Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 791 | $ 676 |
Less: Net income attributable to noncontrolling interests | 19 | 17 |
Net income attributable to Aon shareholders | 772 | 659 |
Other comprehensive income (loss), net of tax: | ||
Change in fair value of financial instruments | (5) | 7 |
Foreign currency translation adjustments | (397) | 133 |
Postretirement benefit obligation | 24 | 31 |
Total other comprehensive income (loss) | (378) | 171 |
Less: Other comprehensive income attributable to noncontrolling interests | (2) | 2 |
Total other comprehensive income (loss) attributable to Aon shareholders | (376) | 169 |
Comprehensive income (loss) attributable to Aon shareholders | $ 396 | $ 828 |
Condensed Consolidated Statements of Financial Position (Parenthetical) - $ / shares |
Mar. 31, 2020 |
Dec. 31, 2019 |
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Statement of Financial Position [Abstract] | ||
Common stock, nominal or par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 750,000,000 | 750,000,000 |
Common stock, issued shares (in shares) | 234,100,000 | 240,100,000 |
Condensed Consolidated Statement of Shareholders' Equity Unaudited (Parenthetical) - $ / shares |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Statement of Stockholders' Equity [Abstract] | ||
Dividends (in dollars per share) | $ 0.44 | $ 400,000.00 |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements and Notes thereto (the “Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries. Intercompany accounts and transactions have been eliminated. The Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented. Certain information and disclosures normally included in the Financial Statements prepared in accordance with U.S. GAAP have been condensed or omitted. The Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, including amendments and additions disclosed on Form 8-K issued April 1, 2020. The results for the three months ended March 31, 2020 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2020, particularly in light of the continuing effect of the COVID-19 pandemic. On April 1, 2020, a scheme of arrangement under English law was completed pursuant to which the Class A ordinary shares of Aon plc, a public limited company incorporated under the laws of England and Wales and the publicly traded parent company of the Aon group (“Aon UK”), were cancelled and the holders thereof received, on a one-for-one basis, Class A ordinary shares of Aon plc, an Irish public limited company formerly known as Aon Limited (“Aon Ireland”), as described in the proxy statement filed with the U.S. Securities and Exchange Commission (“SEC”) on December 20, 2019 (the “Ireland Reorganization”). Aon Ireland is a tax resident of Ireland. References in the Financial Statements to “Aon” or the “Company” for time periods prior to April 1, 2020 refer to Aon UK. References in the Financial Statements to “Aon” or the “Company” for time periods on or after April 1, 2020, refer to Aon Ireland. Use of Estimates The preparation of the 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, foreign currency exchange rate movements, and, recently, impacts from the COVID-19 pandemic increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the Financial Statements in future periods.
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Accounting Principles and Practices |
3 Months Ended |
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Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Accounting Principles and Practices | Accounting Principles and Practices Adoption of New Accounting Standards Cloud Computing Arrangements In August 2018, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on implementation costs incurred in a cloud computing arrangement that is a service contract. The new guidance aligns capitalization requirements for certain implementation costs incurred in cloud computing arrangements with existing requirements for capitalizing implementation costs for internal-use software. These costs will be deferred over the term of the hosting arrangement, including any optional renewal periods the entity is reasonably certain to exercise. An entity may apply the new guidance on either a prospective or retrospective basis. The new guidance was effective for Aon in the first quarter of 2020 and was adopted on a prospective basis for all implementation costs incurred after the date of initial adoption. The adoption of this guidance had no 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. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The new guidance was effective for Aon in the first quarter of 2020 and was adopted on a prospective basis. The adoption of this guidance had no significant impact on the Financial Statements. Credit Losses In June 2016, the FASB issued a new accounting standard on the measurement of credit losses on financial instruments. The new standard replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted the new standard as of January 1, 2020 using the modified retrospective approach. Under this approach, prior periods were not restated. Rather, the cumulative effect of initially applying the new standard was recognized as an adjustment to retained earnings. Upon the adoption of this guidance on January 1, 2020, the Company recognized a cumulative adjustment of $6 million to decrease retained earnings. The Company’s estimate for allowance for credit losses with respect to receivables is based on a combination of factors, including evaluation of forward-looking information, historical write-offs, aging of balances, and other qualitative and quantitative analyses. Accounting Standards Issued But Not Yet Adopted Simplifying the Accounting for Income Taxes In December 2019, the FASB issued new accounting guidance that simplifies the accounting for income taxes by eliminating some exceptions to the general approach in the existing guidance. It also clarifies certain aspects of the existing guidance to promote more consistent application. The new guidance is effective for Aon in the first quarter of 2021, with early adoption permitted. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption. 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 new 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. Securities and Exchange Commission Final Rules Financial Disclosures about Guarantors In March 2020, the SEC passed changes to the disclosure requirements in Rules 3-10 and 3-16 of Regulation S-X to better align those requirements with the needs of investors and to simplify and streamline the disclosure obligations of registrants. The amendments are effective January 4, 2021, with early adoption permitted. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption.
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Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers Disaggregation of Revenue The following table summarizes revenue from contracts with customers by principal service line (in millions):
Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):
Contract Costs An analysis of the changes in the net carrying amount of costs to fulfill contracts with customers are as follows (in millions):
An analysis of the changes in the net carrying amount of costs to obtain contracts with customers are as follows (in millions):
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Cash and Cash Equivalents and Short-term Investments |
3 Months Ended |
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Mar. 31, 2020 | |
Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
Cash and Cash Equivalents and Short-term Investments | Cash and Cash Equivalents and Short-term Investments Cash and cash equivalents include cash balances and all highly liquid instruments with initial maturities of three months or less. Short-term investments consist of money market funds. The estimated fair value of cash and cash equivalents and short-term investments approximates their carrying values. At March 31, 2020, Cash and cash equivalents and Short-term investments were $860 million compared to $928 million at December 31, 2019, a decrease of $68 million. Of the total balances, $95 million and $110 million were restricted as to their use at March 31, 2020 and December 31, 2019, respectively. Included within Short-term investments as of March 31, 2020 and December 31, 2019 were £42.7 million ($52.1 million at March 31, 2020 exchange rates and $55.5 million at December 31, 2019 exchange rates) of operating funds required to be held by the Company in the United Kingdom (the “U.K.”) by the Financial Conduct Authority (the “FCA”), a U.K.-based regulator.
