government bonds	$	1	$	—	$	1	$	—
Equity investments	$	2	$	—	$	2	$	—
Derivatives ⁽²⁾
Gross foreign exchange contracts	$	21	$	—	$	21	$	—
Liabilities
Derivatives ⁽²⁾
Gross foreign exchange contracts	$	12	$	—	$	12	$	—


(1)	Included within Fiduciary assets or Short-term investments in the Consolidated Statements of Financial Position, depending on their nature and initial maturity.


(2)	Refer to Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.



			Fair Value Measurements Using
	Balance at December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market funds ⁽¹⁾	$	1,847	$	1,847	$	—	$	—
Other investments
Government bonds	$	1	$	—	$	1	$	—
Equity investments	$	4	$	—	$	4	$	—
Derivatives ⁽²⁾
Gross foreign exchange contracts	$	33	$	—	$	33	$	—
Liabilities
Derivatives ⁽²⁾
Gross foreign exchange contracts	$	6	$	—	$	6	$	—


(1)	Included within Fiduciary assets or Short-term investments in the Consolidated Statements of Financial Position, depending on their nature and initial maturity.


(2)	Refer to Note 15 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.

There were no transfers of assets or liabilities between fair value hierarchy levels during 2018 or 2017. The Company recognized no realized or unrealized gains or losses in the Consolidated Statements of Income related to assets and liabilities measured at fair value using unobservable inputs in 2018, 2017, or 2016.

The fair value of debt is classified as Level 2 of the fair value hierarchy. The following table provides the carrying value and fair value for the Company’s term debt (in millions):



	2018				2017
As of December 31	Carrying Value		Fair Value		Carrying Value		Fair Value
Current portion of long-term debt	$	—	$	—	$	299	$	301
Long-term debt	$	5,993	$	6,159	$	5,667	$	6,267

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Claims, Lawsuits and Other Contingencies	12 Months Ended
Claims, Lawsuits and Other Contingencies	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Claims, Lawsuits, and Other Contingencies	Claims, Lawsuits, and Other Contingencies Legal Aon and its subsidiaries are subject to numerous claims, tax assessments, lawsuits and proceedings that arise in the ordinary course of business, which include E&O claims. The damages claimed in these matters are or may be substantial, including, in many instances, claims for punitive, treble or extraordinary damages. While Aon maintains meaningful E&O insurance and other insurance programs to provide protection against certain losses that arise in such matters, Aon has exhausted or materially depleted its coverage under some of the policies that protect the Company and, consequently, is self-insured or materially self-insured for some claims. Accruals for these exposures, and related insurance receivables, when applicable, are included in the Consolidated Statements of Financial Position and have been recognized in Other general expenses in the Consolidated Statements of Income to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Matters that are not probable and reasonably estimable are not accrued for in the financial statements. The Company has included in the current matters described below certain matters in which (1) loss is probable, (2) loss is reasonably possible; that is, more than remote but not probable, or (3) there exists the reasonable possibility of loss greater than the accrued amount. In addition, the Company may from time to time disclose matters for which the probability of loss could be remote but the claim amounts associated with such matters are potentially significant. The reasonably possible range of loss for the matters described below, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.2 billion, exclusive of any insurance coverage. These estimates are based on currently available information. As available information changes, the matters for which Aon is able to estimate may change, and the estimates themselves may change. In addition, many estimates involve significant judgment and uncertainty. For example, at the time of making an estimate, Aon may only have limited information about the facts underlying the claim, and predictions and assumptions about future court rulings and outcomes may prove to be inaccurate. Although management at present believes that the ultimate outcome of all matters described below, individually or in the aggregate, will not have a material adverse effect on the consolidated financial position of Aon, legal proceedings are subject to inherent uncertainties and unfavorable rulings or other events. Unfavorable resolutions could include substantial monetary or punitive damages imposed on Aon or its subsidiaries. If unfavorable outcomes of these matters were to occur, future results of operations or cash flows for any particular quarterly or annual period could be materially adversely affected. Current Matters A pensions consulting and administration subsidiary of Aon provided advisory services to the Trustees of the Gleeds pension fund in the United Kingdom and, on occasion, to the relevant employer of the fund. In April 2014, the High Court, Chancery Division, London found that certain governing documents of the fund that sought to alter the fund’s benefit structure and that had been drafted by Aon were procedurally defective and therefore invalid. No lawsuit naming Aon as a party was filed, although a tolling agreement was entered. The High Court decision says that the additional liabilities in the pension fund resulting from the alleged defect in governing documents amount to approximately £45 million ($57 million at December 31, 2018 exchange rates). In December 2014, the Court of Appeal granted the employer leave to appeal the High Court decision. At a hearing in October 2016, the Court of Appeal approved a settlement of the pending litigation. On October 31, 2016, the fund’s trustees and employer sued Aon in the High Court, Chancery Division, London, alleging negligence and breach of duty in relation to the governing documents. The proceedings were served on Aon on December 20, 2016. The claimants seek damages of approximately £70 million ($88 million at December 31, 2018 exchange rates). In February 2018, the claimants instructed new lawyers and in May 2018 added their previous lawyers as defendants to the Aon lawsuit. The claimants allege that the previous lawyers were responsible for some of the losses sought from Aon because the lawyers gave negligent legal advice during the High Court and Court of Appeal proceedings. The trial of this matter has been set for November 2019. Aon believes that it has meritorious defenses and intends to vigorously defend itself against this claim. On June 29, 2015, Lyttelton Port Company Limited (“LPC”) sued Aon New Zealand in the Christchurch Registry of the High Court of New Zealand. LPC alleges, among other things, that Aon was negligent and in breach of contract in arranging LPC’s property insurance program for the period covering June 30, 2010, to June 30, 2011. LPC contends that acts and omissions by Aon caused LPC to recover less than it otherwise would have from insurers for losses suffered in the 2010 and 2011 Canterbury earthquakes. LPC claims damages of approximately NZD $184 million ($124 million at December 31, 2018 exchange rates) plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims. On October 3, 2017, Christchurch City Council (“CCC”) invoked arbitration to pursue a claim that it asserts against Aon New Zealand. Aon provided insurance broking services to CCC in relation to CCC’s 2010-2011 material damage and business interruption program. In December 2015, CCC settled its property and business interruption claim for its losses arising from the 2010-2011 Canterbury earthquakes against the underwriter of its material damage and business interruption program and the reinsurers of that underwriter. CCC contends that acts and omissions by Aon caused CCC to recover less in that settlement than it otherwise would have. CCC claims damages of approximately NZD $528 million ($355 million at December 31, 2018 exchange rates) plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims. A retail insurance brokerage subsidiary of Aon was sued on September 6, 2018 in the United States District Court for the Southern District of New York by a client, Pilkington North America, Inc., that sustained damage from a tornado to its Ottawa, Illinois property. The lawsuit seeks between $45 million and $85 million in property and business interruption damages from either its insurer or Aon. The insurer contends that insurance proceeds were limited to $15 million in coverage by a windstorm sub-limit purportedly contained in the policy procured by Aon for Pilkington. The insurer therefore has tendered $15 million to Pilkington and denied coverage for the remainder of the loss. Pilkington sued the insurer and Aon seeking full coverage for the loss from the insurer or, in the alternative, seeking the same damages against Aon on various theories of professional liability if the court finds that the $15 million sub-limit applies to the claim. Aon believes it has meritorious defenses and intends to vigorously defend itself against these claims. In April 2017, the FCA announced an investigation relating to suspected competition law breaches in the aviation and aerospace broking industry, which, for Aon in 2016, represented less than $100 million in global revenue. The European Commission has now assumed jurisdiction over the investigation in place of the FCA. Other antitrust agencies outside the European Union are also conducting formal or informal investigations regarding these matters. Aon intends to work diligently with all antitrust agencies concerned to ensure they can carry out their work as efficiently as possible. At this time, in light of the uncertainties and many variables involved, Aon cannot estimate the ultimate impact on our company from these investigations or any related private litigation, nor any damages, penalties, or fines related to them. There can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity. Settled/Closed Matters A retail insurance brokerage subsidiary of Aon was sued on September 14, 2010 in the Chancery Court for Davidson County, Tennessee Twentieth Judicial District, at Nashville by a client, Opry Mills Mall Limited Partnership (“Opry Mills”), that sustained flood damage to its property in May 2010. The lawsuit sought $200 million in coverage from numerous insurers with whom this Aon subsidiary placed the client’s property insurance coverage. The insurers contended that only $50 million in coverage (which had already been paid) was available for the loss because the flood event occurred on property in a high hazard flood zone. Opry Mills sought full coverage from the insurers for the loss and sued this Aon subsidiary in the alternative for the same $150 million difference on various theories of professional liability if the court determined there was not full coverage. In addition, Opry Mills sought prejudgment interest, attorneys’ fees and enhanced damages which could have substantially increased Aon’s exposure. In March 2015, the trial court granted partial summary judgment in favor of plaintiffs and against the insurers, holding generally that the plaintiffs are entitled to $200 million in coverage under the language of the policies. In August 2015, a jury returned a verdict in favor of Opry Mills and against the insurers in the amount of $204 million. On January 26, 2018, the Tennessee Court of Appeals reversed and remanded, reversing summary judgment in favor of plaintiffs and concluding that coverage is limited to $50 million. In December 2018, the parties reach an agreement to settle this case, and the settlement is now concluded. The terms of this settlement did not have a significant impact on Aon’s results of operations or financial condition. Guarantees and Indemnifications The Company provides a variety of guarantees and indemnifications to its customers and others. The maximum potential amount of future payments represents the notional amounts that could become payable under the guarantees and indemnifications if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or other methods. These amounts may bear no relationship to the expected future payments, if any, for these guarantees and indemnifications. Any anticipated amounts payable are included in the Company’s Consolidated Financial Statements, and are recorded at fair value. The Company expects that, as prudent business interests dictate, additional guarantees and indemnifications may be issued from time to time. Redomestication In connection with the Redomestication, the Company on April 2, 2012 entered into various agreements pursuant to which it agreed to guarantee the obligations of its subsidiaries arising under issued and outstanding debt securities. Those agreements included the (1) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc, and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) (amending and restating the Indenture, dated as of September 10, 2010, between Aon Corporation and the Trustee), (2) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of December 16, 2002, between Aon Corporation and the Trustee), and (3) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of January 13, 1997, as supplemented by the First Supplemental Indenture, dated as of January 13, 1997). Sale of the Divested Business In connection with the sale of the Divested Business, the Company guaranteed future operating lease commitments related to certain facilities assumed by the Buyer. The Company is obligated to perform under the guarantees if the Divested Business defaults on such leases at any time during the remainder of the lease agreements, which expire on various dates through 2025. As of December 31, 2018, the undiscounted maximum potential future payments under the lease guarantee is $85 million, with an estimated fair value of $17 million. No cash payments were made in connection to the lease commitments during 2018. Additionally, the Company is subject to performance guarantee requirements under certain client arrangements that were assumed by the Buyer. Should the Divested Business fail to perform as required by the terms of the arrangements, the Company would be required to fulfill the remaining contract terms, which expire on various dates through 2023. As of December 31, 2018, the undiscounted maximum potential future payments under the performance guarantees were $188 million, with an estimated fair value of $1 million. No cash payments were made in connection to the lease commitments during 2018. Letters of Credit Aon has entered into a number of arrangements whereby the Company’s performance on certain obligations is guaranteed by a third party through the issuance of a letter of credit (“LOCs”). The Company had total LOCs outstanding of approximately $83 million at December 31, 2018, compared to $96 million at December 31, 2017. These letters of credit cover the beneficiaries related to certain of Aon’s U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for Aon’s own workers compensation program. The Company has also obtained LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at its international subsidiaries. Premium Payments The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $103 million at December 31, 2018, compared to $95 million at December 31, 2017.

