UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

					
FORM 8-K
 
CURRENT REPORT

Pursuant to Section 13 or 15(d)
 of the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): July 31, 2020

					
Aon plc
(Exact Name of Registrant as Specified in Charter)

Ireland	 	1-7933	 	98-1539969	
(State or Other Jurisdiction
of Incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification No.)	

Metropolitan Building, James Joyce Street, Dublin 1, Ireland    D01 K0Y8
         (Address of principal executive offices)     (Zip Code)
 
Registrant’s telephone number, including area code: +353 1 266 6000
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange
on which registered	
Class A Ordinary Shares $0.01 nominal value		AON		New York Stock Exchange	
Guarantees of Aon plc’s 2.800% Senior Notes due 2021		AON21		New York Stock Exchange	
Guarantees of Aon plc’s 4.000% Senior Notes due 2023		AON23		New York Stock Exchange	
Guarantees of Aon plc’s 3.500% Senior Notes due 2024		AON24		New York Stock Exchange	
Guarantees of Aon plc’s 3.875% Senior Notes due 2025		AON25		New York Stock Exchange	
Guarantees of Aon plc’s 2.875% Senior Notes due 2026		AON26		New York Stock Exchange	
Guarantees of Aon plc’s 4.250% Senior Notes due 2042		AON24		New York Stock Exchange	
Guarantees of Aon plc’s 4.450% Senior Notes due 2043		AON43		New York Stock Exchange	
Guarantees of Aon plc’s 4.600% Senior Notes due 2044		AON44		New York Stock Exchange	
Guarantees of Aon plc’s 4.750% Senior Notes due 2045		AON45		New York Stock Exchange	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

	
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Item 2.02.             Results of Operations and Financial Condition.
 
On July 31, 2020, Aon plc issued a press release (the “Press Release”) announcing its results of operations for the quarter ended June 30, 2020.
 
A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
Item 9.01.             Financial Statements and Exhibits.
 
(a) - (c)   Not applicable.
 
(d)           Exhibits:

	Exhibit
Number	 	Description of
 Exhibit	
	99.1	 	Press Release issued by Aon plc on July 31, 2020.	

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

												
	 	Aon plc	
	 	 	
	 	By:	/s/ Michael Neller	
	 	 	Michael Neller	
	 	 	Senior Vice President and Global Controller	
	 	 	
Date:	July 31, 2020	 	
 
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Exhibit 99.1

Investor Relations		
 
News from Aon
 
Aon Reports Second Quarter 2020 Results
 
Second Quarter Key Metrics From Continuing Operations
•Total revenue decreased 4% to $2.5 billion, including organic revenue decline of 1%
•Operating margin increased to 23.8%, and operating margin, adjusted for certain items, increased 240 basis points to 26.8%
•EPS increased to $1.70, and EPS, adjusted for certain items, increased 5% to $1.96
•For the first six months of 2020, cash flows from operations increased $858 million to $1,219 million, and free cash flow increased $875 million to $1,130 million

Second Quarter Highlights
•Filed the joint definitive proxy in connection with the pending combination with Willis Towers Watson and will hold the shareholder vote on August 26, 2020
•Issued $1 billion of senior notes, substantially improving liquidity, and used a portion of the proceeds to pay down term debt set to mature in the third quarter
•Announced the launch of our new Pooled Employer Plan, utilizing investment expertise to help create higher performing, more efficient 401(k) plans
•Established the Work, Travel & Convene Coalition in Chicago, New York, London, and Singapore, leveraging our data and tools to step forward as a leader supporting economic recovery in cities around the world
 
DUBLIN - July 31, 2020 - Aon plc (NYSE: AON) today reported results for the three months ended June 30, 2020.
  
Net income from continuing operations attributable to Aon shareholders was $397 million, or $1.70 per share, compared to $277 million, or $1.14 per share, in the prior year period. Net income per share from continuing operations attributable to Aon shareholders, adjusted for certain items, increased 5% to $1.96, including an unfavorable impact of $0.01 per share if the Company were to translate prior year period results at current period foreign exchange rates (“foreign currency translation”), compared to $1.87 in the prior year period. Certain items that impacted second quarter results and comparisons with the prior year period are detailed in the “Reconciliation of Non-GAAP Measures - Operating Income from Continuing Operations and Diluted Earnings Per Share” on page 10 of this press release.

“Our second quarter results reflect the resiliency of our business, the efficiency of our operations and the dedicated client service of our 50,000 colleagues around the world. We delivered strong results including 240 basis points of operating margin expansion in the quarter and free cash flow of $1.1 billion, up $875 million from the first half last year,” said Greg Case, Chief Executive Officer. “We are living in a time of increasing economic and geopolitical volatility - as evidenced by the COVID-19 pandemic and broader social injustice and unrest - which demands action within our firm and on behalf of clients. Our Aon United strategy has proven

essential to delivering more relevant solutions today, and our combination with Willis Towers Watson will accelerate innovation and strengthen capability to meet the evolving, long-term challenges our clients will face in the future.”

