8/13/2019 Aon PLC 2011

1/166

2 0 1 1 A n n u a l F i n a n c i a l R e p o r t

w w w . a o n . c o m

I I I 1 . 1 , 1 1 1 1 , 1 , 1 9 1 . 112025895

2011 Annual Financial Report

Received SEC

AP82tt2

WsDC 20549

www.aon.com

8/13/2019 Aon PLC 2011

2/166

T o O u r S h a r e h o l d e r s :A s A o n c e l e b r a t e s i t s 2 5 t h y e a r a s a g l o b a l b r a n d , I a m p l e a s e d t o r e p o r t t o y o u t h a t o u r f i r m

f i n i s h e d 2 0 1 1 w i t h a n o t h e r s o l i d p e r f o r m a n c e , r e f l e c t i n g c o n t i n u e d m o m e n t u m i n o u r R i s k S o l u t i o n sa n d H R S o l u t i o n s b u s i n e s s e s a s w e d e l i v e r v a l u e t o c l i e n t s a r o u n d t w o o f t h e m o s t i m p o r t a n t i s s u e sf a c i n g t h e g l o b a l e c o n o m y : r i s k a n d p e o p l e .T h i s s u c c e s s i s t h e r e s u l t o f t h e d e d i c a t e d a n d t i r e l e s s w o r k o f o u r o v e r 6 0 , 0 0 0 c o l l e a g u e s a r o u n dt h e w o r l d w h o a r e c o m m i t t e d t o p r o v i d i n g d i s t i n c t i v e v a l u e t o o u r c l i e n t s e v e r y d a y .I w a n t t o t h a n k o u r s h a r e h o l d e r s f o r v o t i n g o v e r w h e l m i n g l y t o a p p r o v e t h e b o a r d ' s d e c i s i o n t om o v e o u r c o r p o r a t e h e a d q u a r t e r s t o t h e U n i t e d K i n g d o m . T h i s m o v e w i l l p r o v i d e g r e a t e r a c c e s s t oe m e r g i n g m a r k e t s a n d a l l o w A o n t o t a k e b e t t e r a d v a n t a g e o f t h e s t r a t e g i c p r o x i m i t y t o L l o y d ' s a n d t h eL o n d o n m a r k e t .T h i s m o v e w i l l a l s o h a v e s e v e r a l n e a r - a n d l o n g - t e r m f i n a n c i a l b e n e f i t s , i n c l u d i n g i n c r e a s e df i n a n c i a l f l e x i b i l i t y a n d i m p r o v e d c a p i t a l a l l o c a t i o n . A s t h e p r o p o r t i o n o f A o n ' s r e v e n u e f r o mi n t e r n a t i o n a l o p e r a t i o n s c o n t i n u e s t o g r o w , t h e a b i l i t y t o a l l o c a t e c a p i t a l f o r i n v e s t m e n t a n d g r o w t h w i l lb e e v e n m o r e v i t a l t o t h e f i r m ' s o n g o i n g s u c c e s s .O v e r a l l , i n 2 0 1 1 w e a c c o m p l i s h e d a n u m b e r o f g o a l s a g a i n s t o u r t h r e e s t r a t e g i c o b j e c t i v e s : p r o v i d ed i s t i n c t i v e v a l u e t o o u r c l i e n t s , a t t r a c t a n d r e t a i n u n m a t c h e d t a l e n t , a n d d e l i v e r o p e r a t i o n a l e x c e l l e n c e .O u r m o s t s i g n i f i c a n t a c c o m p l i s h m e n t s f o r 2 0 1 1 i n c l u d e d t h e f o l l o w i n g :

W e c o n t i n u e d t o s t r e n g t h e n o u r i n d u s t r y - l e a d i n g p o s i t i o n a s t h e # 1 i n t e r m e d i a i y o f p r i m a r y r i s ki n s u r a n c e , t h e # 1 i n t e r m e d i a r y o f r e i n s u r a n c e , a n d t h e # 1 h u m a n r e s o u r c e c o n s u l t i n g a n do u t s o u r c i n g f i r m w i t h u n m a t c h e d t a l e n t a n d c a p a b i l i t i e sW e a c h i e v e d i m p r o v e d o r g a n i c r e v e n u e g r o w t h a c r o s s b o t h o f o u r b u s i n e s s e s i n a y e a r w h e nm a c r o - e c o n o m i c a n d i n d u s t r y p r e s s u r e s c o n t i n u e t o b e f e l t i n m a n y m a r k e t s a r o u n d t h e g l o b eW e a c h i e v e d a n e s t i m a t e d $ 2 3 3 m i l l i o n o f c u m u l a t i v e r e s t r u c t u r i n g a n d s y n e r g y s a v i n g s u n d e rt h e A o n H e w i t t r e s t r u c t u r i n g p r o g r a m a n d a r e f u l l y o n t r a c k t o a c h i e v e $ 3 5 5 m i l l i o n o fc u m u l a t i v e r e s t r u c t u r i n g a n d s y n e r g y s a v i n g s i n 2 0 1 3W e d e l i v e r e d 2 1 % g r o w t h i n n e t i n c o m e p e r s h a r e a t t r i b u t a b l e t o A o n s h a r e h o l d e r sL a s t l y , w e i n c r e a s e d c a s h f l o w f r o m o p e r a t i o n s 3 0 % t o o v e r $ 1 b i l l i o n , e n a b l i n g t h e r e t u r n o fm o r e t h a n $ 1 b i l l o n o f e x c e s s c a p i t a l t o s h a r e h o l d e r s t h r o u g h o u r s h a r e r e p u r c h a s e p r o g r a m a n dp a y m e n t o f d i v i d e n d s o n c o m m o n s t o c k

A o n i s i n a u n i q u e l e a d e r s h i p p o s i t i o n . O u r s o l i d o p e r a t i o n a l p e r f o r m a n c e , c o m b i n e d w i t h s t r o n ge x p e n s e d i s c i p l i n e a n d c a s h f l o w g e n e r a t i o n , p r o v i d e s u s w i t h t h e o p p o r t u n i t y t o m a k e s i g n i f i c a n ti n v e s t m e n t s i n o u r c o l l e a g u e s a n d i n o u r c a p a b i l i t i e s i n o r d e r t o c r e a t e v a l u e f o r o u r s h a r e h o l d e r s . W ew i l l c o n t i n u e t o s t r e n g t h e n o u r l e a d e r s h i p p o s i t i o n i n t h e m a r k e t p l a c e a n d b u i l d o n o u r i n d u s t r y - l e a d i n gc a p a b i l i t i e s t o i d e n t i f y a n d c a p t u r e g r o w t h o p p o r t u n i t i e s a c r o s s a l l o f o u r m a r k e t s .I n R i s k S o l u t i o n s ,

W e a r e i n v e s t i n g i n c l i e n t l e a d e r s h i p t o d r i v e g r e a t e r p r o d u c t i v i t y a n d e f f i c i e n c y w i t h t h e r o l l - o u to f t h e R e v e n u e E n g i n e i n E M E A a n d A s i a P a c i f i c , a s w e l l a s t h e r o l l o u t o f C l i e n t P r o m i s e ,w h i c h i s d r i v i n g g r e a t e r r e t e n t i o n a n d r o l l o v e r r a t e s a c r o s s o u r c l i e n t b a s e

A O NAotiTo Our Shareholders

As Aon celebrates its 25th year as global brand am pleased to report to you that our firm

finished 2011 with another solid performance reflecting continued momentum in our Risk Solutionsand HR Solutions bu si ne ss es a s we deliver value to clients around two o f t he most important issues

facing the global economy risk and people

This success is the result of t he dedicated and tireless work of our over 60000 colleagues around

the world who are committed to providing distinctive value to our clients every day

want to thank our shareholders for voting overwhelmingly to approve the boards de cision t o

move our corporate headquarters t o t he United Kingdom This move will provide greater access to

emerging markets and allow Aon to take better advantage o f t he strategic proximity to Lloyds and the

London market

This move will also have several near- and long-term financial benefits including increased

financialflexibility

and improved capital allocation As the proportion of Aons revenue from

international operations continues to grow the ability to allocate capital for investment and growth will

be even more vital t o t he firms ongoing success

Overall in 2011 we accomplished number of goals against our three strategic objectives provide

distinctive value to our clients attract and retain unmatched talent and deliver operational excellence

Our most significant accomplishments for 2011 included the following

We continued to strengthen our industry-leading position as the intermediary of primary risk

insurance the intermediary of reinsurance and the human resource consulting and

outsourcing firm with unmatched talent and capabilities

We achieved improved organic revenue growth across both of our businesses in year when

macro-economic and industry pressures continue to be felt in many markets around the globe

We achieved an estimated $233 million of cumulative restructuring and synergy savings under

the

Aon Hewitt restructuring program and are fully on t ra ck t o achieve

$355 million of

cumulative restructuring and synergy savings in 2013

We delivered 21% growth in net income per share attributable to Aon shareholders

Lastly we increased cash flow from operations 30% to over $1 billion enabling the return of

more than $1 billon of excess capital to shareholders through our share repurchase program and

payment of dividends on common stock

Aon is in unique leadership position Our solid operational performance combined with strong

expense discipline and cash flow generation provides us with the opportunity to make significant

investments in our colleagues and in our capabilities in order to create value for our shareholders We

will continue to strengthen our leadership position in the marketplace and build on our industry-leading

capabilities to identify and capture growth opportunities across all of our markets