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Other Financial Data |
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Other Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data | Other Financial Data Condensed Consolidated Statements of Income Information Other Income (Expense) Other income (expense) consists of the following (in millions):
Condensed Consolidated Statements of Financial Position Information Allowance for Doubtful Accounts An analysis of the allowance for doubtful accounts is as follows (in millions):
Other Current Assets The components of Other current assets are as follows (in millions):
Other Non-Current Assets The components of Other non-current assets are as follows (in millions):
Other Current Liabilities The components of Other current liabilities are as follows (in millions):
Other Non-Current Liabilities The components of Other non-current liabilities are as follows (in millions):
(1) Includes $145 million for the non-current portion of the one-time mandatory transition tax on accumulated foreign earnings as of March 31, 2020 and December 31, 2019.
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Restructuring |
3 Months Ended |
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Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring In 2017, Aon initiated a global restructuring plan (the “Restructuring Plan”) in connection with the sale of the benefits administration and business process outsourcing business (the “Divested Business”). The Restructuring Plan was intended to streamline operations across the organization and deliver greater efficiency, insight, and connectivity. The Company incurred all remaining costs for the Restructuring Plan, and the Restructuring Plan was closed in the fourth quarter of 2019. As such, for the three months ended March 31, 2020, no charges were taken under the Restructuring Plan. For the three months ended March 31, 2019, $91 million of restructuring expenses were charged under the Restructuring Plan. As of December 31, 2019, the remaining liabilities for the Restructuring Plan were $204 million. During the three months ended March 31, 2020, the Company made cash payments of $60 million, and the effect of foreign currency translation and other non-cash activity was $17 million, resulting in restructuring liabilities of $127 million as of March 31, 2020.
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Acquisitions and Dispositions of Businesses |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Dispositions of Businesses | Acquisitions and Dispositions of Businesses Completed Acquisitions The Company completed five acquisitions during the three months ended March 31, 2020 and one acquisition during the three months ended March 31, 2019. 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):
The results of operations of these acquisitions are included in the Financial Statements as of the respective acquisition dates. The Company’s results of operations would not have been materially different if these acquisitions had been reported from the beginning of the period in which they were acquired. 2020 Acquisitions On January 1, 2020, the Company completed the acquisition of 100% share capital of Apollo Conseil et Courtage, an insurance broker based in France. On January 1, 2020, the Company completed the acquisition of 100% share capital of Assimedia SA, an insurance broker based in Switzerland. On January 1, 2020, the Company completed the acquisition of 100% share capital of TRIUM GmbH Insurance Broker, an insurance broker based in Germany. On January 3, 2020, the Company completed the acquisition of 100% share capital of CoverWallet, Inc., a U.S.-based digital insurance platform for small- and medium-sized businesses. On January 31, 2020, the Company completed the acquisition of 100% share capital of Cytelligence Inc., a Canadian-based cyber security firm that provides incident response advisory, digital forensic expertise, security consulting services, and cyber security training for employees to help organizations respond to cyber security threats and strengthen their security position. 2019 Acquisitions On July 31, 2019, the Company completed the acquisition of 100% share capital of Ovatio Courtage SAS, an insurance broker based in France. On July 31, 2019, the Company completed the acquisition of 100% share capital of Zalba-Caldu Correduria de Seguros, S.A., a Spanish insurance broker. On January 1, 2019, the Company completed the acquisition of 100% share capital of Chapka Assurances SAS, based in France. Completed Dispositions The Company completed one disposition during the three months ended March 31, 2020. The Company completed one disposition during the three months ended March 31, 2019. Total pretax gains recognized for the three months ended March 31, 2020 were $25 million. Total pretax gains recognized for the three months ended March 31, 2019 were $5 million. Gains and losses recognized as a result of a disposition are included in Other income (expense) in the Condensed Consolidated Statements of Income. Other Significant Activity On March 9, 2020, Aon and Willis Towers Watson Public Limited Company, an Irish public limited company (“WTW”), entered into a business combination agreement (the “Business Combination Agreement”) with respect to a combination of the parties (the “Combination”). Refer to “Business Combination Agreement” within Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information.
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Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The changes in the net carrying amount of goodwill for the three months ended March 31, 2020 are as follows (in millions):
Other intangible assets by asset class are as follows (in millions):
The estimated future amortization for finite-lived intangible assets as of March 31, 2020 is as follows (in millions):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Notes In March 2020, the Company’s $400 million 2.80% Senior Notes due March 2021 were classified as Short-term debt and current portion of long-term debt in the Condensed Consolidated Statements of Financial Position as the date of maturity is in less than one year. On November 15, 2019, Aon Corporation, a Delaware corporation and a wholly owned subsidiary of the Company, issued $500 million 2.20% Senior Notes due November 2022. The Company used the net proceeds of the offering to pay down a portion of outstanding commercial paper and for general corporate purposes. In September 2019, the Company’s $600 million 5.00% Senior Notes due September 2020 were classified as Short-term debt and current portion of long-term debt in the Condensed Consolidated Statements of Financial Position as the date of maturity is in less than one year. On May 2, 2019, Aon Corporation issued $750 million 3.75% Senior Notes due May 2029. The Company used the net proceeds of the offering to pay down a portion of outstanding commercial paper and for general corporate purposes. Revolving Credit Facilities As of March 31, 2020, Aon plc had two primary committed credit facilities outstanding: its $900 million multi-currency U.S. credit facility expiring in February 2022 and its $750 million multi-currency U.S. credit facility expiring in October 2023. Effective February 27, 2020, the $750 million multi-currency U.S. credit facility was increased by $350 million from the original $400 million. In aggregate, these two facilities provide $1.65 billion in available credit. Each of these primary committed credit facilities includes customary representations, warranties, and covenants, including financial covenants that require Aon to maintain specified ratios of adjusted consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”) to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At March 31, 2020, Aon did not have borrowings under either of these primary committed credit facilities, and was in compliance with the financial covenants and all other covenants contained therein during the rolling 12 months ended March 31, 2020. Commercial Paper Aon Corporation has established a U.S. commercial paper program (the “U.S. Program”) and Aon UK has established a European multi-currency commercial paper program (the “European Program” and, together with the U.S. Program, the “Commercial Paper 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 $1.65 billion at March 31, 2020. As of March 31, 2020, the U.S. Program was fully and unconditionally guaranteed by Aon UK and the European Program was fully and unconditionally guaranteed by Aon Corporation. In connection with the Ireland Reorganization, on April 1, 2020, a new guarantee structure for the Commercial Paper Programs was established. Refer to Note 18 “Guarantee of Registered Securities” for further information. Commercial paper outstanding, which is included in Short-term debt and current portion of long-term debt in the Condensed Consolidated Statements of Financial Position, is as follows (in millions):
The weighted average commercial paper outstanding and its related interest rates are as follows (in millions, except percentages):
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Income Taxes |
3 Months Ended |
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Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate on Net income from continuing operations was 19.3% for the three months ended March 31, 2020. The effective tax rate on Net income from continuing operations was 15.7% for the three months ended March 31, 2019. For the three months ended March 31, 2020, the tax rate was primarily driven by the geographical distribution of income and certain discrete items, primarily the favorable impact of share-based payments. For the three months ended March 31, 2019, the tax rate was primarily driven by the geographical distribution of income and certain discrete items, primarily the favorable impact of shared-based payments.