SECOND QUARTER 2020 FINANCIAL SUMMARY
The second quarter 2020 financial results discussed herein represent performance from continuing operations unless otherwise noted. The second quarter 2020 financial results are not necessarily indicative of results that may be expected for the full year or any future period, particularly in light of the continuing effect of and uncertainty in connection with the COVID-19 pandemic.

Total revenue in the second quarter decreased 4% to $2.5 billion compared to the prior year period driven by a 2% unfavorable impact from foreign currency translation, organic revenue decline of 1%, and a 1% unfavorable impact from fiduciary investment income.

Total operating expenses in the second quarter decreased 13% to $1.9 billion compared to the prior year period due primarily to a $127 million decrease in restructuring charges, a $53 million favorable impact from foreign currency translation, a $35 million decrease from accelerated amortization related to certain tradenames that were fully amortized in the quarter, and a temporary reduction and deferral of certain discretionary expenses in an effort to proactively manage liquidity due to uncertainty surrounding COVID-19 and its impact on the Company, partially offset by $18 million of transaction costs related to the pending combination with Willis Towers Watson.

Foreign currency exchange rates in the second quarter had an immaterial impact on U.S. GAAP net income and a $3 million, or $0.01 per share, unfavorable impact on adjusted net income if the Company were to translate prior year period results at current quarter foreign exchange rates. If currency were to remain stable at today’s rates, the Company would expect an unfavorable impact of approximately $0.02 per share in each of the third and fourth quarters of 2020.

Effective tax rate used in the Company’s U.S. GAAP financial statements in the second quarter was 17.2%, compared to 16.3% in the prior year period. After adjusting to exclude the applicable tax impact associated with certain non-GAAP adjustments, the adjusted effective tax rate for the second quarter of 2020 decreased to 17.5% compared to 18.0% in the prior year period, primarily driven by changes in the geographical distribution of income and a net favorable impact from discrete items. The adjusted effective tax rate in the prior year period included a net favorable impact from discrete items.

Weighted average diluted shares outstanding decreased to 233.6 million in the second quarter compared to 242.8 million in the prior year period. The Company did not repurchase any Class A Ordinary Shares in the quarter. As of June 30, 2020, the Company had $1.6 billion of remaining authorization under its share repurchase program.

YEAR TO DATE 2020 CASH FLOW SUMMARY
Cash flows provided by operations for the first six months of 2020 increased $858 million to $1,219 million compared to the prior year period, and includes near-term actions taken to improve working capital in an effort to proactively manage liquidity due to uncertainty surrounding COVID-19 and its impact on the Company, the impact of temporary salary reductions, for which the amounts withheld will be paid in the third quarter, a decrease in restructuring cash outlays, and strong operational improvement.

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Free cash flow, defined as cash flows from operations less capital expenditures, increased $875 million, to $1,130 million for the first six months of 2020 compared to the prior year period, reflecting an increase in cash flows from operations and a $17 million decrease in capital expenditures.

SECOND QUARTER 2020 REVENUE REVIEW
The second quarter revenue reviews provided below include supplemental information related to organic revenue growth (decline), which is a non-GAAP measure that is described in detail in “Reconciliation of Non-GAAP Measures - Organic Revenue Growth (Decline) and Free Cash Flow” on page 9 of this press release.

 		Three Months Ended June 30,											
(millions)		2020		2019		% Change		Less: Currency Impact		Less: Fiduciary Investment Income		Less: Acquisitions, Divestitures & Other		Organic Revenue Growth (Decline)	
Revenue		 		 		 		 				 		 	
Commercial Risk Solutions		$	1,126 	 		$	1,167 	 		(4)	%		(2)	%		(1)	%		(2)	%		1 	%	
Reinsurance Solutions		448 	 		420 	 		7 	 		— 	 		(1)	 		(1)	 		9 	 	
Retirement Solutions		393 	 		419 	 		(6)	 		(2)	 		— 	 		(3)	 		(1)	 	
Health Solutions		258 	 		317 	 		(19)	 		(4)	 		— 	 		3 	 		(18)	 	
Data & Analytic Services		274 	 		286 	 		(4)	 		(2)	 		— 	 		6 	 		(8)	 	
Elimination		(2)	 		(3)	 		N/A		N/A		N/A		N/A		N/A	
Total revenue		$	2,497 	 		$	2,606 	 		(4)	%		(2)	%		(1)	%		— 	%		(1)	%	

Total revenue decreased $109 million, or 4%, to $2,497 million compared to the prior year period, including organic revenue decline of 1%, reflecting a decline in the more discretionary portions of our business, partially offset by strength in our core business.

Commercial Risk Solutions organic revenue growth of 1% was driven by growth across most major geographies, including modest growth in the U.S. and EMEA and double-digit growth in Latin America and Asia, driven by strong retention and management of the renewal book portfolio, partially offset by a decline in the Pacific region. Results also include a decline in the more discretionary portions of our book as a result of COVID-19, including transaction liability, construction, and project-related work. On average globally, exposures and pricing were both modestly positive, resulting in a modestly positive market impact overall.