Segment Information

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Information

The Company operates as one segment that includes all of Aon’s continuing operations, which as a global professional services firm provides advice and solutions to clients focused on risk, retirement, and health through five revenue lines which make up its principal products and services. The Chief Operating Decision Maker (the “CODM”) assesses the performance of the Company and allocates resources based on one segment: Aon United.

The Company’s reportable operating segment has been determined using a management approach, which is consistent with the basis and manner in which Aon’s CODM uses financial information for the purposes of allocating resources and evaluating performance. The CODM assesses performance and allocates resources based on total Aon results against its key four metrics, including organic revenue growth, expense discipline, and collaborative behaviors that maximize value for Aon and its shareholders, regardless of which revenue line it benefits.

As Aon operates as one segment, segment profit or loss is consistent with consolidated reporting as disclosed on the Consolidated Statements of Income. Refer to Note 3 “Revenue from Contracts with Customers” for further information on revenue by principal service line.

Consolidated Non-current assets by geographic area are as follows (in millions):



Years ended December 31	Total		United States		Americas other than U.S.		United Kingdom		Europe, Middle East, & Africa		Asia Pacific
2018	$	588	$	288	$	44	$	58	$	101	$	97
2017	$	564	$	239	$	47	$	68	$	114	$	96

Guarantee of Registered Securities

12 Months Ended

Dec. 31, 2018

Guarantee of Registered Securities

Guarantee of Registered Securities

As described in Note 17 “Claims, Lawsuits, and Other Contingencies,” in connection with the Redomestication, Aon plc entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, including the 5.00% Notes due September 2020, the 8.205% Notes due January 2027, and the 6.25% Notes due September 2040 (collectively, the “Aon Corp Notes”). Additionally, Aon plc has agreed to guarantee the obligations of Aon Corporation arising under the 4.50% Senior Notes due 2028. Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. All guarantees of Aon plc are full and unconditional. There are no other subsidiaries of Aon plc that are guarantors of the Aon Corp Notes.

In addition, Aon Corporation entered into an agreement pursuant to which it agreed to guarantee the obligations of Aon plc arising under the 4.25% Notes due 2042 exchanged for Aon Corporation’s outstanding 8.205% Notes due January 2027 and has also agreed to guarantee the obligations of Aon plc arising under the 4.45% Notes due 2043, the 4.00% Notes due November 2023, the 2.875% Notes due May 2026, the 3.50% Notes due June 2024, the 4.60% Notes due June 2044, the 4.75% Notes due May 2045, the 2.80% Notes due March 2021, and the 3.875% Notes due December 2025 (collectively, the “Aon plc Notes”). In each case, the guarantee of Aon Corporation is full and unconditional. There are no subsidiaries of Aon plc, other than Aon Corporation, that are guarantors of the Aon plc Notes. As a result of the existence of these guarantees, the Company has elected to present the financial information set forth in this footnote in accordance with Rule 3-10 of Regulation S-X.

In December 2018, Aon plc obtained direct ownership in two subsidiaries that were previously indirectly owned by Aon Corporation. The financial results of both subsidiaries are included in the Other Non-Guarantor Subsidiaries column of the Condensed Consolidating Financial Statements. The Company has reflected this transfer on the Condensed Consolidating Statements of Income and Condensed Consolidating Statements of Comprehensive Income for the periods ended December 31, 2017 and 2016 and the Condensed Consolidating Statement of Financial Position for the period ended December 31, 2017.

The following tables set forth Condensed Consolidating Statements of Income and Condensed Consolidating Statements of Comprehensive Income for the years ended December 31, 2018, 2017, and 2016, Condensed Consolidating Statements of Financial Position as of December 31, 2018 and December 31, 2017, and Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2018, 2017, and 2016, in accordance with Rule 3-10 of Regulation S-X. The condensed consolidating financial information includes the accounts of Aon plc, the accounts of Aon Corporation, and the combined accounts of the non-guarantor subsidiaries. The condensed consolidating financial statements are presented in all periods as a merger under common control. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions.