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Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity Ordinary Shares Aon has a share repurchase program authorized by the Company’s Board of Directors (the “Repurchase Program”). The Repurchase Program was established in April 2012 with $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014 and June 2017 for a total of $15.0 billion in repurchase authorizations. The Repurchase Program was adopted by Aon Ireland’s Board of Directors on April 1, 2020. Under the Repurchase Program, the Company’s Class A Ordinary Shares may be repurchased through the open market or in privately negotiated transactions, from time to time, based on prevailing market conditions, and will be funded from available capital. The following table summarizes the Company’s share repurchase activity (in millions, except per share data):
At March 31, 2020, the remaining authorized amount for share repurchases under the Repurchase Program was $1.6 billion. Under the Repurchase Program, the Company has repurchased a total of 130.9 million shares for an aggregate cost of approximately $13.4 billion. Due to COVID-19, the Company has temporarily suspended share repurchase. Net Income Per Share Weighted average ordinary shares outstanding are as follows (in millions):
Potentially issuable shares are not included in the computation of Diluted net income per share if their inclusion would be antidilutive. There were no shares and 0.1 million shares excluded from the calculation for the three months ended March 31, 2020 and March 31, 2019, respectively. Accumulated Other Comprehensive Loss Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):
(3) It is the Company’s policy to release income tax effects from accumulated other comprehensive loss using the portfolio approach.
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Employee Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefits | Employee Benefits The following table provides the components of the net periodic (benefit) cost recognized in the Condensed Consolidated Statements of Income for Aon’s significant U.K., U.S., and other major pension plans, which are located in the Netherlands and Canada. Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):
Contributions Assuming no additional contributions are agreed to with, or required by, the pension plan trustees, the Company expects to make total cash contributions of approximately $5 million, $99 million, and $19 million, (at December 31, 2019 exchange rates) to its significant U.K., U.S., and other major pension plans, respectively, during 2020. The following table summarizes contributions made to the Company’s significant pension plans (in millions):
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Share-Based Compensation Plans |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Plans | Share-Based Compensation Plans The following table summarizes share-based compensation expense recognized in the Condensed Consolidated Statements of Income in Compensation and benefits (in millions):
Restricted Share Units RSUs generally vest between three and five years. The fair value of RSUs is based upon the market value of the Company’s Class A 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 (shares in thousands, except fair value):
Unamortized deferred compensation expense amounted to $359 million as of March 31, 2020, with a remaining weighted average amortization period of approximately two 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 issuance 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 the Company’s Class A ordinary shares at the date of grant. The performance conditions are not considered in the determination of the grant date fair value for these awards. Compensation expense is recognized over the performance period based on management’s estimate of the number of units expected to vest. Management evaluates its estimate of the actual number of shares expected to be issued at the end of the programs on a quarterly basis. The cumulative effect of the change in estimate is recognized in the period of change as an adjustment to Compensation and benefits in the Condensed Consolidated Statements of Income, if necessary. Dividend equivalents are not paid on PSAs. The following table summarizes the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the three months ended March 31, 2020 and the years ended December 31, 2019 and 2018, respectively (shares in thousands and dollars in millions, except fair value):
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Derivatives and Hedging |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging | Derivatives and Hedging The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, and 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 Condensed Consolidated Statements of Comprehensive Income. The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company’s global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30-day basis, but may be for up to 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 Condensed Consolidated Statements of Income. The notional and fair values of derivative instruments are as follows (in millions):
The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements are as follows (in millions):
The amounts of derivative gains (losses) reclassified from Accumulated other comprehensive loss in the Condensed Consolidated Statements of Income are as follows (in millions):
The Company estimates that approximately $14 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified into earnings in the next 12 months. The Company recorded a loss of $35 million and a gain of $5 million in Other income (expense) during the three months ended March 31, 2020 and March 31, 2019, respectively, 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. The Company has designated a portion of its euro-denominated commercial paper issuances as a non-derivative hedge of the foreign currency exposure of a net investment in its European operations. The change in fair value of the designated portion of the euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive loss, to the extent it is effective as a hedge. The foreign currency translation adjustment of the hedged net investments is also recorded in Accumulated other comprehensive loss. Ineffective portions of net investment hedges, if any, are reclassified from Accumulated other comprehensive loss into earnings during the period of change. The Company had €101 million ($112 million at March 31, 2020 exchange rates) and €101 million ($112 million at December 31, 2019 exchange rates) of outstanding euro-denominated commercial paper at March 31, 2020 and December 31, 2019, respectively, designated as a hedge of the foreign currency exposure of its net investment in its European operations. The unrealized gain recognized in Accumulated other comprehensive loss related to the net investment non-derivative hedging instrument was $30 million and $29 million, as of March 31, 2020 and December 31, 2019, respectively. The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive loss to earnings during the three months ended March 31, 2020 and 2019.