In Risk Solutions

We are investing in client leadership to drive greater productivity and efficiency w ith t he roll-out

o f t he Revenue Engine in EMEA and Asia Pacific as well as the roll out of Client Promise

which is driving greater retention and rollover rates across our client base

8/13/2019 Aon PLC 2011

3/166

W e c o n t i n u e t o i n v e s t i n i n n o v a t i v e t e c h n o l o g y s u c h a s F A C o n n e c t a n d o u r G l o b a l R i s k I n s i g h tP l a t f o r m , w h i c h i s t h e w o r l d ' s l e a d i n g g l o b a l r e p o s i t o r y o f r i s k a n d i n s u r a n c e p l a c e m e n ti n f o r m a t i o nW e a r e d r i v i n g o u r A o n B r o k i n g i n i t i a t i v e t o b e t t e r m a t c h c l i e n t n e e d s w i t h i n s u r e r a p p e t i t e f o rr i s k , r e s u l t i n g i n b e t t e r e c o n o m i c s f o r a l l p a r t i c i p a n t sW e c o n t i n u e d t o i n v e s t i n t h e f u t u r e o f o u r f i r m a s w e l l a s e x p a n d o u r i n t e r n a t i o n a l f o o t p r i n tt h r o u g h a c q u i s i t i o n s s u c h a s G l e n r a n d M I B i n S o u t h A f r i c a

A n d f i n a l l y , e f f e c t i v e J a n u a r y 1 , 2 0 1 2 , w e a l i g n e d o u r g l o b a l h e a l t h a n d b e n e f i t s p l a t f o r m u n d e rR i s k S o l u t i o n s t o b e t t e r l e v e r a g e a b r o a d e r g l o b a l d i s t r i b u t i o n c h a n n e l a n d t o s t r e n g t h e n t h ed e e p b r o k e r a g e c a p a b i l i t i e s i n d a t a a n d a n a l y t i c s w i t h c l i e n t s a n d i n s u r a n c e c a r r i e r sA s w e h a v e d i s c u s s e d p r e v i o u s l y , w e h a v e p r o v e d t h e c o n c e p t o f t h e s e i n v e s t m e n t s i n 2 0 1 1 , a n da s w e m o v e i n t o 2 0 1 2 a n d 2 0 1 3 , w e w i l l c o n t i n u e t o d r i v e g r e a t e r s c a l e a n d i n c r e a s e o p e r a t i n g l e v e r a g ea s a r e s u l t o f t h e s e i n v e s t m e n t s i n o u r R i s k S o l u t i o n s s e g m e n t .

I n H R S o l u t i o n s ,W e a r e e x p a n d i n g o u r i n t e r n a t i o n a l f o o t p r i n t a s t h e w o r k f o r c e i s i n c r e a s i n g l y b e c o m i n g m o r eg l o b a l , w i t h i n v e s t m e n t s i n k e y t a l e n t a n d c a p a b i l i t i e s a c r o s s e m e r g i n g m a r k e t sW e a r e c o n t i n u i n g t o i n v e s t i n e x p a n d i n g o u r c o r e H R B P 0 o f f e r i n g s t h r o u g h p o i n t s o l u t i o n so p p o r t u n i t i e s s u c h a s d e p e n d e n t e l i g i b i l i t y a u d i t s a n d a b s e n c e m a n a g e m e n t d i a g n o s t i c sW e a r e e x p a n d i n g o u r i n d u s t r y - l e a d i n g b e n e f i t s a d m i n i s t r a t i o n p l a t f o r m f r o m l a r g e - m a r k e t t om i d d l e - m a r k e tF i n a l l y , w e c o n t i n u e t o s t r e n g t h e n o u r i n d u s t r y - l e a d i n g p o s i t i o n i n h e a l t h c a r e e x c h a n g e s ,e n a b l i n g c l i e n t s t o p r e p a r e f o r u l t i m a t e c h a n g e s i n h e a l t h c a r e l e g i s l a t i o n w i t h d e s i g n , p u r c h a s i n ga n d a d m i n i s t r a t i o n c a p a b i l i t y

W h e t h e r i t i s a n e a r t h q u a k e a n d t s u n a m i i n J a p a n o r f l o o d s i n A u s t r a l i a a n d N e w Z e a l a n d , o u rc o l l e a g u e s w e r e o n t h e g r o u n d i n a r a p i d r e s p o n s e m o d e , h e l p i n g c l i e n t s a n d f e l l o w c o l l e a g u e s d e a lw i t h t h e b u s i n e s s a n d p e r s o n a l a s p e c t s o f t h e s e c a t a s t r o p h i c e v e n t s . A s w e s u r v e y t h e g l o b e , i t i s c l e a rt h a t t h e m a g n i t u d e , s c o p e a n d c o m p l e x i t y o f r i s k c o n t i n u e s t o i n c r e a s e , b o t h i n t e r m s o f t r a d i t i o n a l r i s ks u c h a s p r o p e r t y , c a s u a l t y o r d i r e c t o r s a n d o f f i c e r s ' l i a b i l i t y , a n d n o n - t r a d i t i o n a l r i s k s u c h a s t e r r o r i s ma n d p a n d e m i c .O n t h e p e o p l e s i d e , h e a l t h c a r e r e f o r m i s a g r o w i n g i s s u e f o r U . S . c o m p a n i e s i n n e e d o f a d v i c ea n d s o l u t i o n s t o m a n a g e t h e c o m p l e x l e g i s l a t i v e c h a n g e s a h e a d . I n 2 0 1 1 , w e i d e n t i f i e d t h e u n i q u eo p p o r t u n i t y t o i n v e s t i n h e a l t h c a r e e x c h a n g e s ; j u s t o n e e x a m p l e o f t h e m a n y d i f f e r e n t i a t i n g s o l u t i o n sw e a r e a b l e t o p r o v i d e t o o u r c l i e n t s .W h i l e t h e g l o b a l e c o n o m y a p p e a r s t o b e m a k i n g s o m e i m p r o v e m e n t , m a n y o f o u r c l i e n t s a r e s t i l lf a c i n g s t r o n g e c o n o m i c h e a d w i n d s . F o r t u n a t e l y , A o n h a s t r e m e n d o u s c a p a b i l i t y a n d u n m a t c h e dr e s o u r c e s t o s u p p o r t t h e m i n t h e s e t i m e s . T h e s t r e n g t h o f o u r g l o b a l n e t w o r k a n d o u r d e m o n s t r a t e da b i l i t y t o d e l i v e r w o r l d w i d e c a p a b i l i t y o n a t r u l y l o c a l l e v e l m a k e s A o n b e t t e r e q u i p p e d t h a n a n y o n ee l s e t o s e r v e t h e n e e d s o f o u r c l i e n t s .O u r p o r t f o l i o o f R i s k S o l u t i o n s a n d H R S o l u t i o n s g i v e s u s t h e f i n a n c i a l s t r e n g t h a n d f l e x i b i l i t y t o

i n v e s t i n o u r b u s i n e s s e s , a n d i n o u r c l i e n t s a n d c o l l e a g u e s , s p e c i f i c a l l y i n c r i t i c a l a r e a s s u c h a s t r a i n i n g ,t e c h n o l o g y , t a l e n t a n d b r a n d . F o r e x a m p l e , A o n B e n f i e l d i n v e s t s a p p r o x i m a t e l y $ 1 0 0 m i l l i o n e a c h y e a ri n a n a l y t i c c a p a b i l i t y w h i c h h e l p s t o d e l i v e r d i s t i n c t i v e v a l u e t o c l i e n t s .I t i s c o n t i n u e d i n v e s t m e n t s s u c h a s t h e s e t h a t w i l l s t r e n g t h e n o u r a b i l i t y t o b e t t e r s e r v e o u r c l i e n t s ,p r o v i d e g r e a t e r o p p o r t u n i t i e s f o r c o l l e a g u e s , a n d i n c r e a s e v a l u e f o r s h a r e h o l d e r s . T h e s e i n v e s t m e n t s a r eb e i n g m a d e w i t h i n t h e c o n t e x t o f o u r o n g o i n g m a r g i n i m p r o v e m e n t s . A s w e a d d t o o u r g l o b a l n e t w o r ka n d b u i l d u p o n o u r c a p a b i l i t i e s , w e a r e i d e n t i f y i n g a n d e l i m i n a t i n g e f f i c i e n c i e s a n d c o s t s f r o m

We continue to invest in innovative technology such as FAConnect and our Global Risk Insight

Platform which is the worlds leading global repository of risk and insurance placement

information

We are driving our Aon Broking initiative to better match client needs with insurer appetite for

risk resulting in better economics for all participants

We continued to invest in th e f u tu re o f our firm as well as expand our international footprint

through acquisitions such as Glenrand MIB in South Africa

And finally effective January 2012 we aligned our global health and benefits platform under

Risk Solutions to better leverage broader global distribution channel and to strengthen the

deep brokerage capabilities in data and analytics with clients and insurance carriers

As we have discussed previously we have proved the concept of these investments in 2011 and

as we move into 2012 and 2013 we will continue to drive greater scale and increase operating leverage

as result of these investments in our Risk Solutions segment

In HR Solutions

We are expanding our international footprint as the workforce is increasingly becoming more

global with investments in key talent and capabilities across emerging markets

We are continuing to invest in expanding our core HR BPO offerings through point solutions

opportunities such as dependent eligibility audits and absence management diagnostics

We are expanding our industry-leading benefits administration platform from large-market to

middle-market

Finally we continue to strengthen our industry-leading position in health care exchanges

enabling clients to prepare for ultimate changes in health care legislation with design purchasing

and administration capability

Whether it is an earthquake and tsunami in Japan or floods in Australia and New Zealand our

colleagues were on the ground in rapid response mode helping clients and fellow colleagues deal

with the business and personal aspects of these catastrophic events As we survey the globe it is clear

t ha t t he magnitude scope and complexity of risk continues to increase both in terms of traditional risk

such as property casualty or directors and officers liability and non-traditional risk such as terrorism

and pandemic

On the people side health care reform is growing issue for U.S companies in need of advice

and so lu tion s t o manage the complex legislative changes ahead In 2011 we identified the unique

opportunity to invest in health care exchanges just one example o f t he many differentiating solutions

we a re a bl e t o provide to our clients

While the global economy appears to be making some improvement many of our clients are still

facing strong economic headwinds Fortunately Aon has tremendous capability and unmatched

resources to support them in these times The strength of our global network and our demonstrated

ability to deliver worldwide capability on truly local level makes Aon better equipped than anyoneelse to serve the needs of our clients