Condensed Consolidating Statement of Income



	Year Ended December 31, 2018
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenue
Total revenue	$	—		$	—		$	10,770		$	—		$	10,770
Expenses
Compensation and benefits	74			(1		)	6,030			—			6,103
Information technology	—			—			484			—			484
Premises	—			—			370			—			370
Depreciation of fixed assets	—			—			176			—			176
Amortization and impairment of intangible assets	—			—			593			—			593
Other general expenses (income)	4			64			1,432			—			1,500
Total operating expenses	78			63			9,085			—			9,226
Operating income (loss)	(78		)	(63		)	1,685			—			1,544
Interest income	—			58			—			(53		)	5
Interest expense	(203		)	(101		)	(27		)	53			(278		)
Intercompany interest income (expense)	15			(514		)	499			—			—
Intercompany other income (expense)	97			(399		)	302			—			—
Other income (expense)	9			(48		)	35			(21		)	(25		)
Income (loss) from continuing operations before income taxes	(160		)	(1,067		)	2,494			(21		)	1,246
Income tax expense (benefit)	(60		)	(192		)	398			—			146
Net income (loss) from continuing operations	(100		)	(875		)	2,096			(21		)	1,100
Net Income from discontinued operations	—			—			74			—			74
Net income (loss) before equity in earnings of subsidiaries	(100		)	(875		)	2,170			(21		)	1,174
Equity in earnings of subsidiaries	1,255			1,004			129			(2,388		)	—
Net income	1,155			129			2,299			(2,409		)	1,174
Less: Net income attributable to noncontrolling interests	—			—			40			—			40
Net income attributable to Aon shareholders	$	1,155		$	129		$	2,259		$	(2,409	)	$	1,134

Condensed Consolidating Statement of Income



	Year Ended December 31, 2017
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenue
Total revenue	$	—		$	—		$	9,998		$	—		$	9,998
Expenses
Compensation and benefits	150			26			5,827			—			6,003
Information technology	—			—			419			—			419
Premises	—			—			348			—			348
Depreciation of fixed assets	—			—			187			—			187
Amortization and impairment of intangible assets	—			—			704			—			704
Other general expenses (income)	12			(6		)	1,266			—			1,272
Total operating expenses	162			20			8,751			—			8,933
Operating income (loss)	(162		)	(20		)	1,247			—			1,065
Interest income	—			52			4			(29		)	27
Interest expense	(202		)	(94		)	(15		)	29			(282		)
Intercompany interest income (expense)	14			(543		)	529			—			—
Intercompany other income (expense)	247			(411		)	164			—			—
Other income (expense)	(27		)	12			(128		)	18			(125		)
Income (loss) from continuing operations before income taxes	(130		)	(1,004		)	1,801			18			685
Income tax expense (benefit)	(43		)	(110		)	403			—			250
Net income (loss) from continuing operations	(87		)	(894		)	1,398			18			435
Net Income from discontinued operations	—			—			828			—			828
Net income (loss) before equity in earnings of subsidiaries	(87		)	(894		)	2,226			18			1,263
Equity in earnings of subsidiaries	1,295			1,121			227			(2,643		)	—
Net income	1,208			227			2,453			(2,625		)	1,263
Less: Net income attributable to noncontrolling interests	—			—			37			—			37
Net income attributable to Aon shareholders	$	1,208		$	227		$	2,416		$	(2,625	)	$	1,226

Condensed Consolidating Statement of Income



	Year Ended December 31, 2016
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Revenue
Total revenue	$	—		$	—		$	9,409		$	—		$	9,409
Expenses
Compensation and benefits	130			6			5,378			—			5,514
Information technology	—			—			386			—			386
Premises	—			—			343			—			343
Depreciation of fixed assets	—			—			162			—			162
Amortization and impairment of intangible assets				—			157			—			157
Other general expenses (income)	—			2			1,034			—			1,036
Total operating expenses	130			8			7,460			—			7,598
Operating income (loss)	(130		)	(8		)	1,949			—			1,811
Interest income	—			16			22			(29		)	9
Interest expense	(196		)	(101		)	(14		)	29			(282		)
Intercompany interest income (expense)	14			(541		)	527			—			—
Intercompany other income (expense)	274			(361		)	87			—			—
Other income (expense)	15			(170		)	36			(18		)	(137		)
Income (loss) from continuing operations before income taxes	(23		)	(1,165		)	2,607			(18		)	1,401
Income tax expense (benefit)	(55		)	(325		)	528			—			148
Net income (loss) from continuing operations	32			(840		)	2,079			(18		)	1,253
Net Income from discontinued operations	—			—			177			—			177
Net income (loss) before equity in earnings of subsidiaries	32			(840		)	2,256			(18		)	1,430
Equity in earnings of subsidiaries	1,382			1,249			409			(3,040		)	—
Net income	1,414			409			2,665			(3,058		)	1,430
Less: Net income attributable to noncontrolling interests	—			—			34			—			34
Net income attributable to Aon shareholders	$	1,414		$	409		$	2,631		$	(3,058	)	$	1,396

Condensed Consolidating Statement of Comprehensive Income



	Year Ended December 31, 2018
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income	$	1,155		$	129		$	2,299		$	(2,409	)	$	1,174
Less: Net income attributable to noncontrolling interests	—			—			40			—			40
Net income attributable to Aon shareholders	1,155			129			2,259			(2,409		)	1,134
Other comprehensive income (loss), net of tax:
Change in fair value of financial instruments	—			—			11			—			11
Foreign currency translation adjustments	—			—			(465		)	21			(444		)
Postretirement benefit obligation	—			(2		)	19			—			17
Total other comprehensive income (loss)	—			(2		)	(435		)	21			(416		)
Equity in other comprehensive income (loss) of subsidiaries, net of tax	(433		)	(415		)	(417		)	1,265			—
Less: Other comprehensive income (loss) attributable to noncontrolling interests	—			—			(4		)	—			(4		)
Total other comprehensive income (loss) attributable to Aon shareholders	(433		)	(417		)	(848		)	1,286			(412		)
Comprehensive income (loss) attributable to Aon shareholders	$	722		$	(288	)	$	1,411		$	(1,123	)	$	722

Condensed Consolidating Statement of Comprehensive Income



	Year Ended December 31, 2017
(millions)	Aon plc		Aon Corporation			Other Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Net income	$	1,208	$	227		$	2,453	$	(2,625	)	$	1,263
Less: Net income attributable to noncontrolling interests	—		—			37		—			37
Net income attributable to Aon shareholders	1,208		227			2,416		(2,625		)	1,226
Other comprehensive income (loss), net of tax:
Change in fair value of financial instruments	—		3			9		—			12
Foreign currency translation adjustments	—		—			408		(18		)	390
Postretirement benefit obligation	—		(101		)	120		—			19
Total other comprehensive income (loss)	—		(98		)	537		(18		)	421
Equity in other comprehensive income (loss) of subsidiaries, net of tax	434		515			417		(1,366		)	—
Less: Other comprehensive income (loss) attributable to noncontrolling interests	—		—			5		—			5
Total other comprehensive income (loss) attributable to Aon shareholders	434		417			949		(1,384		)	416
Comprehensive income (loss) attributable to Aon shareholders	$	1,642	$	644		$	3,365	$	(4,009	)	$	1,642

Condensed Consolidating Statement of Comprehensive Income



	Year Ended December 31, 2016
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income	$	1,414		$	409		$	2,665		$	(3,058	)	$	1,430
Less: Net income attributable to noncontrolling interests	—			—			34			—			34
Net income attributable to Aon shareholders	1,414			409			2,631			(3,058		)	1,396
Other comprehensive income (loss), net of tax:
Change in fair value of financial instruments	—			(1		)	(11		)	—			(12		)
Foreign currency translation adjustments	(2		)	21			(532		)	18			(495		)
Postretirement benefit obligation	—			68			(52		)	—			16
Total other comprehensive income (loss)	(2		)	88			(595		)	18			(491		)
Equity in other comprehensive income (loss) of subsidiaries, net of tax	(505		)	(547		)	(459		)	1,511			—
Less: Other comprehensive income (loss) attributable to noncontrolling interests	—			—			(2		)	—			(2		)
Total other comprehensive income (loss) attributable to Aon shareholders	(507		)	(459		)	(1,052		)	1,529			(489		)
Comprehensive income (loss) attributable to Aon shareholders	$	907		$	(50	)	$	1,579		$	(1,529	)	$	907

Condensed Consolidating Statement of Financial Position



	As of December 31, 2018
(millions)	Aon plc		Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Assets
Current assets
Cash and cash equivalents	$	—	$	862		$	575		$	(781	)	$	656
Short-term investments	—		56			116			—			172
Receivables, net	—		—			2,760			—			2,760
Fiduciary assets	—		—			10,166			—			10,166
Intercompany receivables	191		897			11,454			(12,542		)	—
Other current assets	—		16			602			—			618
Total current assets	191		1,831			25,673			(13,323		)	14,372
Goodwill	—		—			8,171			—			8,171
Intangible assets, net	—		—			1,149			—			1,149
Fixed assets, net	—		—			588			—			588
Deferred tax assets	94		467			144			(144		)	561
Intercompany receivables	403		261			7,405			(8,069		)	—
Prepaid pension	—		5			1,128			—			1,133
Other non-current assets	1		30			417			—			448
Investment in subsidiary	8,433		19,065			(897		)	(26,601		)	—
Total assets	$	9,122	$	21,659		$	43,778		$	(48,137	)	$	26,422