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Fair Value Measurements and Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments Accounting standards establish a three tier fair value hierarchy that prioritizes the inputs used in measuring fair values as follows:
The following methods and assumptions are used to estimate the fair values of the Company’s financial instruments: Money market funds consist of institutional prime, treasury, and government money market funds. The Company reviews treasury and government money market funds to obtain reasonable assurance that the fund net asset value is $1 per share, and reviews the floating net asset value of institutional prime money market funds for reasonableness. Equity investments consist of 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, 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 internal Company guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates used in the Financial Statements. Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities. Debt is carried at outstanding principal balance, less any unamortized issuance costs, discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements. The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2020 and December 31, 2019 (in millions):
There were no transfers of assets or liabilities between fair value hierarchy levels in the three months ended March 31, 2020 and 2019. The Company recognized no realized or unrealized gains or losses in the Condensed Consolidated Statements of Income during the three months ended March 31, 2020 and 2019 related to assets and liabilities measured at fair value using unobservable inputs. The fair value of debt is classified as Level 2 of the fair value hierarchy. The following table provides the carrying value and fair value for the Company’s term debt (in millions):
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Claims, Lawsuits and Other Contingencies |
3 Months Ended |
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Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Claims, Lawsuits and Other Contingencies | Claims, Lawsuits, and Other Contingencies Legal Aon and its subsidiaries are subject to numerous claims, tax assessments, lawsuits, and proceedings that arise in the ordinary course of business, which frequently include errors and omissions (“E&O”) claims. The damages claimed in these matters are or may be substantial, including, in many instances, claims for punitive, treble, or extraordinary damages. While Aon maintains meaningful E&O insurance and other insurance programs to provide protection against certain losses that arise in such matters, Aon has exhausted or materially depleted its coverage under some of the policies that protect the Company and, consequently, is self-insured or materially self-insured for some claims. Accruals for these exposures, and related insurance receivables, when applicable, are included in the Condensed Consolidated Statements of Financial Position and have been recognized in Other general expense in the Condensed Consolidated Statements of Income to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Matters that are not probable and reasonably estimable are not accrued for in the financial statements. The Company has included in the current matters described below certain matters in which (1) loss is probable, (2) loss is reasonably possible (that is, more than remote but not probable), or (3) there exists the reasonable possibility of loss greater than the accrued amount. In addition, the Company may from time to time disclose matters for which the probability of loss could be remote but the claim amounts associated with such matters are potentially significant. The reasonably possible range of loss for the matters described below for which loss is estimable, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.1 billion, exclusive of any insurance coverage. These estimates are based on available information as of the date of this filing. As available information changes, the matters for which Aon is able to estimate, 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 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 ($315 million at March 31, 2020 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 the Company from these investigations or any related private litigation, nor any damages, penalties, or fines related to them. There can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity. Guarantees and Indemnifications The Company provides a variety of guarantees and indemnifications to its customers and others. The maximum potential amount of future payments represents the notional amounts that could become payable under the guarantees and indemnifications if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or other methods. These amounts may bear no relationship to the expected future payments, if any, for these guarantees and indemnifications. Any anticipated amounts payable are included in the 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. Guarantee of Registered Securities See Note 18 “Guarantee of Registered Securities” for information regarding the Company’s guarantees of obligations of its subsidiaries arising under issued and outstanding debt securities. 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 March 31, 2020, the undiscounted maximum potential future payments under the lease guarantee is $66 million, with an estimated fair value of $11 million. No cash payments were made in connection to the lease commitments during the three months ended March 31, 2020. Additionally, the Company is subject to performance guarantee requirements under certain client arrangements that were assumed by the Buyer. Should the Divested Business fail to perform as required by the terms of the arrangements, the Company would be required to fulfill the remaining contract terms, which expire on various dates through 2023. As of March 31, 2020, the undiscounted maximum potential future payments under the performance guarantees were $139 million, with an estimated fair value of $1 million. No cash payments were made in connection to the performance guarantees during the three months ended March 31, 2020. Letters of Credit Aon has entered into a number of arrangements whereby the Company’s performance on certain obligations is guaranteed by a third party through the issuance of letters of credit (“LOCs”). The Company had total LOCs outstanding of approximately $71 million at March 31, 2020, compared to $73 million at December 31, 2019. These LOCs cover the beneficiaries related to certain of Aon’s U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for Aon’s own workers compensation program. The Company has also obtained LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at its international subsidiaries. Premium Payments The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $70 million at March 31, 2020 compared to $110 million at December 31, 2019.
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Segment Information |
3 Months Ended |
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Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company operates as one segment that includes all of Aon’s continuing operations, which as a global professional services firm provides advice and solutions to clients focused on risk, retirement, and health through five revenue lines which make up its principal products and services. The Chief Operating Decision Maker (the “CODM”) assesses the performance of the Company and allocates resources based on one segment: Aon United. The Company’s reportable operating segment has been determined using a management approach, which is consistent with the basis and manner in which the 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 in the Condensed Consolidated Statements of Income. Refer to Note 3 “Revenue from Contracts with Customers” for further information on revenue by principal service line.
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Guarantee of Registered Securities |
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Guarantee of Registered Securities | Guarantee of Registered Securities In connection with the Company’s 2012 redomestication to the U.K. (the “2012 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 April 2, 2012, among Aon Corporation, Aon UK, and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) (amending and restating the Indenture, dated September 10, 2010, between Aon Corporation and the Trustee); (2) Amended and Restated Indenture, dated April 2, 2012, among Aon Corporation, Aon UK and the Trustee (amending and restating the Indenture, dated December 16, 2002, between Aon Corporation and the Trustee); and (3) Amended and Restated Indenture, dated April 2, 2012, among Aon Corporation, Aon UK and the Trustee (amending and restating the Indenture, dated January 13, 1997, between Aon Corporation and the Trustee, as supplemented by the First Supplemental Indenture, dated January 13, 1997). In connection with the Ireland Reorganization, on April 1, 2020 Aon Ireland and Aon Global Holdings Limited, a company incorporated under the laws of England and Wales, entered into various agreements pursuant to which they agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, which were previously guaranteed solely by Aon UK, including the: 5.00% Notes due September 2020; 2.20% Notes due November 2022; 8.205% Notes due January 2027; 4.50% Senior Notes due December 2028; 3.75% Senior Notes due May 2029; and 6.25% Notes due September 2040 (collectively, the “Aon Corporation Notes). Aon Corporation, Aon UK, and Aon Global Holdings Limited are indirect wholly owned