Our portfolio of Risk Solutions and HR Solutions gives us the financial strength and flexibility to

invest in our businesses and

in our

clients and colleagues specifically

in criticalareas such as training

technology talent and brand For example Aon Benfield invests approximately $100 million each yearin analytic capability which helps to deliver distinctive value to clients

It is continued investments such as these that will strengthen our ability to better serve our clients

provide greater opportunities for colleagues and increase value for shareholders These investments are

being made w ith in t he c on te xt o f our ongoing margin improvements As we add to our global network

and build upon our capabilities we are identifying and eliminating efficiencies and costs from

8/13/2019 Aon PLC 2011

4/166

n o n - c l i e n t f a c i n g a r e a s . T h e s e a c t i o n s a l l o w u s t o m a k e c o n t i n u e d a n d s i g n i f i c a n t i n v e s t m e n t s i n o u rb u s i n e s s a n d i n o u r p e o p l e w h i l e s i m u l t a n e o u s l y d e l i v e r i n g m a r g i n i m p r o v e m e n t .L o o k i n g f o r w a r d , t h e n e x t f i v e y e a r s a t A o n w i l l b e k e y t o h o w w e p o s i t i o n o u r f i r m f o r g r o w t h f o rt h e n e x t 5 0 y e a r s . I t r u l y b e l i e v e t h a t A o n h a s t h e u n i q u e c a p a b i l i t y i n t e r m s o f r e s o u r c e s a n d p e o p l e t or e m a i n a s t h e l e a d e r i n r i s k m a n a g e m e n t a n d h u m a n r e s o u r c e c o n s u l t i n g a n d o u t s o u r c i n g f o r t h el o n g - t e r m .T h i s i s a n e x c i t i n g t i m e t o b e p a r t o f A o n . I t i s a p l e a s u r e f o r m e t o b e p a r t o f t h e l e a d e r s h i p t e a mt h a t i s w o r k i n g h a r d o n y o u r b e h a l f , a n d I h o p e y o u s h a r e m y c o n f i d e n c e i n t h e v i e w t h a t c o n t i n u e ds u c c e s s l i e s a h e a d f o r A o n i n 2 0 1 2 a n d b e y o n d .L a s t l y , o n a p e r s o n a l n o t e , I w a n t t o t h a n k J a n K a l f f , E d e n M a r t i n , A n d r e w M c K e n n a a n d J o h nR o g e r s f o r t h e i r m a n y y e a r s o f d i s t i n g u i s h e d s e r v i c e a s m e m b e r s o f A o n ' s B o a r d o f D i r e c t o r s . T h e i rc o l l e c t i v e w i s d o m a n d i n s i g h t h a s a l l o w e d A o n t o e v o l v e i n t o t h e p r e e m i n e n t g l o b a l p r o f e s s i o n a ls e r v i c e s f i r m t h a t i t h a s b e c o m e t o d a y , a n d w e w i l l m i s s t h e i r s a g e c o u n s e l a s w e c o n t i n u e o n o u r p a t ho f p r o g r e s s a n d m o m e n t u m .T h a n k y o u f o r t h e f a i t h a n d t r u s t y o u h a v e p l a c e d i n o u r B o a r d o f D i r e c t o r s a n d m a n a g e m e n tt e a m . Y o u r s u p p o r t i s i n v a l u a b l e t o o u r e f f o r t s , a n d w e w i l l w o r k h a r d t o e x c e e d y o u r e x p e c t a t i o n s .

A k e r , / e ,G r e g o r y C . C a s eP r e s i d e n t a n d C h i e f E x e c u t i v e O f f i c e r

non-client facing areas These actions allow us to make continued and significant investments in our

business and in our people while simultaneously delivering margin improvement

Looking forward the next five years at Aon will be key to how we position our firm for growth for

the next 50 years truly believe that Aon has the unique capability in terms of resources and people to

remain as the leader in risk management and human resource consulting and outsourcing for the

long-term

This is an exciting time to be part of Aon It is pleasure for me to be part o f t he leadership team

that is working hard on your behalf and hope you

share my confidence in the view that continued

success lies ahead for Aon in 2012 and beyond

Lastly on personal note want to thank Jan Kalff Eden Martin Andrew McKenna and John

Rogers for their many years of distinguished service as members of Aons Board of Directors Their

collective wisdom and insight has allowed Aon to evolve into the preeminent global professional

services firm that it has become today and we will miss their sage co un se l a s we continue on our path

of progress and momentum

Thank you for the faith and trust you have placed in our Board of Directors and management

team Your support is invaluable to our efforts and we will work hard to exceed your expectations

Gregory Case

President and Chief Executive Officer

8/13/2019 Aon PLC 2011

5/166

( T h i s p a g e h a s b e e n l e f t b l a n k i n t e n t i o n a l l y . )This page has been left blank intentionally

8/13/2019 Aon PLC 2011

6/166

I n d i c a t e b y c h e c k m a r k i f t h e r e g i s t r a n t i s a w e l l - k n o w n s e a s o n e d i s s u e r , a s d e f i n e d i n R u l e 4 0 5 o f t h e S e c u r i t i e sA c t . Y E S I N N O EI n d i c a t e b y c h e c k m a r k i f t h e r e g i s t r a n t i s n o t r e q u i r e d t o f i l e r e p o r t s p u r s u a n t t o S e c t i o n 1 3 o r S e c t i o n 1 5 ( d ) o f t h e

E x c h a n g e A c t . Y E S E N OI n d i c a t e b y c h e c k m a r k w h e t h e r t h e r e g i s t r a n t ( 1 ) h a s f i l e d a l l r e p o r t s r e q u i r e d t o b e f i l e d b y S e c t i o n 1 3 o r 1 5 ( d ) o ft h e S e c u r i t i e s E x c h a n g e A c t o f 1 9 3 4 d u r i n g t h e p r e c e d i n g 1 2 m o n t h s ( o r f o r s u c h s h o r t e r p e r i o d t h a t t h e r e g i s t r a n t w a sr e q u i r e d t o f i l e s u c h r e p o r t s ) , a n d ( 2 ) h a s b e e n s u b j e c t t o s u c h f i l i n g r e q u i r e m e n t s f o r t h e p a s t 9 0 d a y s . Y E S I E N OI n d i c a t e b y c h e c k m a r k w h e t h e r t h e r e g i s t r a n t h a s s u b m i t t e d e l e c t r o n i c a l l y a n d p o s t e d o n i t s c o r p o r a t e W e b s i t e , i fa n y , e v e r y I n t e r a c t i v e D a t a F i l e r e q u i r e d t o b e s u b m i t t e d a n d p o s t e d p u r s u a n t t o R u l e 4 0 5 o f R e g u l a t i o n S - T ( 2 3 2 . 4 0 5o f t h i s c h a p t e r ) d u r i n g t h e p r e c e d i n g 1 2 m o n t h s ( o r f o r s u c h s h o r t e r p e r i o d t h a t t h e r e g i s t r a n t w a s r e q u i r e d t o s u b m i ta n d p o s t s u c h f i l e s ) . Y E S N O

I n d i c a t e b y c h e c k m a r k i f d i s c l o s u r e o f d e l i n q u e n t f i l e r s p u r s u a n t t o I t e m 4 0 5 o f R e g u l a t i o n S - K i s n o t c o n t a i n e dh e r e i n , a n d w i l l n o t b e c o n t a i n e d , t o t h e b e s t o f r e g i s t r a n t ' s k n o w l e d g e , i n d e f i n i t i v e p r o x y o r i n f o r m a t i o n s t a t e m e n t si n c o r p o r a t e d b y r e f e r e n c e i n P a r t I I I o f t h i s F o r m 1 0 - K o r a n y a m e n d m e n t t o t h i s F o r m 1 0 - K . C II n d i c a t e b y c h e c k m a r k w h e t h e r t h e r e g i s t r a n t i s a l a r g e a c c e l e r a t e d f i l e r , a n a c c e l e r a t e d f i l e r , a n o n - a c c e l e r a t e df i l e r , o r a s m a l l e r r e p o r t i n g c o m p a n y . S e e t h e d e f i n i t i o n s o f l a r g e a c c e l e r a t e d f i l e r , a c c e l e r a t e d f i l e r , a n d s m a l l e rr e p o r t i n g c o m p a n y i n R u l e 1 2 b - 2 o f t h e E x c h a n g e A c t .

L a r g e a c c e l e r a t e d f i l e r E A c c e l e r a t e d f i l e r E N o n - a c c e l e r a t e d f i l e r E S m a l l e r r e p o r t i n g c o m p a n y E l( D o n o t c h e c k i f a s m a l l e r r e p o r t i n g c o m p a n y . )I n d i c a t e b y c h e c k m a r k w h e t h e r t h e r e g i s t r a n t i s a s h e l l c o m p a n y ( a s d e f i n e d i n R u l e 1 2 b - 2 o f t h e E x c h a n g e A c t ) .Y E S E N O

A s o f J u n e 3 0 , 2 0 1 1 , t h e a g g r e g a t e m a r k e t v a l u e o f t h e r e g i s t r a n t ' s c o m m o n s t o c k h e l d b y n o n - a f f i l i a t e s o f t h er e g i s t r a n t w a s $ 1 6 , 7 5 9 , 2 9 8 , 7 7 9 b a s e d o n t h e c l o s i n g s a l e s p r i c e a s r e p o r t e d o n t h e N e w Y o r k S t o c k E x c h a n g e C o m p o s i t eT r a n s a c t i o n L i s t i n g .N u m b e r o f s h a r e s o f c o m m o n s t o c k o u t s t a n d i n g a s o f J a n u a r y 3 1 , 2 0 1 2 w a s 3 2 5 , 1 7 9 , 1 6 3 .