Reinsurance Solutions organic revenue growth of 9% was driven by strong net new business generation in treaty and solid growth in facultative placements. Results in the quarter also include a modest net negative impact from the timing of certain revenue. Market impact was modestly positive on results in the quarter, both in the U.S. and internationally. The majority of revenue in our treaty portfolio is recurring in nature and is recorded in connection with the major renewal periods that take place throughout the first half of the year, while the second half of the year is largely driven by facultative placements and capital markets that are more transactional in nature.

Retirement Solutions organic revenue decline of 1% was driven by a decline in the more discretionary portions of the business as a result of COVID-19, primarily in Human Capital for rewards and assessment services. Results were partially offset by solid growth in Investments, primarily in delegated investment management. Growth in the Retirement business was flat.

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Health Solutions organic revenue decline of 18% was driven by a $34 million decrease primarily related to COVID-19, including a $19 million reduction primarily reflecting the annualized impact of lower employment levels and lower renewals, and a $15 million decrease from the timing of certain revenue and a decline in the more discretionary portions of the business. Results were further negatively impacted by a one-time adjustment of $16 million related to revenue that was recorded across multiple years and was identified in connection with the implementation of a new system.

Data & Analytic Services organic revenue decline of 8% was driven by a decrease in the travel and events practice globally.

SECOND QUARTER 2020 EXPENSE REVIEW

 		Three Months Ended June 30,					
(millions)		2020		2019		$ Change		% Change	
Expenses		 		 					
Compensation and benefits		$	1,361 	 		$	1,501 	 		$	(140)	 		(9)	%	
Information technology		107 	 		126 	 		(19)	 		(15)	 	
Premises		74 	 		85 	 		(11)	 		(13)	 	
Depreciation of fixed assets		41 	 		40 	 		1 	 		3 	 	
Amortization of intangible assets		58 	 		97 	 		(39)	 		(40)	 	
Other general expense		262 	 		344 	 		(82)	 		(24)	 	
Total operating expenses		$	1,903 	 		$	2,193 	 		$	(290)	 		(13)	%	

Compensation and benefits expense decreased $140 million, or 9%, compared to the prior year period due primarily to a $78 million decrease in restructuring charges and a $38 million favorable impact from foreign currency translation. The temporary salary reductions had no benefit in the quarter, as the expense for salary repayments was accrued in the second quarter.

Information technology expense decreased $19 million, or 15%, compared to the prior year period due primarily to a temporary reduction and deferral of certain discretionary expenses and a $4 million decrease in restructuring charges.

Premises expense decreased $11 million, or 13%, compared to the prior year period due primarily to a $5 million decrease in restructuring charges and a decrease related to reduced office occupancy.

Depreciation of fixed assets increased $1 million, or 3%, compared to the prior year period.

Amortization and impairment of intangible assets decreased $39 million, or 40%, compared to the prior year period due primarily to a $35 million decrease from accelerated amortization related to certain tradenames that were fully amortized in the quarter.

Other general expenses decreased $82 million, or 24%, compared to the prior year period due primarily to a temporary reduction and deferral of certain discretionary expenses, primarily travel and entertainment, a $38 million decrease in restructuring charges, and a $7 million favorable impact from foreign currency translation, partially offset by $18 million of transaction costs related to the pending combination with Willis Towers Watson and $5 million of costs related to the move of the jurisdiction for the firm’s parent company to Ireland.

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SECOND QUARTER 2020 INCOME SUMMARY
The second quarter 2020 financial results discussed herein represent performance from continuing operations unless otherwise noted. In addition, certain noteworthy items impacted adjusted operating income and adjusted operating margins in the second quarters of 2020 and 2019, which are also described in detail in “Reconciliation of Non-GAAP Measures - Operating Income from Continuing Operations and Diluted Earnings Per Share” on page 10 of this press release.

 		Three Months Ended June 30,		 	
(millions)		2020		2019		% Change	
Revenue		$	2,497 	 		$	2,606 	 		(4)	%	
Expenses		1,903 	 		2,193 	 		(13)	 	
Operating income		$	594 	 		$	413 	 		44 	%	
Operating margin		23.8 	%		15.8 	%			
Operating income - as adjusted		$	670 	 		$	637 	 		5 	%	
Operating margin - as adjusted		26.8 	%		24.4 	%			

Operating income increased to $594 million compared to the prior year period. Adjusting for certain items detailed on page 10 of this press release, operating income increased $33 million, or 5%, and operating margin increased +240 basis points to 26.8%, each compared to the prior year period. Adjusted operating income and margin primarily reflect a temporary reduction and deferral of certain discretionary expenses and increased operating leverage across the portfolio, partially offset by organic revenue decline of 1% and an unfavorable impact from foreign currency translation of $4 million.