Liabilities and equity
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	274	$	70		$	2,380		$	(781	)	$	1,943
Short-term debt and current portion of long-term debt	250		—			1			—			251
Fiduciary liabilities	—		—			10,166			—			10,166
Intercompany payables	213		11,695			634			(12,542		)	—
Other current liabilities	—		69			867			—			936
Total current liabilities	737		11,834			14,048			(13,323		)	13,296
Long-term debt	4,231		1,762			—			—			5,993
Deferred tax liabilities	—		—			325			(144		)	181
Pension, other postretirement and other post-employment liabilities	—		1,275			361			—			1,636
Intercompany payables	—		7,570			499			(8,069		)	—
Other non-current liabilities	3		115			979			—			1,097
Total liabilities	4,971		22,556			16,212			(21,536		)	22,203

Total Aon shareholders' equity	4,151		(897		)	27,498			(26,601		)	4,151
Noncontrolling interests	—		—			68			—			68
Total equity	4,151		(897		)	27,566			(26,601		)	4,219
Total liabilities and equity	$	9,122	$	21,659		$	43,778		$	(48,137	)	$	26,422

Condensed Consolidating Statement of Financial Position



	As of December 31, 2017
(millions)	Aon plc		Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Assets
Current assets
Cash and cash equivalents	$	1	$	2,524		$	793		$	(2,562	)	$	756
Short-term investments	—		355			174			—			529
Receivables, net	—		2			2,476			—			2,478
Fiduciary assets	—		—			9,625			—			9,625
Intercompany receivables	165		1,046			10,824			(12,035		)	—
Other current assets	1		29			259			—			289
Total current assets	167		3,956			24,151			(14,597		)	13,677
Goodwill	—		—			8,358			—			8,358
Intangible assets, net	—		—			1,733			—			1,733
Fixed assets, net	—		—			564			—			564
Deferred tax assets	99		396			143			(249		)	389
Intercompany receivables	414		261			8,232			(8,907		)	—
Prepaid pension	—		6			1,054			—			1,060
Other non-current assets	1		35			271			—			307
Investment in subsidiary	8,884		17,799			(91		)	(26,592		)	—
Total assets	$	9,565	$	22,453		$	44,415		$	(50,345	)	$	26,088

Liabilities and equity
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	574	$	36		$	3,913		$	(2,562	)	$	1,961
Short-term debt and current portion of long-term debt	—		—			299			—			299
Fiduciary liabilities	—		—			9,625			—			9,625
Intercompany payables	130		11,149			756			(12,035		)	—
Other current liabilities	16		64			790			—			870
Total current liabilities	720		11,249			15,383			(14,597		)	12,755
Long-term debt	4,251		1,415			1			—			5,667
Deferred tax liabilities	—		—			376			(249		)	127
Pension, other postretirement and other post-employment liabilities	—		1,391			398			—			1,789
Intercompany payables	—		8,398			509			(8,907		)	—
Other non-current liabilities	11		91			1,000			—			1,102
Total liabilities	4,982		22,544			17,667			(23,753		)	21,440

Total Aon shareholders' equity	4,583		(91		)	26,683			(26,592		)	4,583
Noncontrolling interests	—		—			65			—			65
Total equity	4,583		(91		)	26,748			(26,592		)	4,648
Total liabilities and equity	$	9,565	$	22,453		$	44,415		$	(50,345	)	$	26,088

Condensed Consolidating Statement of Cash Flows



	Year Ended December 31, 2018
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities
Cash provided by (used for) operating activities - continuing operations	$	1,575		$	3		$	3,608		$	(3,500	)	$	1,686
Cash provided by operating activities - discontinued operations	—			—			—			—			—
Cash provided by (used for) operating activities	1,575			3			3,608			(3,500		)	1,686

Cash flows from investing activities
Proceeds from investments	—			24			955			(908		)	71
Payments for investments	(13		)	(47		)	(33		)	13			(80		)
Net purchases (sales) of short-term investments - non-fiduciary	—			299			49			—			348
Acquisition of businesses, net of cash acquired	—			—			(58		)	—			(58		)
Sale of businesses, net of cash sold	—			—			(10		)	—			(10		)
Capital expenditures	—			—			(240		)	—			(240		)
Cash provided by (used for) investing activities - continuing operations	(13		)	276			663			(895		)	31
Cash used for investing activities - discontinued operations	—			—			—			—			—
Cash provided by (used for) investing activities	(13		)	276			663			(895		)	31

Cash flows from financing activities
Share repurchase	(1,470		)	—			—			—			(1,470		)
Advances from (to) affiliates	156			(2,291		)	(4,041		)	6,176			—
Issuance of shares for employee benefit plans	(149		)	—			—			—			(149		)
Issuance of debt	1,723			4,028			3			—			5,754
Repayment of debt	(1,441		)	(3,678		)	(298		)	—			(5,417		)
Cash dividends to shareholders	(382		)	—			—			—			(382		)
Noncontrolling interests and other financing activities				—			(35		)	—			(35		)
Cash provided by (used for) financing activities - continuing operations	(1,563		)	(1,941		)	(4,371		)	6,176			(1,699		)
Cash used for financing activities - discontinued operations	—			—			—			—			—
Cash provided by (used for) financing activities	(1,563		)	(1,941		)	(4,371		)	6,176			(1,699		)

Effect of exchange rate changes on cash and cash equivalents	—			—			(118		)	—			(118		)
Net increase (decrease) in cash and cash equivalents	(1		)	(1,662		)	(218		)	1,781			(100		)
Cash and cash equivalents at beginning of year	1			2,524			793			(2,562		)	756
Cash and cash equivalents at end of year	$	—		$	862		$	575		$	(781	)	$	656

Condensed Consolidating Statement of Cash Flows



	Year Ended December 31, 2017
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities
Cash provided by (used for) operating activities - continuing operations	$	2,787		$	503		$	2,010		$	(4,631	)	$	669
Cash provided by operating activities - discontinued operations	—			—			65			—			65
Cash provided by (used for) operating activities	2,787			503			2,075			(4,631		)	734

Cash flows from investing activities
Proceeds from investments	224			587			582			(1,325		)	68
Payments for investments	(261		)	(29		)	(576		)	802			(64		)
Net purchases (sales) of short-term investments - non-fiduciary	—			(215		)	(17		)	—			(232		)
Acquisition of businesses, net of cash acquired	—			—			(1,029		)	—			(1,029		)
Sale of businesses, net of cash sold	—			—			4,246			—			4,246
Capital expenditures	—			—			(183		)	—			(183		)
Cash provided by (used for) investing activities - continuing operations	(37		)	343			3,023			(523		)	2,806
Cash used for investing activities - discontinued operations	—			—			(19		)	—			(19		)
Cash provided by (used for) investing activities	(37		)	343			3,004			(523		)	2,787

Cash flows from financing activities
Share repurchase	(2,399		)	—			—			—			(2,399		)
Advances from (to) affiliates	426			95			(4,975		)	4,454			—
Issuance of shares for employee benefit plans	(121		)	—			—			—			(121		)
Issuance of debt	544			1,100			10			—			1,654
Repayment of debt	(835		)	(1,150		)	(14		)	—			(1,999		)
Cash dividends to shareholders	(364		)	—			—			—			(364		)
Noncontrolling interests and other financing activities	—			—			(36		)	—			(36		)
Cash provided by (used for) financing activities - continuing operations	(2,749		)	45			(5,015		)	4,454			(3,265		)
Cash used for financing activities - discontinued operations	—			—			—			—			—
Cash provided by (used for) financing activities	(2,749		)	45			(5,015		)	4,454			(3,265		)

Effect of exchange rate changes on cash and cash equivalents	—			—			69			—			69
Net increase (decrease) in cash and cash equivalents	1			891			133			(700		)	325
Cash and cash equivalents at beginning of year⁽¹⁾	—			1,633			660			(1,862		)	431
Cash and cash equivalents at end of year⁽²⁾	$	1		$	2,524		$	793		$	(2,562	)	$	756


(1)	Includes $5 million of discontinued operations at December 31, 2016.