D O C U M E N T S I N C O R P O R A T E D B Y R E F E R E N C EP o r t i o n s o f A o n C o r p o r a t i o n ' s P r o x y S t a t e m e n t f o r t h e 2 0 1 2 A n n u a l M e e t i n g o f S t o c k h o l d e r s t o b e h e l d o n M a y 1 8 ,2 0 1 2 a r e i n c o r p o r a t e d b y r e f e r e n c e i n t h i s F o r m 1 0 - K i n r e s p o n s e t o P a r t I I I , I t e m s 1 0 , 1 1 , 1 2 , 1 3 a n d 1 4 .

E CU N I T E D S T A T E S M a i l P r o c e s s i n gS E C U R I T I E S A N D E X C H A N G E C O M M I S S I t t b hW a s h i n g t o n , D . C . 2 0 5 4 9

A o n C o r p o r a t i o n( E x a c t n a m e o f r e g i s t r a n t a s s p e c i f i e d i n i t s c h a r t e r )D E L A W A R E 3 6 - 3 0 5 1 9 1 5( S t a t e o r o t h e r j u r i s d i c t i o n o f ( I . R . S . E m p l o y e ri n c o r p o r a t i o n o r o r g a n i z a t i o n ) I d e n t i f i c a t i o n N o . )

2 0 0 E . R A N D O L P H S T R E E T 6 0 6 0 1C H I C A G O , I L L I N O I S ( Z i p C o d e )( A d d r e s s o f p r i n c i p a l e x e c u t i v e o f f i c e s )( 3 1 2 ) 3 8 1 - 1 0 0 0( R e g i s t r a n t ' s t e l e p h o n e n u m b e r , i n c l u d i n g a r e a c o d e )

S e c u r i t i e s r e g i s t e r e d p u r s u a n t t o S e c t i o n 1 2 ( b ) o f t h e A c t :T i t l e o f E a c h C l a s so n V V h i c h R e g i s t e r e da m e o f E a c h E x c h a n g e

A P R 1 8 2 0 1 2F O R M 1 0 , - K( M a r k O n e ) A N N U A L R E P O R T P U R S U A N T T O S E C T I O N 1 3 O R 1 A M W A I r b cS E C U R I T I E S E X C H A N G E A C T O F 1 9 3 4 4 0 5F o r t h e f i s c a l y e a r e n d e d D e c e m b e r 3 1 , 2 0 1 1O R

1 1 1 T R A N S I T I O N R E P O R T P U R S U A N T T O S E C T I O N 1 3 O R 1 5 ( d ) O F T H ES E C U R I T I E S E X C H A N G E A C T O F 1 9 3 4C o m m i s s i o n f i l e n u m b e r : 1 - 7 9 3 3

C o m m o n S t o c k , $ 1 p a r v a l u e N e w Y o r k S t o c k E x c h a n g eS e c u r i t i e s r e g i s t e r e d p u r s u a n t t o S e c t i o n 1 2 ( g ) o f t h e A c t : N O N E

UNITED STATESMail Processing

SECURITIES AND ECHANGE COMMISStWashington D.C 20549

FOR1VI 10-K APR 18201

Mark One

ANNUAL REPORT PURSUANT TO SECTION 13 OR 1Wf TJbSECURITIES EXCHANGE ACT OF 1934

405For the fiscal year ended December 31 2011

OR

LI TRANSITION REPORT PURSUANT TO SECTION 13 OR 15d OF THESECURITIES EXCHANGE ACT OF 1934

Commission file number 1-7933

Aon CorporationExact name of registrant as specified in its charter

DELAWARE 36-3051915

State or other jurisdiction of I.R.S Employer

incorporation or organization Identification No

200 RANDOLPH STREET 60601CHICAGO ILLINOIS Zip Code

Address of principal executive offices

312 381-1000Registrants telephone number including area code

Securitiesregistered pursuant to Section 12b o f t he Act

Title of Each Class

Name of Each Exchange on Which Registered

Common Stock $1 par value New York Stock Exchange

Securities registered pursuant to Section 12g of the Act NONE

Indicate by check mark if the registrant is well-known seasoned issuer as defined in Rule 405 of the Securities

Act.YESj NOL

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15d of the

Exchange Act YES NO

Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15d ofthe Securities Exchange Act of 1934 during the preceding 12 months or for such shorter period that the registrant was

required to file such reports and has been subject to such filing requirements for the past 90 days YES NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site if

any every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 232.405of this chapter during the preceding 12 months or for such shorter period that the registrant was required to submitand post such files YES NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained

herein and will not be contained to the best of registrants knowledge in definitive proxy or information statements

incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K fl

Indicate by check mark whether the registrant is large accelerated filer an accelerated filer non-accelerated

filer o r s ma ll er reporting company See the definitions of large accelerated filer accelerated filer and smaller

reporting company in Rule 12b-2 o f t he Exchange Act

Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company

Do not check if smaller reporting company

Indicate by check mark whether the registrant is shell company as defined in Rule 12b-2 of the Exchange ActYES NO EI

As of June 3 0 2 01 1 the aggregate market value o f t he registrants common stock held by non-affiliates of the

registrant was $16759298779 based on the closing sales price as reported on the New York Stock ExchangeCompositeTransaction Listing

Number of shares of common stock outstanding as of January 31 2012 was 325179163

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Aon Corporations Proxy Statement for the 2012 Annual Meeting of Stockholders to be held on May 182012 are incorporated by reference in this Form 10-K in response to Part III Items 10 11 12 13 and 14

8/13/2019 Aon PLC 2011

7/166

I t e m 1 . B u s i n e s s .O V E R V I E W

A o n C o r p o r a t i o n ' s s t r a t e g y i s t o b e t h e p r e e m i n e n t p r o f e s s i o n a l s e r v i c e f i r m i n t h e w o r l d , f o c u s e do n t h e t o p i c s o f r i s k a n d p e o p l e . A m i C o r p o r a t i o n ( w h i c h m a y b e r e f e r r e d t o a s A o n , t h eC o m p a n y , w e , U s , o r o u r ) i s t h e l e a d i n g g l o b a l p r o v i d e r o f r i s k m a n a g e m e n t s e r v i c e s , i n s u r a n c ea n d r e i n s u r a n c e b r o k e r a g e , a n d h u m a n r e s o u r c e c o n s u l t i n g a n d o u t s o u r c i n g , d e l i v e r i n g d i s t i n c t i v e c l i e n tv a l u e v i a i n n o v a t i v e a n d e f f e c t i v e r i s k m a n a g e m e n t a n d w o r k f o r c e p r o d u c t i v i t y s o l u t i o n s . A o n w a si n c o r p o r a t e d i n 1 9 7 9 u n d e r t h e l a w s o f D e l a w a r e , a n d i s t h e p a r e n t c o r p o r a t i o n o f b o t hl o n g - e s t a b l i s h e d a n d a c q u i r e d c o m p a n i e s . W e h a v e a p p r o x i m a t e l y 6 2 , 0 0 0 e m p l o y e e s a n d c o n d u c t o u ro p e r a t i o n s t h r o u g h v a r i o u s s u b s i d i a r i e s i n m o r e t h a n 1 2 0 c o u n t r i e s a n d s o v e r e i g n t i e s .W e s e r v e c l i e n t s t h r o u g h t h e f o l l o w i n g o p e r a t i n g s e g m e n t s :

R i s k S o l u t i o n s a c t s a s a n a d v i s o r a n d i n s u r a n c e a n d r e i n s u r a n c e b r o k e r , h e l p i n g c l i e n t s m a n a g et h e i r r i s k s v i a c o n s u l t a t i o n , a s w e l l a s n e g o t i a t i o n a n d p l a c e m e n t o f i n s u r a n c e r i s k w i t h i n s u r a n c ec a r r i e r s t h r o u g h o u r g l o b a l d i s t r i b u t i o n n e t w o r k .H R S o l u t i o n s p a r t n e r s w i t h o r g a n i z a t i o n s t o s o l v e t h e i r m o s t c o m p l e x b e n e f i t s , t a l e n t a n d r e l a t e df i n a n c i a l c h a l l e n g e s , a n d i m p r o v e b u s i n e s s p e r f o r m a n c e b y d e s i g n i n g , i m p l e m e n t i n g ,c o m m u n i c a t i n g a n d a d m i n i s t e r i n g a w i d e r a n g e o f h u m a n c a p i t a l , r e t i r e m e n t , i n v e s t m e n tm a n a g e m e n t , h e a l t h c a r e , c o m p e n s a t i o n a n d t a l e n t m a n a g e m e n t s t r a t e g i e s .