Interest income decreased $1 million compared to the prior year period. Interest expense increased $12 million to $89 million compared to the prior year period reflecting higher outstanding term debt and an increase in commercial paper borrowings. Other pension income decreased $3 million to $2 million compared to the prior year period. Other expense of $12 million primarily reflects $7 million of expense related to the prepayment of $600 million Senior Notes due September 2020 and $4 million of net losses due to the unfavorable impact of exchange rates on the remeasurement of assets and liabilities in non-functional currencies.

DISCONTINUED OPERATIONS
Net income from discontinued operations was $1 million compared to $0 million in the prior year period.

Conference Call, Presentation Slides and Webcast Details

The Company will host a conference call on Friday, July 31, 2020 at 7:30 a.m., central time. Interested parties can listen to the conference call via a live audio webcast and view the presentation slides at www.aon.com.

About Aon
Aon plc (NYSE: AON) Aon is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

Safe Harbor Statement

This communication contains certain statements related to future results, or states Aon’s intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act
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of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. These forward-looking statements include information about possible or assumed future results of Aon’s operations, the uncertainty surrounding the COVID-19 outbreak, and Aon’s pending combination with Willis Towers Watson (the “Combination”). All statements, other than statements of historical facts that address activities, events or developments that Aon expects or anticipates may occur in the future, including such things as its outlook, future capital expenditures, growth in commissions and fees, changes to the composition or level of its revenues, cash flow and liquidity, expected tax rates, business strategies, competitive strengths, goals, the benefits of new initiatives, growth of its business and operations, plans and references to future successes, are forward-looking statements. Also, when Aon uses the words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “probably”, “potential”, “looking forward”, or similar expressions, it is making forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward looking statements: general economic and political conditions in different countries in which Aon does business around the world, including the U.K.’s withdrawal from the European Union; changes in the competitive environment or damage to Aon’s reputation; fluctuations in exchange and interest rates that could influence revenue and expenses; changes in global equity and fixed income markets that could affect the return on invested assets; changes in the funding status of Aon's various defined benefit pension plans and the impact of any increased pension funding resulting from those changes; the level of Aon’s debt limiting financial flexibility or increasing borrowing costs; rating agency actions that could affect Aon's ability to borrow funds; volatility in Aon’s tax rate due to a variety of different factors, including U.S. tax reform; changes in estimates or assumptions on Aon’s financial statements; limits on Aon’s subsidiaries to make dividend and other payments to Aon; the impact of lawsuits and other contingent liabilities and loss contingencies arising from errors and omissions and other claims against Aon; the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which Aon operates, particularly given the global scope of Aon’s businesses and the possibility of conflicting regulatory requirements across jurisdictions in which Aon does business; the impact of any investigations brought by regulatory authorities in the U.S., the U.K. and other countries; the impact of any inquiries relating to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws and with U.S. and non-U.S. trade sanctions regimes; failure to protect intellectual property rights or allegations that Aon infringes on the intellectual property rights of others; the effects of Irish law on Aon’s operating flexibility and the enforcement of judgments against Aon; the failure to retain and attract qualified personnel; international risks associated with Aon’s global operations; the effects of natural or man-made disasters, including the effects of COVID-19 and other health pandemics; the potential of a system or network breach or disruption resulting in operational interruption or improper disclosure of personal data; Aon’s ability to develop and implement new technology; the damage to Aon’s reputation among clients, markets or third parties; the actions taken by third parties that perform aspects of Aon’s business operations and client services; the extent to which Aon manages certain risks created in connection with the services, including fiduciary and investments, consulting, and other advisory services, among others, that Aon currently provides, or will provide in the future, to clients; Aon’s ability to continue, and the costs and the costs and risks associated with, growing, developing and integrating companies that it acquires or new lines of business; changes in commercial property and casualty markets, commercial premium rates or methods of compensation; changes in the health care system or Aon’s relationships with insurance carriers; Aon’s ability to implement initiatives intended to yield cost savings, and the ability to achieve those cost savings; Aon’s ability to realize the expected benefits from its restructuring plan; the possibility that the Combination will not be consummated; failure to obtain necessary shareholder or regulatory approvals or to satisfy any of the other conditions to the Combination; adverse effects on the market price of Aon’s securities and/or operating results for any reason, including, without limitation, because of the failure to consummate the Combination; the failure to realize the expected benefits of the Combination (including anticipated revenue and growth synergies); the failure to effectively integrate the combined companies following the Combination; significant transaction and integration costs or difficulties in connection with the Combination and or unknown or inestimable liabilities; potential litigation associated with the Combination; potential impact of the announcement or consummation of the Combination on relationships, including with suppliers, customers, employees and regulators; and general economic, business and political conditions (including any epidemic, pandemic or disease outbreak, including COVID-19) that affect the combined companies following the consummation of the Combination.