(2)	Includes $0 million of discontinued operations at December 31, 2017

Condensed Consolidating Statement of Cash Flows



	Year Ended December 31, 2016
(millions)	Aon plc			Aon Corporation			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities
Cash provided by (used for) operating activities - continuing operations	$	2,705		$	(536	)	$	2,768		$	(3,108	)	$	1,829
Cash provided by operating activities - discontinued operations	—			—			497			—			497
Cash provided by (used for) operating activities	2,705			(536		)	3,265			(3,108		)	2,326

Cash flows from investing activities
Proceeds from investments	—			316			15			(288		)	43
Payments for investments	—			(35		)	(29		)	—			(64		)
Net purchases (sales) of short-term investments - non-fiduciary	—			70			(9		)	—			61
Acquisition of businesses, net of cash acquired	—			(335		)	(608		)	64			(879		)
Sale of businesses, net of cash sold	—			—			171			(64		)	107
Capital expenditures	—			—			(156		)	—			(156		)
Cash provided by (used for) investing activities - continuing operations	—			16			(616		)	(288		)	(888		)
Cash used for investing activities - discontinued operations	—			—			(66		)	—			(66		)
Cash provided by (used for) investing activities	—			16			(682		)	(288		)	(954		)

Cash flows from financing activities
Share repurchase	(1,257		)	—			—			—			(1,257		)
Advances from (to) affiliates	(2,008		)	570			(3,037		)	4,475			—
Issuance of shares for employee benefit plans	(129		)	—			—			—			(129		)
Issuance of debt	1,879			1,588			—			—			3,467
Repayment of debt	(845		)	(2,088		)	(12		)	—			(2,945		)
Cash dividends to shareholders	(345		)	—			—			—			(345		)
Noncontrolling interests and other financing activities	—			—			(77		)	—			(77		)
Cash provided by (used for) financing activities - continuing operations	(2,705		)	70			(3,126		)	4,475			(1,286		)
Cash used for financing activities - discontinued operations	—			—			—			—			—
Cash provided by (used for) financing activities	(2,705		)	70			(3,126		)	4,475			(1,286		)

Effect of exchange rate changes on cash and cash equivalents	—			—			(39		)	—			(39		)
Net increase (decrease) in cash and cash equivalents	—			(450		)	(582		)	1,079			47
Cash and cash equivalents at beginning of year⁽¹⁾	—			2,083			1,242			(2,941		)	384
Cash and cash equivalents at end of year⁽²⁾	$	—		$	1,633		$	660		$	(1,862	)	$	431


(1)	Includes $2 million of discontinued operations at December 31, 2015.


(2)	Includes $5 million of discontinued operations at December 31, 2016

Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

Selected quarterly financial data for the years ended December 31, 2018 and 2017 are as follows (in millions, except per share data):



	1Q		2Q			3Q			4Q		2018
Income Statement Data
Total revenue	$	3,090	$	2,561		$	2,349		$	2,770	$	10,770
Operating income	799		(16		)	262			499		1,544
Net income from continuing operations	604		57			155			284		1,100
Income from discontinued operations, net of tax	6		1			(2		)	69		74
Net income	610		58			153			353		1,174
Less: Net income attributable to noncontrolling interests	16		10			6			8		40
Net income attributable to Aon shareholders	$	594	$	48		$	147		$	345	$	1,134
Per Share Data
Basic net income per share attributable to Aon shareholders
Continuing operations	$	2.37	$	0.19		$	0.61		$	1.14	$	4.32
Discontinued operations	0.02		0.01			(0.01		)	0.28		0.30
Net income	$	2.39	$	0.20		$	0.60		$	1.42	$	4.62
Diluted net income per share attributable to Aon shareholders
Continuing operations	$	2.35	$	0.19		$	0.61		$	1.13	$	4.29
Discontinued operations	0.02		—			(0.01		)	0.28		0.30
Net income	$	2.37	$	0.19		$	0.60		$	1.41	$	4.59



	1Q		2Q			3Q			4Q			2017
Income Statement Data
Total revenue	$	2,381	$	2,368		$	2,340		$	2,909		$	9,998
Operating income	335		(127		)	256			601			1,065
Net income from continuing operations	265		(43		)	196			17			435
Income from discontinued operations, net of tax	40		821			(4		)	(29		)	828
Net income	305		778			192			(12		)	1,263
Less: Net income attributable to noncontrolling interests	14		9			7			7			37
Net income attributable to Aon shareholders	$	291	$	769		$	185		$	(19	)	$	1,226
Per Share Data
Basic net income per share attributable to Aon shareholders
Continuing operations	$	0.95	$	(0.20	)	$	0.74		$	0.04		$	1.54
Discontinued operations	0.15		3.13			(0.02		)	(0.12		)	3.20
Net income	$	1.10	$	2.93		$	0.72		$	(0.08	)	$	4.74
Diluted net income per share attributable to Aon shareholders
Continuing operations	$	0.94	$	(0.20	)	$	0.73		$	0.04		$	1.53
Discontinued operations	0.15		3.13			(0.01		)	(0.11		)	3.17
Net income	$	1.09	$	2.93		$	0.72		$	(0.07	)	$	4.70

Summary of Significant Accounting Principles and Practices (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Accounting

The accompanying Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Financial Statements include the accounts of Aon and its controlled subsidiaries. Intercompany accounts and transactions have been eliminated. The Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented.

Use of Estimates

The preparation of the accompanying Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the Financial Statements in future periods.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Aon plc and those entities in which the Company has a controlling financial interest. To determine if Aon holds a controlling financial interest in an entity, the Company first evaluates if it is required to apply the variable interest entity (VIE) model to the entity, otherwise, the entity is evaluated under the voting interest model. Where Aon holds rights that give it the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, combined with a variable interest that gives the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company has a controlling financial interest in that VIE. Aon holds a controlling financial interest in entities that are not VIEs where it, directly or indirectly, holds more than 50% of the voting rights or where it exercises control through substantive participating rights or as a general partner.

Revenue Recognition

The Company generates revenues primarily through commissions, compensation from insurance and reinsurance companies for services provided to them, and fees from customers. Commissions and fees for brokerage services vary depending upon several factors, which may include the amount of premium, the type of insurance or reinsurance coverage provided, the particular services provided to a client, insurer, or reinsurer, and the capacity in which the Company acts. Compensation from insurance and reinsurance companies includes: (1) fees for consulting and analytics services and (2) fees and commissions for administrative and other services provided to or on behalf of insurers. In Aon’s capacity as an insurance and reinsurance broker, the service promised to the customer is placement of an effective insurance or reinsurance policy, respectively. At the completion of the insurance or reinsurance policy placement process once coverage is effective, the customer has obtained control over the services promised by the Company. Judgment is not typically required when assessing whether the coverage is effective. Fees from clients for advice and consulting services are dependent on the extent and value of the services provided. Payment terms for the Company’s principal service lines are discussed below; the Company believes these terms are consistent with current industry practices. Significant financing components are typically not present in Aon’s arrangements.

The Company recognizes revenue when control of the promised services is transferred to the customer in the amount that best reflects the consideration to which the Company expects to be entitled in exchange for those services. For arrangements where control is transferred over time, an input or output method is applied that represents a faithful depiction of the progress towards completion of the performance obligation. For arrangements that include variable consideration, the Company assesses whether any amounts should be constrained. For arrangements that include multiple performance obligations, the Company allocates consideration based on their relative fair values.

Costs incurred by the Company in obtaining a contract are capitalized and amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates, considering anticipated renewals when applicable. Certain contract related costs, including pre-placement brokerage costs, are capitalized as a cost to fulfill and are amortized on a systematic basis consistent with the transfer of control of the services to which the asset relates, which is generally less than one year.

The Company has elected to apply practical expedients to not disclose the revenue related to unsatisfied performance obligations if (1) the contract has an original duration of 1 year or less, (2) the Company has recognized revenue for the amount in which it has the right to bill, and (3) the variable consideration is allocated entirely to an unsatisfied performance obligation which is recognized as a series of distinct goods or services that form a single performance obligation.

Disaggregation of Revenue

The following is a description of principal service lines from which the Company generates its revenue:

Commercial Risk Solutions includes retail brokerage, cyber solutions, global risk consulting, and captives. Revenue primarily includes insurance commissions and fees for services rendered. Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy, or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. For arrangements recognized over time, various output measures, including units transferred and time elapsed, are utilized to provide a faithful depiction of the progress towards completion of the performance obligation. Revenue is recorded net of allowances for estimated policy cancellations, which are determined based on an evaluation of historical and current cancellation data. Commissions and fees for brokerage services may be invoiced near the effective date of the underlying policy or over the term of the arrangement in installments during the policy period.

Reinsurance Solutions includes treaty and facultative reinsurance brokerage and capital markets. Revenue primarily includes reinsurance commissions and fees for services rendered. Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. For arrangements recognized over time, various output measures, including units delivered and time elapsed, are utilized to provide a faithful depiction of the progress towards completion of the performance obligation. Commissions and fees for brokerage services may be invoiced at the inception of the reinsurance period for certain reinsurance brokerage, or more commonly, over the term of the arrangement in installments based on deposit or minimum premiums for most treaty reinsurance arrangements.