O u r c l i e n t s a r e g l o b a l l y d i v e r s i f i e d a n d i n c l u d e a l l s e g m e n t s o f t h e e c o n o m y ( i n d i v i d u a l s t h r o u g hp e r s o n a l l i n e s , m i d - m a r k e t c o m p a n i e s a n d l a r g e g l o b a l l y c o m p a n i e s ) a n d e v e r y i n d u s t r y i n t h e e c o n o m yi n o v e r 1 2 0 c o u n t r i e s g l o b a l l y . T h i s d i v e r s i f i c a t i o n o f c u s t o m e r b a s e p r o v i d e s s t a b i l i t y i n d i f f e r e n te c o n o m i c s c e n a r i o s t h a t m a y a f f e c t s p e c i f i c i n d u s t r i e s , c u s t o m e r s e g m e n t s o r g e o g r a p h i e s .O v e r t h e l a s t f i v e y e a r s w e h a v e f o c u s e d o u r p o r t f o l i o o n h i g h e r m a r g i n , c a p i t a l l i g h t p r o f e s s i o n a ls e r v i c e s b u s i n e s s e s t h a t h a v e h i g h r e c u r r i n g r e v e n u e s t r e a m s a n d s t r o n g f r e e c a s h f l o w g e n e r a t i o n . A o nd r i v e s i t s c a p i t a l d e c i s i o n m a k i n g p r o c e s s a r o u n d r e t u r n o n i n v e s t e d c a p i t a l ( R O I C ) , f i r m l y b e l i e v i n gt h i s m e t h o d o l o g y h a s a h i g h e r c o r r e l a t i o n t h a n a n y o t h e r m e t r i c w i t h s h a r e h o l d e r v a l u e c r e a t i o n . T h i sf o c u s o n r e t u r n o n i n v e s t e d c a p i t a l ( R O I C ) , m e a s u r e d o n a c a s h o n c a s h b a s i s , l e d t o a n u m b e r o fs i g n i f i c a n t p o r t f o l i o c h a n g e s : e x i t i n g t h e l o w e r - m a r g i n , c a p i t a l i n t e n s i v e i n s u r a n c e u n d e r w r i t i n g

b u s i n e s s e s a n d i n v e s t i n g i n B e n f i e l d a n d H e w i t t , s u b s t a n t i a l f r a n c h i s e s t o g r o w f r e e c a s h f l o w o v e r t i m e .I I I n A p r i l 2 0 0 8 , w e c o m p l e t e d t h e s a l e o f o u r C o m b i n e d I n s u r a n c e C o m p a n y o f A m e r i c a( C I C A ' ) a n d S t e r l i n g I n s u r a n c e C o m p a n y ( S t e r l i n g ) s u b s i d i a r i e s , w h i c h r e p r e s e n t e d t h em a j o r i t y o f t h e o p e r a t i o n s o f o u r f o r m e r I n s u r a n c e U n d e r w r i t i n g s e g m e n t .

I n A u g u s t 2 0 0 9 , w e c o m p l e t e d t h e s a l e o f o u r r e m a i n i n g p r o p e r t y a n d c a s u a l t y i n s u r a n c eu n d e r w r i t i n g o p e r a t i o n s t h a t w e r e i n r u n - o f f . T h e r e s u l t s o f a l l o f t h e s e o p e r a t i o n s a r e r e p o r t e di n d i s c o n t i n u e d o p e r a t i o n s f o r a l l p e r i o d s p r e s e n t e d .I n N o v e m b e r 2 0 0 8 , w e e x p a n d e d o u r R i s k S o l u t i o n s p r o d u c t o f f e r i n g s t h r o u g h t h e m e r g e r w i t hB e n f i e l d G r o u p L i m i t e d ( B e n f i e l d ) , a l e a d i n g i n d e p e n d e n t r e i n s u r a n c e i n t e r m e d i a r y . B e n f i e l dp r o d u c t s h a v e b e e n i n t e g r a t e d w i t h o u r e x i s t i n g r e i n s u r a n c e p r o d u c t s .

o I n O c t o b e r 2 0 1 0 , w e c o m p l e t e d t h e a c q u i s i t i o n o f H e w i t t A s s o c i a t e s , I n c . ( H e w i t t ) , o n e o f t h ew o r l d ' s l e a d i n g h u m a n r e s o u r c e c o n s u l t i n g a n d o u t s o u r c i n g c o m p a n i e s . H e w i t t o p e r a t e s g l o b a l l yt o g e t h e r w i t h A o n ' s e x i s t i n g c o n s u l t i n g a n d o u t s o u r c i n g o p e r a t i o n s u n d e r t h e n e w l y c r e a t e d A o nH e w i t t b r a n d i n o u r H R S o l u t i o n s s e g m e n t .

F o l l o w i n g t h e a c q u i s i t i o n s o f B e n f i e l d G r o u p i n 2 0 0 8 a n d H e w i t t A s s o c i a t e s i n 2 0 1 0 , t h e C o m p a n yh a s s u c c e s s f u l l y t r a n s f o r m e d t h e p o r t f o l i o t o w a r d s h i g h e r - m a r g i n , c a p i t a l l i g h t p r o f e s s i o n a l s e r v i c e s

P A R T I

2

PART

Item Business

OVERVIEW

Aon Corporations strategy is to be the preeminent professional service firm in the world focused

on the topics of ianr1people Aori Corporation which may be referre d to as Aon theCompany we us or our is the leading global provider of risk management services insuranceand reinsuranc brokerage and human resource consulting and outsourcing delivering distinctive client

value via innovative and effective risk management and workiorce productivity solutions Aon was

incorporated in 1979 under the laws of Delaware and is the parent corporation of both

long-established and acquired companies We have approximately 62000 employees and conduct our

operations through various subsidiaries in more than 120 countries and sovereignties

We serve clients through the following operating segments

Risk Solutions acts as an advisor and insurance and reinsurance broker helping clients manage

their risks via consultation as well as negotiation and placement of insurance risk with insurance

carriers through our global distribution network

HR Solutions partners with organizations to solve their most complex benefits talent and related

financial challenges and improve business performance by designing implementing

communicating and administering wide range of human capital retirement investment

management health care compensation and talent management strategies

Our clients are globally diversified and include all segments o f the economy individuals through

personal lines mid-market companies and large globally companies and every industry in the economy

in over 120 countries globally This diversification of customer base provides stability in different

economic scenarios that may affect specific industries customer segments or geographies

Over the last five years we have focused our portfolio on higher margin capital light professional

services businesses that have high recurring revenue streams and strong free cash flow generation Aon

drives its capital decision making process around return on invested capital ROIC firmly believingthis methodology has higher correlation than any

other metric with shareholder value creation This

focus on return on invested capital ROTC measured on cash on cash basis l ed to number of

significant portfolio changes exiting the lower-margin capital intensive insurance underwriting

businesses and investing in Benfield and Hewitt substantial franchises to grow free cash flow over time

In April 2008 we completed the sal e of our Combined Insurance Company of America

CICA and Sterling Insurance Company Sterling subsidiaries which represented themajority o f the operations of our former Insurance Underwriting segment

In August 2009 we completed the sal e o f our remaining property and casualty insurance

underwriting operations that were in run-off The results of all of these operations are reported

in discontinued operations for all periods presented

In November 2008 we expanded our Risk Solutions product offerings through the merger with

Benfield Group Limited Benfield leading independent reinsurance intermediary Benfield

products have been integrated with our existing reinsurance products

In October 2010 we completed the acquisition of Hewitt Associates Inc Hewitt one of the

worlds leading human resource consulting and outsourcing companies Hewitt operates globally

together with Aons existing consulting and outsourcing operations under the newly created Aon

Hewitt brand in our HR Solutions segment

Following the acquisitions of Benfield Group in 2008 and Hewitt Associates in 2010 the Company

has successfully transformed the portfolio towards higher-margin capital light professional services

8/13/2019 Aon PLC 2011

8/166

b u s i n e s s e s w i t h 6 0 % o f r e v e n u e s i n R i s k S o l u t i o n s a n d 4 0 % o f t o t a l r e v e n n e s i n H R S o l u t i o n s ,r e s u l t i n g i n h i g h r e c u r r i n g r e v e n u e s t r e a m s a n d s t r o n g f r e e c a s h f l o w g e n e r a t i o n c h a r a c t e r i s t i c s .O n J a n u a r y 1 3 , 2 0 1 2 , w e a n n o u n c e d a s a n i m p o r t a n t p a r t o f o u r g l o b a l g r o w t h s t r a t e g y , o u ri n t e n t i o n t o c h a n g e o u r j u r i s d i c t i o n o f i n c o r p o r a t i o n f r o m D e l a w a r e t o t h e U . K . a n d m o v e o u rc o r p o r a t e h e a d q u a r t e r s t o L o n d o n . T h e t r a n s a c t i o n r e q u i r e s a s h a r e h o l d e r v o t e a n d u p o n a p p r o v a l i se x p e c t e d t o c l o s e i n t h e s e c o n d q u a r t e r o f 2 0 1 2 . M o v i n g o u r g l o b a l h e a d q u a r t e r s t o t h e U . K . i se x p e c t e d t o e n h a n c e o u r f o c u s o n g r o w t h , p r o d u c t a n d b r o k i n g i n n o v a t i o n s a t A o n B r o k i n g , t a l e n td e v e l o p m e n t a n d f i n a n c i a l f l e x i b i l i t y . T h e t r a n s a c t i o n i s e x p e c t e d t o s u p p o r t o u r s t r a t e g y a n d i se x p e c t e d t o d e l i v e r s i g n i f i c a n t v a l u e t o o u r s h a r e h o l d e r s .