Any or all of Aon’s forward-looking statements may turn out to be inaccurate, and there are no guarantees about Aon’s performance. The factors identified above are not exhaustive. Aon and its subsidiaries operate in a dynamic business environment in which new risks may emerge frequently. Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. In addition, results for the three months ended March 31, 2020 and June 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020 or any future period, particularly in light of the continuing effect of the COVID-19 outbreak. Further information concerning Aon and its businesses, including factors that potentially could materially affect Aon’s financial results, is contained in Aon’s filings with the SEC. See Aon’s Annual Report on Form 10-K for the year ended December 31, 2019 and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 for a further discussion of these and other risks and uncertainties applicable to Aon and its businesses. These factors
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may be revised or supplemented in subsequent reports. Aon is under no obligation, and expressly disclaims any obligation, to update or alter any forward-looking statement that it may make from time to time, whether as a result of new information, future events or otherwise.

Explanation of Non-GAAP Measures
This communication includes supplemental information related to organic revenue growth (decline), free cash flow, adjusted operating margin, and adjusted earnings per share for continuing operations that exclude the effects of intangible asset amortization, restructuring, capital expenditures, and certain other noteworthy items that affected results for the comparable periods. Organic revenue growth (decline) includes the impact of intercompany activity and excludes foreign exchange rate changes, acquisitions, divestitures, transfers between revenue lines, fiduciary investment income, and gains or losses on derivatives accounted for as hedges. The impact of foreign exchange is determined by translating last year’s revenue, expense, or net income at this year’s foreign exchange rates. Reconciliations to the closest U.S. GAAP measure for each non-GAAP measure presented in this communication are provided in the attached appendices. Supplemental organic revenue growth (decline) information and additional measures that exclude the effects of certain items noted above do not affect net income or any other U.S. GAAP reported amounts. Free cash flow is cash flows from operating activity less capital expenditures. The effective tax rate, as adjusted, excludes the applicable tax impact associated with expenses for estimated intangible asset amortization, restructuring, and certain other noteworthy items. Management believes that these measures are important to make meaningful period-to-period comparisons and that this supplemental information is helpful to investors. Non-GAAP measures should be viewed in addition to, not in lieu of, Aon’s Condensed Consolidated Financial Statements. Industry peers provide similar supplemental information regarding their performance, although they may not make identical adjustments.

									
Investor Contact:	 	Media Contact:	
Leslie Follmer	 	Jason Gertzen	
+1 312-381-3310	 	+1 312-381-3024	
investor.relations@aon.com	 	mediainquiries@aon.com	
 
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Aon plc
Condensed Consolidated Statements of Income (Unaudited)

 		Three Months Ended June 30,				Six Months Ended June 30,			
(millions, except per share data)		2020		2019		% Change		2020		2019		%
Change	
Revenue		 		 		 		 		 		 	
Total revenue		$	2,497 	 		$	2,606 	 		(4)	%		$	5,716 	 		$	5,749 	 		(1)	%	
Expenses		 						 		 			
Compensation and benefits		1,361 	 		1,501 	 		(9)	%		2,883 	 		3,085 	 		(7)	%	
Information technology		107 	 		126 	 		(15)	%		218 	 		243 	 		(10)	%	
Premises		74 	 		85 	 		(13)	%		147 	 		172 	 		(15)	%	
Depreciation of fixed assets		41 	 		40 	 		3 	%		82 	 		80 	 		3 	%	
Amortization of intangible assets		58 	 		97 	 		(40)	%		155 	 		194 	 		(20)	%	
Other general expense		262 	 		344 	 		(24)	%		604 	 		690 	 		(12)	%	
Total operating expenses		1,903 	 		2,193 	 		(13)	%		4,089 	 		4,464 	 		(8)	%	
Operating income		594 	 		413 	 		44 	%		1,627 	 		1,285 	 		27 	%	
Interest income		— 	 		1 	 		(100)	%		2 	 		3 	 		(33)	%	
Interest expense		(89)	 		(77)	 		16 	%		(172)	 		(149)	 		15 	%	
Other income (expense)		(10)	 		6 	 		(267)	%		19 	 		6 	 		217 	%	
Income from continuing operations before income taxes		495 	 		343 	 		44 	%		1,476 	 		1,145 	 		29 	%	
Income tax expense (1)		85 	 		56 	 		52 	%		274 	 		182 	 		51 	%	
Net income from continuing operations		410 	 		287 	 		43 	%		1,202 	 		963 	 		25 	%	
Net income from discontinued operations		1 	 		— 	 		100 	%		— 	 		— 	 		— 	 	
Net income		411 	 		287 	 		43 	%		1,202 	 		963 	 		25 	%	
Less: Net income attributable to noncontrolling interests		13 	 		10 	 		30 	%		32 	 		27 	 		19 	%	
Net income attributable to Aon shareholders		$	398 	 		$	277 	 		44 	%		$	1,170 	 		$	936 	 		25 	%	
													