subsidiaries of Aon Ireland. All guarantees of Aon Ireland, Aon UK, and Aon Global Holdings Limited of the Aon Corporation Notes are joint and several as well as full and unconditional. There are no subsidiaries other than those listed above that guarantee the Aon Corporation Notes. In addition, in connection with the Ireland Reorganization, on April 1, 2020 Aon Ireland and Aon Global Holdings Limited entered into various agreements pursuant to which they guaranteed the obligations of Aon UK arising under issued and outstanding debt securities, which were previously guaranteed solely by Aon Corporation, including the: 4.25% Notes due December 2042 exchanged for Aon Corporation’s 8.205% Notes due January 2027; 4.45% Notes due May 2043; 4.00% Notes due November 2023; 2.875% Notes due May 2026; 3.50% Notes due June 2024; 4.60% Notes due June 2044; 4.75% Notes due May 2045; 2.80% Notes due March 2021; and 3.875% Notes due December 2025 (collectively, the “Aon UK Notes”). All guarantees of Aon Ireland, Aon Global Holdings Limited, and Aon Corporation of the Aon UK Notes are joint and several as well as full and unconditional. There are no subsidiaries other than those listed above that guarantee the Aon UK Notes. The Company has reflected these new guarantees in the Condensed Consolidating Statements of Income, Condensed Consolidating Statements of Comprehensive Income, and Condensed Consolidating Statements of Cash Flows for the three months ended March 31, 2020 and 2019, and in the Condensed Consolidating Statements of Financial Position as of March 31, 2020 and December 31, 2019. In 2019, Aon Corporation obtained indirect ownership of subsidiaries that were previously indirectly owned by Aon UK. The financial results of both subsidiaries are included in the Other Non-Guarantor Subsidiaries column of the Condensed Consolidating Financial Statements. Aon Ireland was not part of the Aon group until November 2019, therefore no balances are reflected in the Condensed Consolidating Statement of Income, Condensed Consolidating Statement of Comprehensive Income, and the Condensed Consolidating Statement of Cash Flows for the period ended March 31, 2019. The following tables set forth the Condensed Consolidating Statements of Income and Condensed Consolidating Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019, Condensed Consolidating Statements of Financial Position as of March 31, 2020 and December 31, 2019, and Condensed Consolidating Statements of Cash Flows for the three months ended March 31, 2020 and 2019, in accordance with Rule 3-10 of Regulation S-X. The Condensed Consolidating Financial Information includes the accounts of Aon Ireland, the accounts of Aon UK, the accounts of Aon Global Holdings Limited, the accounts of Aon Corporation, and the combined accounts of the Other Non-Guarantor Subsidiaries. The Condensed Consolidating Financial Statements are presented in all periods as a merger under common control. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions. Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Cash Flows
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Ireland Reorganization On April 1, 2020, a scheme of arrangement under English law was completed pursuant to which the Class A ordinary shares of Aon UK were cancelled and the holders thereof received, on a one-for-one basis, Class A ordinary shares of Aon Ireland, as described in the proxy statement filed with the SEC on December 20, 2019. Equity incentive and compensation plans were assumed by Aon Ireland and amended to provide that those plans will now provide for the award and issuance of Class A ordinary shares of Aon Ireland instead of Class A ordinary shares of Aon UK, on a one-for-one basis. Beginning on April 1, 2020, Aon Ireland’s principal executive office address is Metropolitan Building, James Joyce Street, Dublin 1, Ireland, not 122 Leadenhall Street, London, England. Aon Ireland is a tax resident of Ireland. The Share Repurchase Program, which related to Class A ordinary shares of Aon UK and preceded the Ireland Reorganization, was adopted by Aon Ireland’s Board of Directors. Commercial Paper On April 1, 2020 the Company entered into an agreement increasing the aggregate outstanding borrowings under its U.S. commercial paper program by $300 million, to an aggregate amount equal to $900 million. The U.S. program remains fully backed by Aon’s committed credit facilities. Colleague Compensatory Arrangements On April 24, 2020, due to the COVID-19 pandemic and the resulting economic disruption, the Board of Directors of the Company determined to temporarily reduce the annual base salaries of the Company’s named executive officers and the cash compensation of each of the Company’s non-executive directors. Each of the named executive officers and non-executive directors have agreed to a temporary 50% reduction in his or her cash compensation from May 1, 2020 through December 31, 2020, or until such other date as decided by the Company. Additionally, on April 27, 2020 the Company announced it will apply a temporary salary reduction of up to 20% to a broader colleague base. The reductions are being applied using a tailored approach based on a set of criteria, including considerations for cost-of-living, to determine the most equitable way to apply this temporary reduction.
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Accounting Principles and Practices (Policies) |
3 Months Ended |
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Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited Condensed Consolidated Financial Statements and Notes thereto (the “Financial Statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries. Intercompany accounts and transactions have been eliminated. The Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented. Certain information and disclosures normally included in the Financial Statements prepared in accordance with U.S. GAAP have been condensed or omitted.
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Use of Estimates | Use of Estimates The preparation of the 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, foreign currency exchange rate movements, and, recently, impacts from the COVID-19 pandemic increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the Financial Statements in future periods.
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New Accounting Standards | Adoption of New Accounting Standards Cloud Computing Arrangements In August 2018, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on implementation costs incurred in a cloud computing arrangement that is a service contract. The new guidance aligns capitalization requirements for certain implementation costs incurred in cloud computing arrangements with existing requirements for capitalizing implementation costs for internal-use software. These costs will be deferred over the term of the hosting arrangement, including any optional renewal periods the entity is reasonably certain to exercise. An entity may apply the new guidance on either a prospective or retrospective basis. The new guidance was effective for Aon in the first quarter of 2020 and was adopted on a prospective basis for all implementation costs incurred after the date of initial adoption. The adoption of this guidance had no 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. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The new guidance was effective for Aon in the first quarter of 2020 and was adopted on a prospective basis. The adoption of this guidance had no significant impact on the Financial Statements. Credit Losses In June 2016, the FASB issued a new accounting standard on the measurement of credit losses on financial instruments. The new standard replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted the new standard as of January 1, 2020 using the modified retrospective approach. Under this approach, prior periods were not restated. Rather, the cumulative effect of initially applying the new standard was recognized as an adjustment to retained earnings. Upon the adoption of this guidance on January 1, 2020, the Company recognized a cumulative adjustment of $6 million to decrease retained earnings. The Company’s estimate for allowance for credit losses with respect to receivables is based on a combination of factors, including evaluation of forward-looking information, historical write-offs, aging of balances, and other qualitative and quantitative analyses. Accounting Standards Issued But Not Yet Adopted Simplifying the Accounting for Income Taxes In December 2019, the FASB issued new accounting guidance that simplifies the accounting for income taxes by eliminating some exceptions to the general approach in the existing guidance. It also clarifies certain aspects of the existing guidance to promote more consistent application. The new guidance is effective for Aon in the first quarter of 2021, with early adoption permitted. The Company is currently evaluating the impact that the guidance will have on the Financial Statements and the period of adoption. 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 new 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.
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Derivatives | The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, and 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 Condensed Consolidated Statements of Comprehensive Income. The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company’s global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30-day basis, but may be for up to 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 Condensed Consolidated Statements of Income.