B U S I N E S S S E G M E N T SR i s k S o l u t i o n s

T h e R i s k S o l u t i o n s s e g m e n t g e n e r a t e d a p p r o x i m a t e l y 6 0 % o f o u r c o n s o l i d a t e d t o t a l r e v e n u e s i n2 0 1 1 , a n d h a s a p p r o x i m a t e l y 3 2 , 0 0 0 e m p l o y e e s w o r l d w i d e . W e p r o v i d e r i s k a n d i n s u r a n c e b r o k e r a g ea n d r e l a t e d s e r v i c e s i n t h i s s e g m e n t .P r i n c i p a l P r o d u c t s a n d S e r v i c e s

W e o p e r a t e i n t h i s s e g m e n t t h r o u g h t w o s i m i l a r t r a n s a c t i o n a l p r o d u c t l i n e s : r e t a i l b r o k e r a g e a n dr e i n s u r a n c e b r o k e r a g e . I n a d d i t i o n , a k e y c o m p o n e n t o f t h i s b u s i n e s s i s o u r r i s k c o n s u l t i n g s e r v i c e s .R e t a i l b r o k e r a g e e n c o m p a s s e s o u r r e t a i l b r o k e r a g e s e r v i c e s , a f f i n i t y p r o d u c t s , m a n a g i n g g e n e r a lu n d e r w r i t i n g , p l a c e m e n t , a n d c a p t i v e m a n a g e m e n t s e r v i c e s . T h e A m e r i c a s ' o p e r a t i o n s p r o v i d e p r o d u c t sa n d s e r v i c e s t o c l i e n t s i n N o r t h , C e n t r a l a n d S o u t h A m e r i c a , t h e C a r i b b e a n , a n d B e r m u d a . O u rI n t e r n a t i o n a l o p e r a t i o n s i n t h e U n i t e d K i n g d o m ; E u r o p e , M i d d l e E a s t a n d A f r i c a ; a n d A s i a P a c i f i co f f e r s i m i l a r p r o d u c t s a n d s e r v i c e s t o c l i e n t s t h r o u g h o u t t h e r e s t o f t h e w o r l d .

O u r e m p l o y e e s d r a w u p o n o u r g l o b a l n e t w o r k o f r e s o u r c e s , i n d u s t r y - l e a d i n g d a t a a n d a n a l y t i c s ,a n d s p e c i a l i z e d e x p e r t i s e t o d e l i v e r v a l u e t o c l i e n t s r a n g i n g f r o m s m a l l a n d m i d - s i z e d b u s i n e s s e s t om u l t i - n a t i o n a l c o r p o r a t i o n s a s w e l l a s i n d i v i d u a l s i n n e e d o f p e r s o n a l c o v e r a g e . W e w o r k w i t h c l i e n t s t oi d e n t i f y t h e i r b u s i n e s s n e e d s a n d h e l p t h e m a s s e s s a n d u n d e r s t a n d t h e i r t o t a l c o s t o f r i s k . O n c e w e h a v eg a i n e d a n u n d e r s t a n d i n g o f o u r c l i e n t s ' r i s k m a n a g e m e n t n e e d s , w e a r e a b l e t o l e v e r a g e o u r g l o b a ln e t w o r k a n d i m p l e m e n t a c u s t o m i z e d r i s k a p p r o a c h w i t h l o c a l A o n r e s o u r c e s . T h e o u t c o m e i s ac o m p r e h e n s i v e r i s k s o l u t i o n p r o v i d e d l o c a l l y a n d p e r s o n a l l y . T h e A o n C l i e n t P r o m i s e e n a b l e s o u rc o l l e a g u e s a r o u n d t h e g l o b e t o d e s c r i b e , b e n c h m a r k a n d p r i c e t h e v a l u e w e d e l i v e r t o c l i e n t s i n au n i f i e d a p p r o a c h , b a s e d o n t h e t e n m o s t i m p o r t a n t c r i t e r i a t h a t o u r c l i e n t s b e l i e v e a r e c r i t i c a l t om a n a g i n g t h e i r t o t a l c o s t o f r i s k .

K n o w l e d g e a n d f o r e s i g h t , u n p a r a l l e l e d b e n c h m a r k i n g a n d c a r r i e r k n o w l e d g e a r e t h e q u a l i t i e s a tt h e h e a r t o f o u r p r o f e s s i o n a l s e r v i c e s e x c e l l e n c e . D e l i v e r i n g s u p e r i o r v a l u e t o c l i e n t s a n d d i f f e r e n t i a t i o nf r o m c o m p e t i t o r s w i l l b e d r i v e n t h r o u g h k e y A o n B r o k i n g i n i t i a t i v e s , s u c h a s t h e d e v e l o p m e n t o f t h eG l o b a l R i s k I n s i g h t P l a t f o r m ( G R I P ) i n 2 0 1 0 , w h i c h u n i q u e l y p o s i t i o n s u s t o p r o v i d e o u r c l i e n t sa n d i n s u r e r s w i t h a d d i t i o n a l m a r k e t i n s i g h t a s w e l l a s n e w p r o d u c t o f f e r i n g s a n d f a c i l i t i e s . G R I P h e l p si n s u r e r s s t r e n g t h e n t h e i r v a l u e p r o p o s i t i o n t o A o n c l i e n t s b y p r o v i d i n g t h e m w i t h c u t t i n g - e d g e a n a l y t i c si n p r e p a r a t i o n f o r r e n e w a l s e a s o n a n d b u s i n e s s p l a n n i n g c o n s u l t a t i o n r e g a r d i n g s t r a t e g y , d e f i n i t i o n o fr i s k a p p e t i t e , a n d a r e a s o f f o c u s . G R I P p r o v i d e s o u r c l i e n t s w i t h i n s i g h t s i n t o m a r k e t c o n d i t i o n s ,p r e m i u m r a t e s a n d b e s t p r a c t i c e s i n p r o g r a m d e s i g n , a c r o s s a l l i n d u s t r i e s a n d e c o n o m i c c e n t e r s .A s a r e t a i l b r o k e r , w e s e r v e a s a n a d v i s o r t o c l i e n t s a n d f a c i l i t a t e a w i d e s p e c t r u m o f r i s km a n a g e m e n t s o l u t i o n s f o r p r o p e r t y l i a b i l i t y , g e n e r a l l i a b i l i t y , p r o f e s s i o n a l a n d d i r e c t o r s ' a n d o f f i c e r s 'l i a b i l i t y , w o r k e r s ' c o m p e n s a t i o n , v a r i o u s h e a l t h c a r e p r o d u c t s , a s w e l l a s o t h e r e x p o s u r e s . O u r b u s i n e s s i sc o m p r i s e d o f s e v e r a l s p e c i a l t y a r e a s s t r u c t u r e d a r o u n d s p e c i f i c p r o d u c t a n d i n d u s t r y n e e d s .

3

businesses with 60% of revenues in Risk Solutions and 40% of total revenies in HR Solutions

resulting in high recurring revenue streams and strong free cash flow generation characteristics

On January 13 2012 we announced as an important part of our global growth strategy our

intention to change our jurisdiction of incorporation from Delaware t o th e U.K and move our

corporate headquarters to London The transaction requires shareholder vote and upon approval is

expected to close in the second quarter of 2012 Moving our global headquarters t o t he U.K is

expected to enhance our focus on growth product and broking i nn ov at io ns a t Aon Broking talent

development and financial flexibility The transaction is expected to support our strategy and is

expected to deliver significant value to our shareholders

BUSINESS SEGMENTS

Risk Solutions

The Risk Solutions segment generated approximately 60% of our consolidated total revenues in

2011 and has approximately 32000 employees worldwide We provide risk and insurance brokerageand related services in this segment

Principal Products and Services

We operate in this segment through two similar transactional product lines retail brokerage and

reinsurance brokerage

In

addition key component of this

business is our risk consulting services

Retail brokerage encompasses our retail brokerage services affinity products managing general

underwriting placement and captive management services The Americas operations provide productsand services to clients in North Central and South America the Caribbean and Bermuda Our

International operations in the United Kingdom Europe Middle East and Africa and Asia Pacific

offer similar products and services to clients throughout the rest of th e world

Ouremployees draw upon our global network of resources industry-leading data and analytics

and specialized expertise to deliver value to clients ranging from small and mid-sized businesses to

multi-national corporations as well as individuals in need of personal coverage We work with clients to

identify their business needs and help them assess and understand their total cost of risk Once we have

gained an understanding of our clients risk management needs we are a bl e t o leverage our global

network and implement customized risk approach with local Aon resources The outcome is

comprehensive risk solution provided locally and personally The Aon Client Promise enables ourcolleagues around the globe to describe benchmark and price the value we deliver to clients in

unified approach based on the ten most important criteria that our clients believe are critical to

managing their total cost of risk

Knowledge and foresight unparalleled benchmarking and carrier knowledge are the qualities at

t he h ea rt o f our professional services excellence Delivering superior value to clients and differentiation

from competitors will be driven through key Aon Broking initiatives such as the development o f t he

Global Risk Insight Platform GRIP in 2010 which uniquely positions us to provide our clientsand insurers with additional market insight as well as new product offerings and facilities GRIP helpsinsurers strengthen their value proposition to Aon clients by providing them with cutting-edge analyticsin preparation for renewal season and business planning consultation regarding strategy definition of

risk appetite and areas of focus GRIP provides our clients with insights into market conditions

premium rates and best practices inprogram

design across all industries and economic centers

As retail broker we serve as an advisor to clients and facilitate wide spectrum of risk

management solutions for property liability general liability professional and directors and officers

liability workers compensation various healthcare products as well as other exposures Our business is

comprised of several specialty areas structured around specific product and industry needs

8/13/2019 Aon PLC 2011

9/166

W e d e l i v e r s p e c i a l i z e d a d v i c e a n d s e r v i c e s i n s u c h i n d u s t r i e s a s t e c h n o l o g y , f i n a n c i a l s e r v i c e s ,a g r i b u s i n e s s , a v i a t i o n , c o n s t r u c t i o n , h e a l t h c a r e a n d e n e r g y , a m o n g o t h e r s . T h r o u g h o u r g l o b a l a f f i n i t yb u s i n e s s , w e p r o v i d e p r o d u c t s f o r p r o f e s s i o n a l l i a b i l i t y , l i f e , d i s a b i l i t y i n c o m e a n d p e r s o n a l l i n e s f o ri n d i v i d u a l s , a s s o c i a t i o n s a n d b u s i n e s s e s a r o u n d t h e w o r l d .I n a d d i t i o n , w e a r e a m a j o r p r o v i d e r o f r i s k c o n s u l t i n g s e r v i c e s , i n c l u d i n g c a p t i v e m a n a g e m e n t , t h a tp r o v i d e o u r c l i e n t s w i t h a l t e r n a t i v e v e h i c l e s f o r m a n a g i n g r i s k s t h a t w o u l d b e c o s t - p r o h i b i t i v e o ru n a v a i l a b l e i n t r a d i t i o n a l i n s u r a n c e m a r k e t s .F i n a l l y , o u r e S o l u t i o n s p r o d u c t s e n a b l e c l i e n t s t o m a n a g e r i s k s , p o l i c i e s , c l a i m s a n d s a f e t y c o n c e r n se f f i c i e n t l y t h r o u g h a n i n t e g r a t e d t e c h n o l o g y p l a t f o r m .