Retirement Solutions includes core retirement, investment consulting, and talent, rewards & performance. Revenue consists primarily of fees paid by customers for consulting services, such as risk management strategies, health and benefits, and human capital consulting services. Revenue recognized for these arrangements is predominantly recognized over the term of the arrangement using input or output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services, or for certain arrangements, at a point in time upon completion of the services. For consulting arrangements recognized over time, revenue will be recognized based on a measure of progress that depicts the transfer of control of the services to the customer, utilizing an appropriate input or output measure to provide a reasonable assessment of the progress towards completion of the performance obligation including units delivered or time elapsed. Fees paid by customers for consulting services are typically charged on an hourly, project or fixed-fee basis, and revenue for these arrangements is typically recognized based on time incurred, days elapsed, or reports delivered. Revenue from time-and-materials or cost-plus arrangements are recognized as services are performed using input or output measures to provide a reasonable assessment of the progress towards completion of the performance obligation including hours worked, and revenue for these arrangements is typically recognized based on time and materials incurred. Reimbursements received for out-of-pocket expenses are recorded as a component of revenue. Payment terms vary but are typically over the contract term in installments.

Health Solutions includes health and benefits brokerage and health care exchanges. Revenue primarily includes insurance commissions and fees for services rendered. For brokerage commissions, revenue is predominantly recognized at the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services using input or output measures, including units delivered or time elapsed, to provide a faithful depiction of the progress towards completion of the performance obligation. Revenue from health care exchange arrangements are typically recognized upon successful enrollment of participants, net of a reserve for estimated cancellations. Commissions and fees for brokerage services may be invoiced at the effective date of the underlying policy or over the term of the arrangement in installments during the policy period. Payment terms for other services vary but are typically over the contract term in installments.

Data & Analytic Services includes Affinity, Aon InPoint, and ReView. Revenue consists primarily of fees for services rendered and is generally recognized over the term of the arrangement to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Payment terms vary but are typically over the contract term in installments. For Data & Analytic Services arrangements recognized over time, revenue will be recognized based on a measure of progress that depicts the transfer of control of the services to the customer, utilizing an appropriate input or output measure to provide a faithful depiction of the progress towards completion of the performance obligation, including units delivered or time elapsed. Input and output measures utilized vary based on the arrangement but typically include reports provided or days elapsed.

Contract Costs

The Company recognizes an asset for costs incurred to fulfill a contract for costs that are specifically identified and relate to a contract or anticipated contract, generate or enhance resources used in satisfying the Company’s performance obligations, and are expected to be recovered. Assets recognized as costs to fulfill a contract, which includes internal costs related to pre-placement broking activities, as well as other costs, are amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates. The amortization is primarily included in Compensation and benefits on the Consolidated Statements of Income.

The Company capitalizes incremental costs to obtain a contract with a customer that are expected to be recovered. Assets recognized for the costs to obtain a contract, which includes certain sales commissions, will be amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates, considering anticipated renewals when applicable. For situations where the renewal period is one year or less and renewal costs are commensurate with the initial contract, the Company has applied a practical expedient and recognized the costs of obtaining a contract as an expense when incurred. The amortization is primarily included in Compensation and benefits on the Consolidated Statements of Income.

Share-Based Compensation Costs

Share-based payments to employees, including grants of restricted share units and performance share awards, are measured based on estimated grant date fair value. The Company recognizes compensation expense over the requisite service period for awards expected to ultimately vest. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.

Pension and Other Post-Retirement Benefits

Pension and Other Postretirement Benefits

The Company records net periodic cost relating to its pension and other postretirement benefit plans based on calculations that include various actuarial assumptions, including discount rates, assumed rates of return on plan assets, inflation rates, mortality rates, compensation increases, and turnover rates. The Company reviews its actuarial assumptions on an annual basis and modifies these assumptions based on current rates and trends. The effects of gains, losses, and prior service costs and credits are amortized over future service periods or future estimated lives if the plans are frozen. The funded status of each plan, calculated as the fair value of plan assets less the benefit obligation, is reflected in the Company’s Consolidated Statements of Financial Position using a December 31 measurement date.

Net Income per Share

Basic net income per share is computed by dividing net income available to ordinary shareholders by the weighted-average number of ordinary shares outstanding, including participating securities, which consist of unvested share awards with non-forfeitable rights to dividends. Diluted net income per share is computed by dividing net income available to ordinary shareholders by the weighted-average number of ordinary shares outstanding, which have been adjusted for the dilutive effect of potentially issuable ordinary shares, including certain contingently issuable shares. The diluted earnings per share calculation reflects the more dilutive effect of either (1) the two-class method that assumes that the participating securities have not been exercised, or (2) the treasury stock method.

Potentially issuable shares are not included in the computation of diluted income per share if their inclusion would be antidilutive.

Cash and Cash Equivalents and Short-term Investments

Cash and cash equivalents include cash balances and all highly liquid investments with initial maturities of three months or less. Short-term investments consist of money market funds. The estimated fair value of Cash and cash equivalents and Short-term investments approximates their carrying values.

Fiduciary Assets and Liabilities

In its capacity as an insurance agent and broker, Aon collects premiums from insureds and, after deducting its commission, remits the premiums to the respective insurers. Aon also collects claims or refunds from insurers on behalf of insureds. Uncollected premiums from insureds and uncollected claims or refunds from insurers are recorded as Fiduciary assets in the Company’s Consolidated Statements of Financial Position. Unremitted insurance premiums and claims are held in a fiduciary capacity and the obligation to remit these funds is recorded as Fiduciary liabilities in the Company’s Consolidated Statements of Financial Position.

Allowance for Doubtful Accounts

The Company’s allowance for doubtful accounts with respect to receivables is based on a combination of factors, including evaluation of historical write-offs, aging of balances, and other qualitative and quantitative analyses.

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Included in this category is internal use software, which is software that is acquired, internally-developed or modified solely to meet internal needs, with no plan to market externally. Costs related to directly obtaining, developing, or upgrading internal use software are capitalized. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which are generally as follows:



Asset Description		Expected Life
Software		Lesser of the life of an associated license, or 4 to 7 years
Leasehold improvements		Lesser of estimated useful life or lease term, not to exceed 10 years
Furniture, fixtures and equipment		4 to 10 years
Computer equipment		4 to 6 years
Buildings		35 years
Automobiles		6 years

Goodwill and Intangible Assets

Goodwill represents the excess of acquisition cost over the fair value of the net assets in the acquisition of a business. Goodwill is allocated to various reporting units. Upon disposition of a business entity, goodwill is allocated to the disposed entity based on the fair value of that entity compared to the fair value of the reporting unit in which it was included. Goodwill is not amortized, but instead is tested for impairment at least annually. The goodwill impairment test is performed at the reporting unit level. The Company may initially perform a qualitative analysis to determine if it is more likely than not that the goodwill balance is impaired. If a qualitative assessment is not performed or if a determination is made that it is not more likely than not that their value of the reporting unit exceeds its carrying amount, then the Company will perform a two-step quantitative analysis. First, the fair value of each reporting unit is compared to its carrying value. If the fair value of the reporting unit is less than its carrying value, the Company performs a hypothetical purchase price allocation based on the reporting unit’s fair value to determine the fair value of the reporting unit’s goodwill. Any resulting difference will be a charge to Amortization and impairment of intangible assets in the Consolidated Statements of Income in the period in which the determination is made. Fair value is determined using a combination of present value techniques and market prices of comparable businesses.

We classify our intangible assets acquired as either tradenames, customer-related and contract-based, or technology and other. Amortization basis and estimated useful lives by intangible asset type are generally as follows:



Intangible Asset Description	Amortization Basis	Expected Life
Customer-related and contract-based	In line with underlying cash flows	7 to 20 years
Tradenames	Straight-line	1 to 3 years
Technology and other	Straight-line	5 to 7 years

Derivatives

Derivative instruments are recognized in the Consolidated Statements of Financial Position at fair value. Where the Company has entered into master netting agreements with counterparties, the derivative positions are netted by counterparties and are reported accordingly in Other assets or Other liabilities. Changes in the fair value of derivative instruments are recognized in earnings each period, unless the derivative is designated and qualifies as a cash flow or net investment hedge.

The Company has historically designated the following hedging relationships for certain transactions: (1) a hedge of the change in fair value of a recognized asset or liability or firm commitment (“fair value hedge”), (2) a hedge of the variability in cash flows from a recognized variable-rate asset or liability or forecasted transaction (“cash flow hedge”), and (3) a hedge of the net investment in a foreign operation (“net investment hedge”).