Basic net income per share attributable to Aon shareholders													
Continuing operations		$	1.71 	 		$	1.15 	 		49 	%		$	5.02 	 		$	3.88 	 		29 	%	
Discontinued operations		— 	 		— 	 		— 	 		— 	 		— 	 		— 	 	
Net income		$	1.71 	 		$	1.15 	 		49 	%		$	5.02 	 		$	3.88 	 		29 	%	
Diluted net income per share attributable to Aon shareholders													
Continuing operations		$	1.70 	 		$	1.14 	 		49 	%		$	5.00 	 		$	3.85 	 		30 	%	
Discontinued operations		— 	 		— 	 		— 	 		— 	 		— 	 		— 	 	
Net income		$	1.70 	 		$	1.14 	 		49 	%		$	5.00 	 		$	3.85 	 		30 	%	
Weighted average ordinary shares outstanding - basic		232.7 	 		240.6 	 		(3)	%		233.0 	 		241.4 	 		(3)	%	
Weighted average ordinary shares outstanding - diluted		233.6 	 		242.8 	 		(4)	%		234.1 	 		243.2 	 		(4)	%	
(1)The effective tax rate was 17.2% and 16.3% for the three months ended June 30, 2020 and 2019, respectively, and 18.6% and 15.9% for the six months ended June 30, 2020 and 2019, respectively.
8

Aon plc
Reconciliation of Non-GAAP Measures - Organic Revenue Growth (Decline) and Free Cash Flow (Unaudited)
Organic Revenue Growth (Decline) From Continuing Operations (Unaudited)

 		Three Months Ended June 30,											
(millions)		2020		2019		% Change		Less: Currency Impact (1)		Less: Fiduciary Investment Income (2)		Less: Acquisitions, Divestitures & Other		Organic Revenue Growth (Decline) (3)	
Revenue		 		 		 		 				 		 	
Commercial Risk Solutions		$	1,126 	 		$	1,167 	 		(4)	%		(2)	%		(1)	%		(2)	%		1 	%	
Reinsurance Solutions		448 	 		420 	 		7 	 		— 	 		(1)	 		(1)	 		9 	 	
Retirement Solutions		393 	 		419 	 		(6)	 		(2)	 		— 	 		(3)	 		(1)	 	
Health Solutions		258 	 		317 	 		(19)	 		(4)	 		— 	 		3 	 		(18)	 	
Data & Analytic Services		274 	 		286 	 		(4)	 		(2)	 		— 	 		6 	 		(8)	 	
Elimination		(2)	 		(3)	 		N/A		N/A		N/A		N/A		N/A	
Total revenue		$	2,497 	 		$	2,606 	 		(4)	%		(2)	%		(1)	%		— 	%		(1)	%	
															
		Six Months Ended June 30,											
(millions)		2020		2019		% Change		Less: Currency Impact (1)		Less: Fiduciary Investment Income (2)		Less: Acquisitions, Divestitures & Other		Organic Revenue Growth  (Decline)(3)	
Revenue															
Commercial Risk Solutions		$	2,272 	 		$	2,285 	 		(1)	%		(2)	%		— 	%		(2)	%		3 	%	
Reinsurance Solutions		1,296 	 		1,208 	 		7 	 		— 	 		(1)	 		(1)	 		9 	 	
Retirement Solutions		790 	 		839 	 		(6)	 		(1)	 		— 	 		(4)	 		(1)	 	
Health Solutions		760 	 		803 	 		(5)	 		(3)	 		— 	 		2 	 		(4)	 	
Data & Analytic Services		605 	 		622 	 		(3)	 		(2)	 		— 	 		2 	 		(3)	 	
Elimination		(7)	 		(8)	 		N/A		N/A		N/A		N/A		N/A	
Total revenue		$	5,716 	 		$	5,749 	 		(1)	%		(2)	%		— 	%		(1)	%		2 	%	
(1)Currency impact is determined by translating last year’s revenue at this year’s foreign exchange rates.
(2)Fiduciary investment income for the three months ended June 30, 2020 and 2019 was $5 million and $18 million, respectively. Fiduciary investment income for the six months ended June 30, 2020 and 2019 was $20 million and $37 million, respectively.
(3)Organic revenue growth (decline) includes the impact of intercompany activity and excludes the impact of changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures, transfers between revenue lines, and gains or losses on derivatives accounted for as hedges.