R e i n s u r a n c e b r o k e r a g e o f f e r s s o p h i s t i c a t e d a d v i s o r y s e r v i c e s i n p r o g r a m d e s i g n a n d c l a i m r e c o v e r i e st h a t e n h a n c e t h e r i s k / r e t u r n c h a r a c t e r i s t i c s o f i n s u r a n c e p o l i c y p o r t f o l i o s , i m p r o v e c a p i t a l u t i l i z a t i o n ,a n d e v a l u a t e a n d m i t i g a t e c a t a s t r o p h i c l o s s e x p o s u r e s w o r l d w i d e . A n i n s u r a n c e o r r e i n s u r a n c e c o m p a n ym a y s e e k r e i n s u r a n c e o r o t h e r r i s k - t r a n s f e r s o l u t i o n s o n a l l o r a p o r t i o n o f t h e r i s k s i t i n s u r e s . T oa c c o m p l i s h t h i s , o u r r e i n s u r a n c e b r o k e r a g e s e r v i c e s u s e d y n a m i c f i n a n c i a l a n a l y s i s a n d c a p i t a l m a r k e ta l t e r n a t i v e s , s u c h a s t r a n s f e r r i n g c a t a s t r o p h e r i s k t h r o u g h s e c u r i t i z a t i o n . R e i n s u r a n c e b r o k e r a g e a l s oo f f e r s c a p i t a l m a n a g e m e n t t r a n s a c t i o n a n d a d v i s o r y s e r v i c e s .W e a c t a s a b r o k e r o r i n t e r m e d i a r y f o r a l l c l a s s e s o f r e i n s u r a n c e . W e p l a c e t w o m a i n t y p e s o fp r o p e r t y a n d c a s u a l t y r e i n s u r a n c e : t r e a t y r e i n s u r a n c e , w h i c h i n v o l v e s t h e t r a n s f e r o f a p o r t f o l i o o f r i s k s ,

a n d f a c u l t a t i v e r e i n s u r a n c e , w h i c h e n t a i l s t h e t r a n s f e r o f p a r t o r a l l o f t h e c o v e r a g e p r o v i d e d b y a s i n g l ei n s u r a n c e p o l i c y . W e a l s o p l a c e s p e c i a l t y l i n e s s u c h a s p r o f e s s i o n a l l i a b i l i t y , w o r k e r s ' c o m p e n s a t i o n ,a c c i d e n t , l i f e a n d h e a l t h .W e a l s o p r o v i d e a c t u a r i a l , e n t e r p r i s e r i s k m a n a g e m e n t , c a t a s t r o p h e m a n a g e m e n t a n d r a t i n g a g e n c ya d v i s o r y s e r v i c e s . W e h a v e d e v e l o p e d t o o l s a n d m o d e l s t h a t h e l p o u r c l i e n t s u n d e r s t a n d t h e f i n a n c i a li m p l i c a t i o n s o f n a t u r a l a n d m a n - m a d e c a t a s t r o p h e s a r o u n d t h e w o r l d . A o n B e n f i e l d S e c u r i t i e s p r o v i d e sg l o b a l c a p i t a l m a n a g e m e n t t r a n s a c t i o n a n d a d v i s o r y s e r v i c e s f o r i n s u r a n c e a n d r e i n s u r a n c e c l i e n t s . I nt h i s c a p a c i t y , A o n B e n f i e l d S e c u r i t i e s i s r e c o g n i z e d a s a l e a d e r i n : ( i ) t h e s t r u c t u r i n g , u n d e r w r i t i n g a n dt r a d i n g o f i n s u r a n c e - l i n k e d s e c u r i t i e s ; ( i i ) t h e a r r a n g e m e n t o f f i n a n c i n g f o r i n s u r a n c e a n d r e i n s u r a n c ec o m p a n i e s , i n c l u d i n g L l o y d ' s s y n d i c a t e s ; a n d ( i i i ) p r o v i d i n g a d v i c e o n s t r a t e g i c a n d c a p i t a l a l t e r n a t i v e s ,i n c l u d i n g m e r g e r s a n d a c q u i s i t i o n s . I n p o i n t i s a l e a d i n g p r o v i d e r o f c o n s u l t i n g s e r v i c e s t o t h e i n s u r a n c ea n d r e i n s u r a n c e i n d u s t r y , h e l p i n g c a r r i e r s i m p r o v e t h e i r p e r f o r m a n c e t o a c h i e v e g r o w t h a n d

p r o f i t a b i l i t y .C o m p e n s a t i o n

W e g e n e r a t e r e v e n u e s t h r o u g h c o m m i s s i o n s , f e e s f r o m c l i e n t s , a n d c o m p e n s a t i o n f r o m i n s u r a n c ea n d r e i n s u r a n c e c o m p a n i e s f o r s e r v i c e s w e p r o v i d e t o t h e m . C o m m i s s i o n r a t e s a n d f e e s v a r y d e p e n d i n gu p o n s e v e r a l f a c t o r s , w h i c h m a y i n c l u d e t h e a m o u n t o f p r e m i u m , t h e t y p e o f i n s u r a n c e o r r e i n s u r a n c ec o v e r a g e p r o v i d e d , t h e p a r t i c u l a r s e r v i c e s p r o v i d e d t o a c l i e n t , i n s u r e r o r r e i n s u r e r , a n d t h e c a p a c i t y i nw h i c h w e a c t . P a y m e n t t e r m s a r e c o n s i s t e n t w i t h c u r r e n t i n d u s t r y p r a c t i c e .W e t y p i c a l l y h o l d f u n d s o n b e h a l f o f c l i e n t s a s a r e s u l t o f p r e m i u m s r e c e i v e d f r o m c l i e n t s a n dc l a i m s d u e t o c l i e n t s t h a t a r e i n t r a n s i t f r o m i n s u r e r s . T h e s e f u n d s h e l d o n b e h a l f o f c l i e n t s a r eg e n e r a l l y i n v e s t e d i n i n t e r e s t - b e a r i n g p r e m i u m t r u s t a c c o u n t s a n d c a n f l u c t u a t e s i g n i f i c a n t l y d e p e n d i n go n w h e n w e c o l l e c t c a s h f r o m o u r c l i e n t s a n d w h e n p r e m i u m s a r e r e m i t t e d t o t h e i n s u r a n c e c a r r i e r s .

W e e a r n i n t e r e s t o n t h e s e a c c o u n t s ; h o w e v e r , t h e p r i n c i p a l i s s e g r e g a t e d a n d n o t a v a i l a b l e f o r g e n e r a lo p e r a t i n g p u r p o s e s .C o m p e t i t i o n

T h e R i s k S o l u t i o n s b u s i n e s s i s h i g h l y c o m p e t i t i v e , a n d w e c o m p e t e p r i m a r i l y w i t h t w o o t h e r g l o b a li n s u r a n c e b r o k e r s , M a r s h & M c L e n n a n C o m p a n i e s , I n c . a n d W i l l i s G r o u p H o l d i n g s L t d . , i n a d d i t i o n t o

4

We deliver specialized advice and services in such industries as technology financial services

agribusiness aviation construction health care and energy among others Through our global affinity

business we provide products for professional liability life disability income and personal lines for

individuals associations and businesses around the world

In addition we are major provider of risk consulting services including captive management that

provide our clients with alternative vehicles for managing risks that would be cost-prohibitive or

unavailable in traditional insurance markets

Finally our eSolutions products enable clients to manage risks policies claims and safety concerns

efficiently through an integrated technology platform

Reinsurance brokerage offers sophisticated advisory services in program design and claim recoveries

that enhance the risk/return characteristics of insurance policy portfolios improve capital utilization

and evaluate and mitigate catastrophic loss exposures worldwide An insurance or reinsurance company

may seek reinsurance or other risk-transfer solutions on all or portion o f t he risks it insures To

accomplish this our reinsurance brokerage services use dynamic financial analysis and capital market

alternatives such as transferring catastrophe risk through securitization Reinsurance brokerage also

offers capital management transaction and advisory services

We act as broker or intermediary for all classes of reinsurance We place two main types of

property and casualty reinsurance treaty reinsurance which involves the transfer of portfolio of risks

and facultative reinsurance which entails the transfer of part or all o f t he coverage provided by single

insurance policy We also place specialty lines such as professional liability workers compensation

accident life and health

We also provide actuarial enterprise risk management catastrophe management and rating agency

advisory services We have developed tools and models that help our clients understand the financial

implications of natural and man-made catastrophes around the world Aon Benfield Securities provides

global capital management transaction and advisory services for insurance and reinsurance clients In

this capacity Aon Benfield Securities is recognized as leader in the structuring underwriting and

trading of insurance-linked securities ii the arrangement of financing for insurance and reinsurance

companies including Lloyds syndicates and iii providing advice on strategic and capital alternatives

including mergers and acquisitions Inpoint is leading provider of consulting services to the insurance

and reinsurance industry helping carriers improve their performance to achieve growth and

profitability

Compensation

We generate revenues through commissions fees from clients and compensation from insurance

and reinsurance companies for services we provide to them Commission rates and fees vary depending

upon several factors which may include the amount of premium the type of insurance or reinsurance

coverage provided the particular services provided to client insurer or reinsurer and the capacity in

which we act Payment terms are consistent with current industry practice

We typically hold funds on be ha lf o f clients as result of premiums received from clients and

claims due to clients that are in transit from insurers These funds held on behalf of clients are

generally invested in interest-bearing premium trust accounts a nd can fluctuate significantly depending

on when we collect cash from our clients and when premiums are r em it te d t o th e insurance carriers