In order for a derivative to qualify for hedge accounting, the derivative must be formally designated as a fair value, cash flow, or a net investment hedge by documenting the relationship between the derivative and the hedged item. The documentation must include a description of the hedging instrument, the hedged item, the risk being hedged, Aon’s risk management objective and strategy for undertaking the hedge, the method for assessing the effectiveness of the hedge, and the method for measuring hedge ineffectiveness. Additionally, the hedge relationship must be expected to be highly effective at offsetting changes in either the fair value or cash flows of the hedged item at both the inception of the hedge and on an ongoing basis. Aon assesses the ongoing effectiveness of its hedges and measures and records hedge ineffectiveness, if any, at the end of each quarter or more frequently if facts and circumstances require.

For a derivative designated as a fair value hedging instrument, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. The effect is to reflect in earnings the extent to which the hedge is not effective in achieving offsetting changes in fair value. For a cash flow hedge that qualifies for hedge accounting, the effective portion of the change in fair value of a hedging instrument is recognized in Other comprehensive income (“OCI”) and subsequently reclassified to earnings in the same period the hedged item impacts earnings. The ineffective portion of the change in fair value is recognized immediately in earnings. For a net investment hedge, the effective portion of the change in fair value of the hedging instrument is recognized in OCI as part of the cumulative translation adjustment, while the ineffective portion is recognized immediately in earnings.

Changes in the fair value of a derivative that is not designated as part of a hedging relationship (commonly referred to as an “economic hedge”) are recorded in Other income (expense) in the Consolidated Statements of Income.

The Company discontinues hedge accounting prospectively when (1) the derivative expires or is sold, terminated, or exercised, (2) the qualifying criteria are no longer met, or (3) management removes the designation of the hedging relationship.

Foreign Currency

Certain of the Company’s non-U.S. operations use their respective local currency as their functional currency. These operations that do not have the U.S. dollar as their functional currency translate their financial statements at the current rates of exchange in effect at the balance sheet date and revenues and expenses using rates that approximate those in effect during the period. The resulting translation adjustments are included in Net foreign currency translation adjustments within the Consolidated Statements of Shareholders’ Equity. Further, for all entities, gains and losses from the remeasurement of monetary assets and liabilities that are denominated in a non-functional currency of that entity are included in Other income (expense) within the Consolidated Statements of Income.

Income Taxes

Deferred income taxes are recognized for the effect of temporary differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted marginal tax rates and laws that are currently in effect. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in the period when the rate change is enacted.

Deferred tax assets are reduced by valuation allowances if, based on the consideration of all available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. Significant weight is given to evidence that can be objectively verified. Deferred tax assets are realized by having sufficient future taxable income to allow the related tax benefits to reduce taxes otherwise payable. The sources of taxable income that may be available to realize the benefit of deferred tax assets are future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carry-forwards, taxable income in carry-back years, and tax planning strategies that are both prudent and feasible.

The Company recognizes the effect of income tax positions only if sustaining those positions is more likely than not. Tax positions that meet the more likely than not recognition threshold but are not highly certain are initially and subsequently measured based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement with the taxing authority. Only information that is available at the reporting date is considered in the Company’s recognition and measurement analysis, and events or changes in facts and circumstances are accounted for in the period in which the event or change in circumstance occurs.

The Company records penalties and interest related to unrecognized tax benefits in Income taxes in the Company’s Consolidated Statements of Income.

New Accounting Pronouncements

Adoption of New Accounting Standards

Presentation of Net Periodic Pension and Postretirement Benefit Costs

In March 2017, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. Additionally, only the service cost component is eligible for capitalization, when applicable. The Company has applied the new guidance retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the Consolidated Statement of Income, and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension costs and net periodic postretirement benefit cost in assets. The new guidance allows a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. The Company did not apply the practical expedient upon adoption of this guidance. The new guidance was effective for Aon in the first quarter of 2018. The adoption of this guidance had no impact on the net income of the Company.

Upon adoption of the guidance, the presentation of the results reflect a change in Operating income (loss) offset by an equal and offsetting change in Other income (expense) for each period, as follows:



	Years ended December 31
	2017									2016
	As Reported			Adjustments			As Adjusted			As Reported		Adjustments			As Adjusted
Operating income (loss) ⁽¹⁾	$	979		$	86		$	1,065		$	1,638	$	173		$	1,811
Other income (expense)	$	(39	)	$	(86	)	$	(125	)	$	36	$	(173	)	$	(137	)


(1)	Reclassification from Operating income is recorded in Compensation and benefits.

Income Tax Consequences of Intercompany Transactions

In October 2016, the FASB issued new accounting guidance on the income tax consequences of intra-entity asset transfers other than inventory. The guidance requires that the seller and buyer recognize the consolidated current and deferred income tax consequences of a transaction in the period the transaction occurs rather than deferring to a future period and recognizing those consequences when the asset has been sold to an outside party or otherwise recovered through use (i.e. depreciated, amortized, or impaired). The Company has applied the new guidance on a modified retrospective basis with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The new guidance was effective for Aon in the first quarter of 2018. Upon the adoption of this guidance on January 1, 2018, the Company recognized an increase to Deferred tax assets of $23 million, an increase to Deferred tax liabilities of $12 million, and a decrease to Other non-current assets of $26 million on the Consolidated Statement of Financial Position through a cumulative adjustment of $15 million decrease to Retained earnings. For the twelve months ended December 31, 2018, the impact of adopting this guidance on the Consolidated Statement of Income was insignificant.

Statement of Cash Flows

In August 2016, the FASB issued new accounting guidance on the classification of certain cash receipts and cash payments. Under the new guidance, an entity no longer has discretion to choose the classification for a number of transactions, including contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The new standard was effective for the Company in the first quarter of 2018. The adoption of this guidance had no impact on the Company’s Consolidated Statements of Cash Flows.

Financial Assets and Liabilities

In January 2016, the FASB issued new accounting guidance on recognition and measurement of financial assets and financial liabilities. The amendments in the new guidance make targeted improvements, which include the requirement to measure equity investments with readily determinable fair values at fair value through net income, simplification of the impairment assessment for equity investments without readily determinable fair values, adjustments to existing and additional disclosure requirements, and additional tax considerations. The Company applied the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with the exception of the amendments related to equity securities without readily determinable fair values, including disclosure requirements, which were applied prospectively. Upon the adoption of this guidance on January 1, 2018, the Company recognized an increase to Accumulated other comprehensive loss of $1 million on the Consolidated Statement of Financial Position through a cumulative adjustment of $1 million increase to Retained earnings. For the twelve months ended December 31, 2018, the impact of adopting this guidance on the Consolidated Statement of Income was insignificant.

Revenue Recognition

In May 2014, the FASB issued a new accounting standard on revenue from contracts with customers (the “Standard” or “ASC 606”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP (“ASC 605”). The core principal of the Standard is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Standard also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments, changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. Two methods of transition were permitted upon adoption: full retrospective and modified retrospective. The Company elected to apply the modified retrospective adoption approach to all contracts. Under this approach, prior periods were not restated. Rather, revenues and other disclosures for prior periods were provided in the notes to the financial statements as previously reported under ASC 605, and the cumulative effect of initially applying the guidance was recognized as an adjustment to Retained earnings.

The following summarizes the significant changes to the Company as a result of the adoption of ASC 606 on January 1, 2018.

•

The Company previously recognized revenue either at a point in time or over a period of time based on the transfer of value to customers or as the remuneration became determinable. Under ASC 606, the revenue related to certain brokerage services recognized over a period of time is recognized on the effective date of the associated policies when control of the policy transfers to the customer. As a result, revenue from these arrangements are typically recognized in earlier periods under ASC 606 in comparison to ASC 605, changing the timing and amount of revenue recognized for annual and interim periods. This change resulted in a significant shift in timing of interim revenue for the Reinsurance Solutions revenue line and, to a lesser extent, certain other brokerage services.

•

The Standard provides guidance on accounting for certain revenue-related costs including when to capitalize costs associated with obtaining and fulfilling a contract. The majority of these costs were previously expensed as incurred under ASC 605. Assets recognized for the costs to obtain a contract, which includes certain sales commissions, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, considering anticipated renewals when applicable. For situations where the renewal period is one year or less and renewal costs are commensurate with the initial contract, the Company applied a practical expedient and recognizes the costs of obtaining a contract as an expense when incurred. Assets recognized as costs to fulfill a contract, which includes internal costs related to pre-placement broking activities, as well as other costs, are amortized on a systematic basis that is consistent with the transfer of the services to which the asset relates, which is generally less than one year.