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Fair Value Measurement | The following methods and assumptions are used to estimate the fair values of the Company’s financial instruments: Money market funds consist of institutional prime, treasury, and government money market funds. The Company reviews treasury and government money market funds to obtain reasonable assurance that the fund net asset value is $1 per share, and reviews the floating net asset value of institutional prime money market funds for reasonableness. Equity investments consist of 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, 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 internal Company guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates used in the Financial Statements. Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities. Debt is carried at outstanding principal balance, less any unamortized issuance costs, discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements.
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Revenue from Contracts with Customers (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes revenue from contracts with customers by principal service line (in millions):
Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):
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Capitalized Contract Cost | An analysis of the changes in the net carrying amount of costs to fulfill contracts with customers are as follows (in millions):
An analysis of the changes in the net carrying amount of costs to obtain contracts with customers are as follows (in millions):
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Other Financial Data (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Income (Expense) | Other income (expense) consists of the following (in millions):
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Schedule of Allowance for Doubtful Accounts | An analysis of the allowance for doubtful accounts is as follows (in millions):
(2) The allowance for doubtful accounts resulted in a $7 million charge from the adoption of the new accounting standard on the measurement of credit losses. After tax impacts, this resulted in a $6 million decrease to Retained earnings. Refer to Note 2 “Accounting Principles and Practices” for further information.
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Schedule of Other Current Assets | The components of Other current assets are as follows (in millions):
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Schedule of Other Non-current Assets | The components of Other non-current assets are as follows (in millions):
(1) Refer to Note 3 “Revenue from Contracts with Customers” for further information.
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Schedule of Other Current Liabilities | The components of Other current liabilities are as follows (in millions):
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Schedule of Other Non-current Liabilities | The components of Other non-current liabilities are as follows (in millions):
(1) Includes $145 million for the non-current portion of the one-time mandatory transition tax on accumulated foreign earnings as of March 31, 2020 and December 31, 2019.
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Acquisitions and Dispositions of Businesses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | 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):
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the Net Carrying Amount of Goodwill by Operating Segment | The changes in the net carrying amount of goodwill for the three months ended March 31, 2020 are as follows (in millions):
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Schedule of Other Intangible Assets by Asset Class | Other intangible assets by asset class are as follows (in millions):
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Schedule of Estimated Future Amortization Expense on Intangible Assets | The estimated future amortization for finite-lived intangible assets as of March 31, 2020 is as follows (in millions):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The weighted average commercial paper outstanding and its related interest rates are as follows (in millions, except percentages):
Commercial paper outstanding, which is included in Short-term debt and current portion of long-term debt in the Condensed Consolidated Statements of Financial Position, is as follows (in millions):
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Shareholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share Repurchase Agreements | The following table summarizes the Company’s share repurchase activity (in millions, except per share data):
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Schedule of Components of Weighted Average Number of Shares | Weighted average ordinary shares outstanding are as follows (in millions):
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Components of Accumulated Other Comprehensive Loss, Net of Related Tax | Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):
(3) It is the Company’s policy to release income tax effects from accumulated other comprehensive loss using the portfolio approach.
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Employee Benefits (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost for the pension plans | The following table provides the components of the net periodic (benefit) cost recognized in the Condensed Consolidated Statements of Income for Aon’s significant U.K., U.S., and other major pension plans, which are located in the Netherlands and Canada. Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):
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Schedule of employer's contributions | The following table summarizes contributions made to the Company’s significant pension plans (in millions):
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Share-Based Compensation Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense recognized in continuing operations | The following table summarizes share-based compensation expense recognized in the Condensed Consolidated Statements of Income in Compensation and benefits (in millions):
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Restricted share unit activity | The following table summarizes the status of the Company’s RSUs (shares in thousands, except fair value):
(1) Represents per share weighted average fair value of award at date of grant.
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Performance-based plans | The following table summarizes the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the three months ended March 31, 2020 and the years ended December 31, 2019 and 2018, respectively (shares in thousands and dollars in millions, except fair value):
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Derivatives and Hedging (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional and fair values of derivative instruments | The notional and fair values of derivative instruments are as follows (in millions):
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Derivative gains (losses) | The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements are as follows (in millions):
The amounts of derivative gains (losses) reclassified from Accumulated other comprehensive loss in the Condensed Consolidated Statements of Income are as follows (in millions):
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Fair Value Measurements and Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities that are measured at fair value on a recurring basis | The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2020 and December 31, 2019 (in millions):
(2) Refer to Note 14 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity.
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Schedule of financial instruments where the carrying amounts and fair values differ | The fair value of debt is classified as Level 2 of the fair value hierarchy. The following table provides the carrying value and fair value for the Company’s term debt (in millions):