Free Cash Flows from Operations (Unaudited)

 		Six Months Ended June 30,			
(millions)		2020		2019		% Change	
Cash Provided by Operating Activities		$	1,219 	 		$	361 	 		238 	%	
Capital Expenditures Used for Operations		(89)	 		(106)	 		(16)	%	
Free Cash Flows Provided by Operations (1)		$	1,130 	 		$	255 	 		343 	%	
(1)Free cash flow is defined as cash flows from operations less capital expenditures. This non-GAAP measure does not imply or represent a precise calculation of residual cash flow available for discretionary expenditures.
9

Aon plc
Reconciliation of Non-GAAP Measures - Operating Income from Continuing Operations and Diluted Earnings Per Share (Unaudited) (1)

	
		Three Months Ended June 30,				Six Months Ended June 30,			
(millions, except percentages)		2020		2019		% Change		2020		2019		%
Change	
Revenue from continuing operations		$	2,497 	 		$	2,606 	 		(4)	%		$	5,716 	 		$	5,749 	 		(1)	%	
													
Operating income from continuing operations		$	594 	 		$	413 	 		44 	%		$	1,627 	 		$	1,285 	 		27 	%	
Amortization and impairment of intangible assets		58 	 		97 	 				155 	 		194 	 			
Restructuring		— 	 		127 	 				— 	 		218 	 			
	
Transaction costs(2)		18 	 		— 	 				36 	 		— 	 			
Operating income from continuing operations - as adjusted		$	670 	 		$	637 	 		5 	%		$	1,818 	 		$	1,697 	 		7 	%	
Operating margin from continuing operations		23.8 	%		15.8 	%				28.5 	%		22.4 	%			
Operating margin from continuing operations - as adjusted		26.8 	%		24.4 	%				31.8 	%		29.5 	%			

	
		Three Months Ended June 30,				Six Months Ended June 30,			
(millions, except percentages)		2020		2019		% Change		2020		2019		%
Change	
	
Operating income from continuing operations - as adjusted		$	670 	 		$	637 	 		5 	%		$	1,818 	 		$	1,697 	 		7 	%	
Interest income		— 	 		1 	 		(100)	%		2 	 		3 	 		(33)	%	
Interest expense		(89)	 		(77)	 		16 	%		(172)	 		(149)	 		15 	%	
Other income (expense):													
Other income (expense) - pensions - as adjusted		2 	 		5 	 		(60)	%		6 	 		9 	 		(33)	%	
Other income (expense) - other		(12)	 		1 	 		(1,300)	%		13 	 		(3)	 		533 	%	
Total Other income (expense) - as adjusted		(10)	 		6 	 		(267)	%		19 	 		6 	 		217 	%	
Income before income taxes from continuing operations - as adjusted		571 	 		567 	 		1 	%		1,667 	 		1,557 	 		7 	%	
Income tax expense (3)		100 	 		102 	 		(2)	%		312 	 		269 	 		16 	%	
Net income from continuing operations - as adjusted		471 	 		465 	 		1 	%		1,355 	 		1,288 	 		5 	%	
Less: Net income attributable to noncontrolling interests		13 	 		10 	 		30 	%		32 	 		27 	 		19 	%	
Net income attributable to Aon shareholders from continuing operations - as adjusted		458 	 		455 	 		1 	%		1,323 	 		1,261 	 		5 	%	
Net income (loss) from discontinued operations		1 	 		— 	 		100 	%		— 	 		— 	 		— 	%	
Net income attributable to Aon shareholders - as adjusted		$	459 	 		$	455 	 		1 	%		$	1,323 	 		$	1,261 	 		5 	%	
Diluted net income (loss) per share attributable to Aon shareholders													
Continuing operations - as adjusted		$	1.96 	 		$	1.87 	 		5 	%		$	5.65 	 		$	5.19 	 		9 	%	
Discontinued operations		— 	 		— 	 		— 	%		— 	 		— 	 		— 	%	
Net income attributable to Aon shareholders - as adjusted		$	1.96 	 		$	1.87 	 		5 	%		$	5.65 	 		$	5.19 	 		9 	%	
Weighted average ordinary shares outstanding - diluted		233.6 	 		242.8 	 		(4)	%		234.1 	 		243.2 	 		(4)	%	
Effective Tax Rates (3)													
Continuing Operations - U.S. GAAP		17.2 	%		16.3 	%				18.6 	%		15.9 	%			
Continuing Operations - Non-GAAP		17.5 	%		18.0 	%				18.7 	%		17.3 	%			
Discontinued Operations - U.S. GAAP		25.9 	%		58.5 	%				33.5 	%		58.5 	%			
Discontinued Operations - Non-GAAP		25.9 	%		58.5 	%				33.5 	%		58.5 	%			
(1)Certain noteworthy items impacting operating income in the three and six months ended June 30, 2020 and 2019 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures.
(2)As part of the proposed combination with Willis Towers Watson, certain transaction costs will be incurred by the Company prior to the closing date, which is expected to be in the first half of 2021. These costs may include advisory, legal, accounting, valuation, and other professional or consulting fees required to complete the combination.
(3)Adjusted items are generally taxed at the estimated annual effective tax rate, except for the applicable tax impact associated with estimated restructuring plan expenses, accelerated tradename amortization, impairment charges and certain transaction costs, which are adjusted at the related jurisdictional rate. In addition, tax expense excludes the tax impacts of payment of certain legacy litigation and enactment date impacts of the Tax Cuts and Jobs Act of 2017.