As a result of applying the modified retrospective method to adopt ASC 606, the following adjustments were made to the Consolidated Statement of Financial Position as of January 1, 2018:



	December 31, 2017					January 1, 2018
(millions)	As Reported		Adjustments			As Adjusted
Assets
Receivables, net	$	2,478	$	252		$	2,730
Other current assets	$	289	$	298		$	587
Deferred tax assets	$	389	$	(128	)	$	261
Other non-current assets	$	307	$	145		$	452

Liabilities
Accounts payable and accrued liabilities	$	1,961	$	8		$	1,969
Other current liabilities	$	870	$	13		$	883
Deferred tax liabilities	$	127	$	42		$	169
Other non-current liabilities	$	1,102	$	(3	)	$	1,099

Equity
Total equity	$	4,648	$	507		$	5,155

The following tables summarize the impacts of adopting ASC 606 on the Company’s Consolidated Statement of Income, Financial Position, and Cash Flows as of and for the twelve months ended December 31, 2018.

Consolidated Statement of Income



	Twelve months ended December 31, 2018
(millions)	As Reported			Adjustments			Balances Without Adoption of ASC 606
Revenue
Total revenue	$	10,770		$	(61	)	$	10,709
Expenses
Compensation and benefits	$	6,103		$	51		$	6,154
Other general expenses	$	1,500		$	(1	)	$	1,499
Other income (expense)	$	(25	)	$	1		$	(24	)
Income taxes	$	146		$	(34	)	$	112

Adoption of ASC 606 had a favorable impact of $78 million on net income from continuing operations, or $0.32 per share, for the twelve months ended December 31, 2018.

Consolidated Statement of Financial Position



	As of December 31, 2018
(millions)	As Reported		Adjustments			Balances Without Adoption of ASC 606
Assets
Receivables, net	$	2,760	$	(301	)	$	2,459
Other current assets	$	618	$	(319	)	$	299
Deferred tax assets	$	561	$	137		$	698
Other non-current assets	$	448	$	(155	)	$	293

Liabilities
Other current liabilities	$	936	$	(43	)	$	893
Deferred tax liabilities	$	181	$	(28	)	$	153
Other non-current liabilities	$	1,097	$	2		$	1,099

Equity
Total equity	$	4,219	$	(569	)	$	3,650

Consolidated Statement of Cash Flows



	Twelve months ended December 31, 2018
(millions)	As Reported			Adjustments			Balances Without Adoption of ASC 606
Cash flows from operating activities
Net income	$	1,174		$	(78	)	$	1,096
Receivables, net	$	(127	)	$	49		$	(78	)
Accounts payable and accrued liabilities	$	25		$	8		$	33
Current income taxes	$	34		$	(34	)	$	—
Other assets and liabilities	$	2		$	55		$	57

The adoption of ASC 606 had no impact on total Cash provided by operating activities.

Refer to Note 3 “Revenue from Contracts with Customers” for further information.

Accounting Standards Issued but Not Yet Adopted

Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued new accounting guidance related to the disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans. The guidance requires sponsors of these plans to provide additional disclosures, including weighted-average interest rates used in the entity’s cash balance pension plans and a narrative description of reasons for any significant gains or losses impacting the benefit obligation for the period, and eliminates certain previous disclosure requirements. The guidance is effective for Aon in the first quarter of 2021 with early adoption permitted and will be applied retrospectively. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB issued new accounting guidance related to reclassification of certain tax effects from accumulated other comprehensive income. The guidance allows a reclassification from accumulated comprehensive income to retained earnings for stranded tax effects resulting from the Tax Reform Act. In addition, the entity is required to provide certain disclosures regarding stranded tax effects. The guidance is effective for Aon in the first quarter of 2019 and early adoption is permitted, including adoption in any interim period. The guidance should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. The Company does not anticipate electing to reclassify stranded tax effects in accumulated other comprehensive income to retained earnings and will adopt the disclosure guidance in the first quarter of 2019. Refer to Note 11 “Income Taxes” for further discussion of the Tax Reform Act.

Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB issued new accounting guidance on targeted improvements to accounting for hedging activities. The new guidance amends its hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and requires the effect of a hedging instrument to be presented in the same income statement line as the hedged item. Further, in December 2018, the FASB issued additional guidance which added to the list of U.S. benchmark interest rates that are eligible to be hedged, the Overnight Index Swap (“OIS”) rate based on the Secured Overnight Financing Rate. Thus, entities may designate the OIS rate in hedging relationships they enter into on or after the date of adoption of this guidance. An entity will apply the new guidance on a modified retrospective basis with a cumulative effect adjustment to accumulated other comprehensive income with a corresponding adjustment to retained earnings as of the beginning of the period of adoption. Changes to income statement presentation and financial statement disclosures will be applied prospectively. The new guidance is effective for Aon in the first quarter of 2019 and early adoption is permitted. The Company will adopt the new guidance in the first quarter of 2019 and does not expect a significant impact on the Financial Statements.

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued new accounting guidance on simplifying the test for goodwill impairment. Currently the standard requires an entity to perform a two-step test to determine the amount, if any, of goodwill impairment. In Step 1, an entity compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the entity performs Step 2 and compares the implied fair value of goodwill with the carrying amount of that goodwill for that reporting unit. An impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the implied fair value of that goodwill is recorded, limited to the amount of goodwill allocated to that reporting unit. The new guidance removes Step 2, resulting in an entity applying a line-step quantitative test and will record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. An entity will apply the new guidance on a prospective basis. The new guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. The Company is currently evaluating the period of adoption, but does not expect a significant impact on the Financial Statements.

Credit Losses

In June 2016, the FASB issued new accounting guidance on the measurement of credit losses on financial instruments. The new guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. The Company is currently evaluating the impact that the standard will have on the Financial Statements and period of adoption.

Leases

In February 2016, the FASB issued a new accounting standard on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new standard, a lessee is required to recognize in the Consolidated Statement of Financial Position liabilities to make future lease payments and right-of-use assets representing its right to use the underlying assets for the lease term. The recognition, measurement, timing, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current U.S. GAAP standards. The new standard is effective for the Company in the first quarter of 2019, with early adoption permitted and must be applied using a modified retrospective transition approach. In July 2018, the FASB amended this guidance and provided an additional transition method with which to adopt the guidance. Under the additional transition method, entities may elect to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. Under this transition method, an entity's reporting for the comparative periods prior to adoption presented in the financial statements would continue to be in accordance with current lease guidance and thus not restated. The Company will adopt the new standard as of January 1, 2019 using the cumulative-effect adjustment transition method approved by the FASB. Additionally, the Company will provide expanded lease disclosures required under the new standard in the first quarter of 2019, including both qualitative and quantitative information.

The modified retrospective approach includes several optional practical expedients that entities may elect to apply upon transition. The Company has determined it will elect the package of practical expedients permitted under the transition guidance within the new standard, which allows a lessee to carryforward their population of existing leases, the classification of each lease, as well as the treatment of initial direct costs as of the period of adoption. In addition, the Company will elect the practical expedient related to lease and non-lease components, as an accounting policy election for all asset classes, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. Furthermore, the Company has made a policy election to not recognize right-of-use assets and lease liabilities that arise from leases with an initial term of twelve months or less on the Consolidated Statements of Financial Position. Lastly, the Company has determined it will not elect the practical expedient related to hindsight in determining the lease term and in assessing impairment of right-of-use assets.

The Company will implement the standard as of January 1, 2019 and has executed a comprehensive approach to identify arrangements that may contain a lease, has performed completeness assessments over the identified lease population, and has implemented system solutions and processes to appropriately account for the lease right-of-use assets and lease liabilities upon transition and an ongoing basis. Further, control activities related to the adoption of this standard as well as ongoing transactional processes and procedures have been designed and begun to be implemented to ensure compliance with the new standard.

The Company expects to recognize lease liabilities ranging from approximately $1.3 billion to $1.5 billion and corresponding right-of-use assets ranging from $1.1 billion to $1.3 billion on the Consolidated Statements of Financial Position upon the adoption of this standard. The Company does not anticipate that the new standard will have a significant impact on the Consolidated Statements of Income or the Consolidated Statements of Cash Flows.

Fair Value Measurements

Accounting standards establish a three tier fair value hierarchy that prioritizes the inputs used in measuring fair values as follows:


•	Level 1 — observable inputs such as quoted prices for identical assets in active markets;


•	Level 2 — inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and


•	Level 3 — unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.