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Guarantee of Registered Securities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Guarantee of Registered Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statements of Income | Condensed Consolidating Statement of Income
Condensed Consolidating Statement of Income
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Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Comprehensive Income
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Condensed Consolidating Statements of Financial Position | Condensed Consolidating Statement of Financial Position
Condensed Consolidating Statement of Financial Position
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Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statement of Cash Flows
Condensed Consolidating Statement of Cash Flows
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Accounting Principles and Practices (Details) $ in Millions |
Jan. 01, 2020
USD ($)
|
---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative adjustment to decrease retained earnings | $ 6 |
Accounting Standards Update 2016-13 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative adjustment to decrease retained earnings | $ 6 |
Revenue from Contracts with Customers - Contract Assets Rollforward (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Capitalized Cost To Fulfill Customer Contracts | ||
Change in Capitalized Contract Costs | ||
Balance at beginning of period | $ 335 | $ 329 |
Additions | 318 | 346 |
Amortization | (416) | (439) |
Impairment | 0 | 0 |
Foreign currency translation and other | (8) | 0 |
Balance at end of period | 229 | 236 |
Capitalized Cost To Obtain Customer Contracts | ||
Change in Capitalized Contract Costs | ||
Balance at beginning of period | 171 | 156 |
Additions | 12 | 9 |
Amortization | (12) | (11) |
Impairment | 0 | 0 |
Foreign currency translation and other | (4) | 1 |
Balance at end of period | $ 167 | $ 155 |
Cash and Cash Equivalents and Short-term Investments (Details) £ in Millions, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2020
USD ($)
|
Mar. 31, 2020
GBP (£)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||||
Cash and cash equivalents and short-term investments | $ 860.0 | $ 928.0 | ||
Cash and cash equivalents and short term investments, period increase (decrease) | $ (68.0) | |||
Restricted cash and investments | 95.0 | 110.0 | ||
Operating funds in U.K. | £ 42.7 | $ 52.1 | $ 55.5 |
Other Financial Data - Schedule of Other Income (Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Other (Expense) Income | ||
Foreign currency remeasurement | $ 42 | $ (11) |
Disposal of businesses | 25 | 5 |
Pension and other postretirement | 4 | 4 |
Equity earnings | 1 | 1 |
Financial instruments | (44) | 1 |
Other | 1 | 0 |
Total | $ 29 | $ 0 |
Other Financial Data - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 70 | $ 64 |
Provision | 9 | 8 |
Accounts written off, net of recoveries | (8) | (8) |
Foreign currency translation and other | 3 | 0 |
Balance at end of period | 81 | $ 64 |
Cumulative Effect, Period Of Adoption, Adjustment | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | 7 | |
Cumulative Effect, Period Of Adoption, Adjustment | Accounting Standards Update 2016-13 | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | 7 | |
Cumulative Effect, Period Of Adoption, Adjusted Balance | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 77 |
Other Financial Data - Schedule of Other Current Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Financial Data [Abstract] | ||
Cost to fulfill contracts with customers | $ 229 | $ 335 |
Prepaid expenses | 156 | 97 |
Taxes receivable | 79 | 88 |
Other | 66 | 82 |
Total | $ 530 | 602 |
Receivables from divested business | $ 4 |
Other Financial Data - Schedule of Other Non-current Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Financial Data [Abstract] | ||
Cost to obtain contracts with customers | $ 167 | $ 171 |
Taxes receivable | 101 | 102 |
Leases | 93 | 100 |
Investments | 52 | 53 |
Other | 120 | 144 |
Total | $ 533 | $ 570 |
Other Financial Data - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
|
Other Financial Data [Abstract] | ||
Deferred revenue | $ 309 | $ 270 |
Leases | 200 | 210 |
Taxes payable | 196 | 93 |
Other | 572 | 513 |
Total | 1,277 | 1,086 |
Revenue recognized from deferred revenue | $ 117 | $ 532 |
Other Financial Data - Schedule of Other Non-current Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Financial Data [Abstract] | ||
Taxes payable | $ 544 | $ 525 |
Leases | 74 | 76 |
Deferred revenue | 72 | 62 |
Compensation and benefits | 41 | 49 |
Other | 199 | 165 |
Total | 930 | 877 |
Noncurrent portion of transition tax | $ 145 | $ 145 |
Restructuring (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Restructuring and Related Activities [Abstract] | |||
Restructuring charges | $ 0 | $ 91,000,000 | |
Restructuring liabilities | 127,000,000 | $ 204,000,000 | |
Cash payments | 60,000,000 | ||
Foreign currency translation and other non-cash activity | $ 17,000,000 |
Acquisitions and Dispositions of Businesses - Dispositions (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020
USD ($)
disposal
|
Mar. 31, 2019
USD ($)
disposal
|
|
Dispositions | ||
Pretax gains (losses) recognized on disposal of businesses | $ | $ 25 | $ 5 |
Disposal Group, Not Discontinued Operations | ||
Dispositions | ||
Number of dispositions | disposal | 1 | 1 |
Goodwill and Other Intangible Assets - Schedule of Goodwill Rollforward (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2020
USD ($)
| |
Changes in the net carrying amount of goodwill by operating segment | |
Beginning balance | $ 8,165 |
Goodwill related to current year acquisitions | 303 |
Goodwill related to disposals | (3) |
Goodwill related to prior year acquisitions | 0 |
Foreign currency translation | (172) |
Ending balance | $ 8,293 |
Goodwill and Other Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Intangible assets with finite lives | ||
Gross Carrying Amount | $ 3,661 | $ 3,673 |
Accumulated Amortization and Impairment | 2,915 | 2,890 |
Net Carrying Amount | 746 | 783 |
Estimated amortization for intangible assets | ||
Remainder of 2020 | 139 | |
2021 | 136 | |
2022 | 96 | |
2023 | 85 | |
2024 | 69 | |
2025 | 51 | |
Thereafter | 170 | |
Total | 746 | |
Customer-related and contract-based | ||
Intangible assets with finite lives | ||
Gross Carrying Amount | 2,227 | 2,264 |
Accumulated Amortization and Impairment | 1,590 | 1,600 |
Net Carrying Amount | 637 | 664 |
Tradenames | ||
Intangible assets with finite lives | ||
Gross Carrying Amount | 1,026 | 1,029 |
Accumulated Amortization and Impairment | 1,005 | 956 |
Net Carrying Amount | 21 | 73 |
Technology and other | ||
Intangible assets with finite lives | ||
Gross Carrying Amount | 408 | 380 |
Accumulated Amortization and Impairment | 320 | 334 |
Net Carrying Amount | $ 88 | $ 46 |
Debt - Schedule of Commercial Paper (Details) - Commercial paper - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Debt Instrument [Line Items] | |||
Commercial paper outstanding | $ 833 | $ 112 | |
Weighted average commercial paper outstanding | $ 456 | $ 323 | |
Weighted average interest rate of commercial paper outstanding | 0.96% | 0.49% |
Income Taxes (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 19.30% | 15.70% |
Shareholders' Equity - Additional Information (Details) - USD ($) |
3 Months Ended | 96 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2020 |
Feb. 28, 2017 |
Nov. 30, 2014 |
Apr. 30, 2012 |
|
Equity, Class of Treasury Stock [Line Items] | ||||||
Total cost of shares purchased | $ 463,000,000 | $ 101,000,000 | ||||
Number of shares excluded from the calculation of diluted earnings per share (in shares) | 0 | 100,000 | ||||