10

Aon plc
Condensed Consolidated Statements of Financial Position (Unaudited)

 		As of	
(millions) 		June 30,
2020		December 31,
2019	
Assets		 		 	
Current assets		 		 	
Cash and cash equivalents		$	757 	 		$	790 	 	
Short-term investments		654 	 		138 	 	
Receivables, net		3,314 	 		3,112 	 	
Fiduciary assets (1)		13,794 	 		11,834 	 	
Other current assets		471 	 		602 	 	
	
Total current assets		18,990 	 		16,476 	 	
Goodwill		8,356 	 		8,165 	 	
Intangible assets, net		699 	 		783 	 	
Fixed assets, net		615 	 		621 	 	
Operating lease right-of-use assets		941 	 		929 	 	
Deferred tax assets		654 	 		645 	 	
Prepaid pension		1,192 	 		1,216 	 	
Other non-current assets		548 	 		570 	 	
	
Total assets		$	31,995 	 		$	29,405 	 	
					
Liabilities and equity		 		 	
Liabilities		 		 	
Current liabilities		 		 	
Accounts payable and accrued liabilities		$	1,488 	 		$	1,939 	 	
Short-term debt and current portion of long-term debt		782 	 		712 	 	
Fiduciary liabilities		13,794 	 		11,834 	 	
Other current liabilities		1,319 	 		1,086 	 	
	
Total current liabilities		17,383 	 		15,571 	 	
Long-term debt		7,229 	 		6,627 	 	
Non-current operating lease liabilities		947 	 		944 	 	
Deferred tax liabilities		200 	 		199 	 	
Pension, other postretirement, and postemployment liabilities		1,641 	 		1,738 	 	
Other non-current liabilities		900 	 		877 	 	
	
Total liabilities		28,300 	 		25,956 	 	
					
Equity		 		 	
Ordinary shares - $0.01 nominal value		2 	 		2 	 	
Additional paid-in capital		6,144 	 		6,152 	 	
Retained earnings		1,751 	 		1,254 	 	
Accumulated other comprehensive loss		(4,296)	 		(4,033)	 	
Total Aon shareholders' equity		3,601 	 		3,375 	 	
Noncontrolling interests		94 	 		74 	 	
Total equity		3,695 	 		3,449 	 	
Total liabilities and equity		$	31,995 	 		$	29,405 	 	
(1)Includes cash and short-term investments of $5,664 million and $5,154 million for the periods ended June 30, 2020 and December 31, 2019, respectively.
11

Aon plc
Condensed Consolidated Statements of Cash Flows (Unaudited)

 		Six Months Ended June 30,	
(millions) 		2020		2019	
Cash flows from operating activities		 		 	
Net income		$	1,202 	 		$	963 	 	
Less: Net income (loss) from discontinued operations		— 	 		— 	 	
Adjustments to reconcile net income to cash provided by operating activities:				 	
(Gain) loss from sales of businesses, net		(25)	 		(7)	 	
Depreciation of fixed assets		82 	 		80 	 	
Amortization and impairment of intangible assets		155 	 		194 	 	
Share-based compensation expense		140 	 		180 	 	
Deferred income taxes		(15)	 		(25)	 	
Change in assets and liabilities:					
Fiduciary receivables		(1,640)	 		(926)	 	
Short-term investments — funds held on behalf of clients		(622)	 		(961)	 	
Fiduciary liabilities		2,262 	 		1,887 	 	
Receivables, net		(262)	 		(477)	 	
Accounts payable and accrued liabilities		(323)	 		(579)	 	
Restructuring reserves		(82)	 		(18)	 	
Current income taxes		186 	 		10 	 	
Pension, other postretirement and postemployment liabilities		(62)	 		(92)	 	
Other assets and liabilities		223 	 		132 	 	

Cash provided by operating activities		1,219 	 		361 	 	
Cash flows from investing activities		 		 	
Proceeds from investments		17 	 		14 	 	
Payments for investments		(60)	 		(60)	 	
Net sales (purchases) of short-term investments — non-fiduciary		(522)	 		(62)	 	
Acquisition of businesses, net of cash acquired		(368)	 		(15)	 	
Sale of businesses, net of cash sold		30 	 		7 	 	
Capital expenditures		(89)	 		(106)	 	

Cash used for investing activities		(992)	 		(222)	 	
Cash flows from financing activities		 		 	
Share repurchase		(463)	 		(1,155)	 	
Issuance of shares for employee benefit plans		(157)	 		(144)	 	
Issuance of debt		4,153 	 		3,559 	 	
Repayment of debt		(3,547)	 		(2,228)	 	
Cash dividends to shareholders		(204)	 		(203)	 	
Noncontrolling interests and other financing activities		14 	 		(61)	 	

Cash used for financing activities		(204)	 		(232)	 	
Effect of exchange rates on cash and cash equivalents		(56)	 		18 	 	
Net decrease in cash and cash equivalents		(33)	 		(75)	 	
Cash and cash equivalents at beginning of period		790 	 		656 	 	
Cash and cash equivalents at end of period		$	757 	 		$	581 	 	

12