2012 - Share Repurchase Program | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Share repurchase authorization limit (up to) | $ 15,000,000,000.0 | $ 15,000,000,000.0 | $ 5,000,000,000.0 | $ 5,000,000,000.0 | $ 5,000,000,000.0 | |
Share repurchase, remaining authorization limit (in shares) | $ 1,600,000,000 | $ 1,600,000,000 | ||||
Shares purchased (in shares) | 2,200,000 | 600,000 | 130,900,000 | |||
Total cost of shares purchased | $ 461,000,000 | $ 100,000,000 | $ 13,400,000,000 |
Shareholders' Equity - Schedule of Stock Repurchases (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 96 Months Ended | |
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Mar. 31, 2020 |
|
Equity, Class of Treasury Stock [Line Items] | |||
Total repurchase cost | $ 463 | $ 101 | |
2012 - Share Repurchase Program | |||
Equity, Class of Treasury Stock [Line Items] | |||
Shares purchased (in shares) | 2.2 | 0.6 | 130.9 |
Average price per share of stock repurchased (in dollars per share) | $ 212.78 | $ 161.16 | |
Total repurchase cost | $ 461 | $ 100 | $ 13,400 |
Additional associated costs | 2 | 1 | |
Total costs recorded to retained earnings | $ 463 | $ 101 |
Shareholders' Equity - Weighted Average Ordinary Shares Outstanding (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Weighted average shares outstanding | ||
Basic weighted average ordinary shares outstanding (in shares) | 233.2 | 242.2 |
Dilutive effect of potentially issuable shares (in shares) | 1.3 | 1.5 |
Diluted weighted average ordinary shares outstanding (in shares) | 234.5 | 243.7 |
Employee Benefits - Components of Net Periodic (Benefit) Cost (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
U.S. | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 0 | $ 0 |
Interest cost | 21 | 27 |
Expected return on plan assets, net of administration expenses | (33) | (34) |
Amortization of prior-service cost | 0 | 1 |
Amortization of net actuarial loss | 17 | 13 |
Total net periodic (benefit) cost | 5 | 7 |
U.K. | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 0 | 0 |
Interest cost | 22 | 28 |
Expected return on plan assets, net of administration expenses | (39) | (49) |
Amortization of prior-service cost | 0 | 1 |
Amortization of net actuarial loss | 7 | 7 |
Total net periodic (benefit) cost | (10) | (13) |
Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 0 | 0 |
Interest cost | 4 | 7 |
Expected return on plan assets, net of administration expenses | (8) | (10) |
Amortization of prior-service cost | 0 | 0 |
Amortization of net actuarial loss | 3 | 3 |
Total net periodic (benefit) cost | $ (1) | $ 0 |
Employee Benefits - Additional Information (Details) $ in Millions |
Dec. 31, 2019
USD ($)
|
---|---|
UNITED STATES | |
Defined Benefit Plan Disclosure [Line Items] | |
Estimate of contributions to defined benefit pension plans for the current fiscal year | $ 99 |
U.K. | |
Defined Benefit Plan Disclosure [Line Items] | |
Estimate of contributions to defined benefit pension plans for the current fiscal year | 5 |
Other | |
Defined Benefit Plan Disclosure [Line Items] | |
Estimate of contributions to defined benefit pension plans for the current fiscal year | $ 19 |
Employee Benefits - Summary of Employer Contributions (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Company’s benefit pension plans | $ 35 | $ 47 |
U.S. | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Company’s benefit pension plans | 31 | 17 |
U.K. | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Company’s benefit pension plans | 2 | 23 |
Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Company’s benefit pension plans | $ 2 | $ 7 |
Share-Based Compensation Plans - Share-based compensation expenses recognized (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total share-based compensation expense | $ 76 | $ 89 |
Restricted share units (“RSUs”) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total share-based compensation expense | 58 | 63 |
Performance share awards (“PSAs”) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total share-based compensation expense | 14 | 23 |
Employee share purchase plans | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total share-based compensation expense | $ 4 | $ 3 |
Share-Based Compensation Plans - Performance Share Awards Narrative (Details) - Performance Shares |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting conditions period (in years) | 3 years |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued, percent | 0.00% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares issued, percent | 200.00% |
Share-Based Compensation Plans - Schedule of Performance-based plans (Details) - Performance Shares - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Target PSAs granted during period (in shares) | 487 | 467 | 564 |
Weighted average fair value per share at date of grant (in dollars per share) | $ 160 | $ 165 | $ 134 |
Number of shares that would be issued based on current performance levels (in shares) | 487 | 451 | 818 |
Unamortized expense, based on current performance levels | $ 78 | $ 42 | $ 24 |
Derivatives and Hedging - Foreign Exchange Risk Management Narrative (Details) - Foreign exchange contracts |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Derivative [Line Items] | |
Term of derivative contract | 30 days |
Cash Flow Hedging | |
Derivative [Line Items] | |
Foreign currency exposures, maximum average hedging period (less than) | 2 years |
Not Designated as Hedging Instrument | |
Derivative [Line Items] | |
Foreign currency exposures, maximum hedging period (up to) | 1 year |
Derivatives and Hedging - Schedule of Derivative Gains (Losses) Recognized in the Consolidated Financial Statements (Details) - Foreign exchange contracts - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Derivative [Line Items] | ||
Gain (loss) recognized in Accumulated other comprehensive loss | $ (11) | $ 4 |
Derivative gains (losses) reclassified from accumulated other comprehensive loss | (5) | (5) |
Total revenue | ||
Derivative [Line Items] | ||
Derivative gains (losses) reclassified from accumulated other comprehensive loss | (4) | (4) |
Interest expense | ||
Derivative [Line Items] | ||
Derivative gains (losses) reclassified from accumulated other comprehensive loss | $ (1) | $ (1) |
Derivatives and Hedging - Interest Rate Management Risk Narrative (Details) - Foreign exchange contracts - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Derivative [Line Items] | ||
Estimated pretax losses currently included within Accumulated Other Comprehensive Loss that will be reclassified to earnings in next twelve months | $ 14 | |
Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative gain (loss) | $ (35) | $ 5 |
Derivatives and Hedging - Net Investments in Foreign Operations Risk Management Narrative (Details) - Net Investment Hedging € in Millions, $ in Millions |
Mar. 31, 2020
EUR (€)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
EUR (€)
|
Dec. 31, 2019
USD ($)
|
---|---|---|---|---|
Derivatives, Fair Value | ||||
European denominated commercial paper | € 101 | $ 112 | € 101 | $ 112 |
Effective portion of loss reclassified from Accumulated OCI | $ 30 | $ 29 |
Fair Value Measurements and Financial Instruments - Schedule of financial instruments where the carrying amounts and fair values differ (Details) - USD ($) $ in Millions |
Mar. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Carrying Value | ||
Fair value of financial instrument | ||
Current portion of long-term debt | $ 999 | $ 600 |
Long-term debt | 6,227 | 6,627 |
Fair Value | Fair Value, Inputs, Level 2 | ||
Fair value of financial instrument | ||
Current portion of long-term debt | 1,004 | 614 |
Long-term debt | $ 6,837 | $ 7,442 |
Segment Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2020
segment
metric
revenue_line
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Number of revenue lines | revenue_line | 5 |
Number of performance metrics | metric | 4 |
Number of operating segments | 1 |