We earn interest on these accounts however

theprincipal

is

segregated and not available for

general

operating purposes

Competition

The Risk Solutions business is highly competitive and we compete primarily with two other global

insurance brokers Marsh McLennan Companies Inc and Willis Group Holdings Ltd in a dd it io n t o

8/13/2019 Aon PLC 2011

10/166

n u m e r o u s s p e c i a l i s t s , r e g i o n a l a n d l o c a l f i r m s i n a l m o s t e v e r y a r e a o f o u r b u s i n e s s . W e a l s o c o m p e t ew i t h i n s u r a n c e a n d r e i n s u r a n c e c o m p a n i e s t h a t m a r k e t a n d s e r v i c e t h e i r i n s u r a n c e p r o d u c t s w i t h o u t t h ea s s i s t a n c e o f b r o k e r s o r a g e n t s ; a n d w i t h o t h e r b u s i n e s s e s t h a t d o n o t f a l l i n t o t h e c a t e g o r i e s a b o v e ,i n c l u d i n g c o m m e r c i a l a n d i n v e s t m e n t b a n k s , a c c o u n t i n g f i r m s , a n d c o n s u l t a n t s t h a t p r o v i d e r i s k - r e l a t e ds e r v i c e s a n d p r o d u c t s .S e a s o n a l i t y

T h e R i s k S o l u t i o n s s e g m e n t t y p i c a l l y e x p e r i e n c e s h i g h e r r e v e n u e s i n t h e f i r s t a n d f o u r t h c a l e n d a rq u a r t e r s o f e a c h y e a r , p r i m a r i l y d u e t o t h e t i m i n g o f p o l i c y r e n e w a l s .H R S o l u t i o n s

T h e H R S o l u t i o n s s e g m e n t g e n e r a t e d a p p r o x i m a t e l y 4 0 % o f o u r c o n s o l i d a t e d t o t a l r e v e n u e s i n2 0 1 1 . W i t h t h e a c q u i s i t i o n o f H e w i t t i n O c t o b e r 2 0 1 0 , t h i s s e g m e n t n o w h a s a p p r o x i m a t e l y 3 0 , 0 0 0e m p l o y e e s w o r l d w i d e w i t h o p e r a t i o n s i n t h e U . S . , C a n a d a , t h e U . K . , E u r o p e , S o u t h A f r i c a , L a t i nA m e r i c a , a n d t h e A s i a P a c i f i c r e g i o n .P r i n c i p a l P r o d u c t s a n d S e r v i c e s

W e p r o v i d e p r o d u c t s a n d s e r v i c e s i n t h i s s e g m e n t p r i m a r i l y u n d e r t h e A o n H e w i t t b r a n d , w h i c hw a s f o r m e d f o l l o w i n g t h e a c q u i s i t i o n o f H e w i t t .A o n H e w i t t w o r k s t o m a x i m i z e t h e v a l u e o f c l i e n t s ' h u m a n r e s o u r c e s s p e n d i n g , i n c r e a s e e m p l o y e ep r o d u c t i v i t y , a n d i m p r o v e e m p l o y e e p e r f o r m a n c e . O u r a p p r o a c h a d d r e s s e s a t r e n d t o w a r d s m o r ed i v e r s e w o r k f o r c e s ( d e m o g r a p h i c s , n a t i o n a l i t i e s , c u l t u r e s a n d w o r k / l i f e s t y l e p r e f e r e n c e s ) t h a t r e q u i r em o r e c h o i c e s a n d f l e x i b i l i t y a m o n g e m p l o y e r s s o t h a t t h e y c a n p r o v i d e b e n e f i t o p t i o n s s u i t e d t oi n d i v i d u a l n e e d s .

W e w o r k w i t h o u r c l i e n t s t o i d e n t i f y o p t i o n s i n h u m a n r e s o u r c e o u t s o u r c i n g a n d p r o c e s si m p r o v e m e n t s . T h e p r i m a r y a r e a s w h e r e c o m p a n i e s c h o o s e t o u s e o u t s o u r c i n g s e r v i c e s i n c l u d e b e n e f i t sa d m i n i s t r a t i o n , c o r e h u m a n r e s o u r c e p r o c e s s e s , w o r k f o r c e a n d t a l e n t m a n a g e m e n t .A o n H e w i t t o f f e r s a b r o a d r a n g e o f h u m a n c a p i t a l s e r v i c e s i n t h e f o l l o w i n g p r a c t i c e a r e a s :H e a l t h a n d B e n e f i t s a d v i s e s c l i e n t s a b o u t s t r u c t u r i n g , f u n d i n g , a n d a d m i n i s t e r i n g e m p l o y e e b e n e f i tp r o g r a m s , w h i c h a t t r a c t , r e t a i n , a n d m o t i v a t e e m p l o y e e s . B e n e f i t s c o n s u l t i n g a n d b r o k e r a g e i n c l u d e s

h e a l t h a n d w e l f a r e , e x e c u t i v e b e n e f i t s , w o r k f o r c e s t r a t e g i e s a n d p r o d u c t i v i t y , a b s e n c e m a n a g e m e n t ,d a t a - d r i v e n h e a l t h , c o m p l i a n c e , e m p l o y e e c o m m i t m e n t , a n d e l e c t i v e b e n e f i t s s e r v i c e s . E f f e c t i v eJ a n u a r y 1 , 2 0 1 2 , t h e H e a l t h a n d B e n e f i t s c o n s u l t i n g b u s i n e s s w i l l m o v e f r o m t h e H R S o l u t i o n s s e g m e n tt o t h e R i s k S o l u t i o n s s e g m e n t . T h e m o v e w i l l a l l o w t h e b u s i n e s s t o b e n e f i t f r o m a b r o a d e r g l o b a ld i s t r i b u t i o n c h a n n e l a n d t o p r o m o t e o u r d e e p h e a l t h a n d b e n e f i t s c a p a b i l i t i e s i n d a t a a n d a n a l y t i c s w i t hc l i e n t s a n d i n s u r a n c e c a r r i e r s .R e t i r e m e n t s p e c i a l i z e s i n p r o v i d i n g g l o b a l a c t u a r i a l s e r v i c e s , d e f i n e d c o n t r i b u t i o n c o n s u l t i n g ,i n v e s t m e n t c o n s u l t i n g , t a x a n d E R I S A c o n s u l t i n g , a n d p e n s i o n a d m i n i s t r a t i o n .

C o m p e n s a t i o n f o c u s e s o n c o m p e n s a t i o n a d v i s o r y / c o u n s e l i n c l u d i n g : c o m p e n s a t i o n p l a n n i n g d e s i g n ,e x e c u t i v e r e w a r d s t r a t e g i e s , s a l a r y s u r v e y a n d b e n c h m a r k i n g , m a r k e t s h a r e s t u d i e s a n d s a l e s f o r c ee f f e c t i v e n e s s a s s e s s m e n t s , w i t h s p e c i a l e x p e r t i s e i n t h e f i n a n c i a l s e r v i c e s a n d t e c h n o l o g y i n d u s t r i e s .S t r a t e g i c H u m a n C a p i t a l d e l i v e r s a d v i c e t o c o m p l e x g l o b a l o r g a n i z a t i o n s o n t a l e n t , c h a n g e a n d

o r g a n i z a t i o n a l e f f e c t i v e n e s s i s s u e s , i n c l u d i n g t a l e n t s t r a t e g y a n d a c q u i s i t i o n , e x e c u t i v e o n - b o a r d i n g ,p e r f o r m a n c e m a n a g e m e n t , l e a d e r s h i p a s s e s s m e n t a n d d e v e l o p m e n t , c o m m u n i c a t i o n s t r a t e g y , w o r k f o r c et r a i n i n g a n d c h a n g e m a n a g e m e n t .B e n e f i t s A d m i n i s t r a t i o n a p p l i e s o u r H R e x p e r t i s e p r i m a r i l y t h r o u g h d e f i n e d b e n e f i t ( p e n s i o n ) ,d e f i n e d c o n t r i b u t i o n ( 4 0 1 ( k ) ) , a n d h e a l t h a n d w e l f a r e a d m i n i s t r a t i v e s e r v i c e s . O u r m o d e l r e p l a c e s t h e

numerous specialists regional and local firms in almost every area of our business We also compete

with insurance and reinsurance companies that market and service their insurance products without the

assistance of brokers or agents and with other businesses that do not fall into the categories above

including commercial and investment banks accounting firms and consultants that provide risk-related

services and products

Seasonality

The Risk Solutions segment typically experiences higher revenues in the first and fourth calendar

quarters of each year primarily due to the timing of policy renewals

HR Solutions

The HR Solutions segment generated approximately 40% of our consolidated total revenues in

2011 With the acquisition of Hewitt in October 2010 this segment now has approximately 30000

employees worldwide with operations in the U.S Canada the U.K Europe South Africa Latin

America and the Asia Pacific region

Principal Products and Services

We provide products and services i n t hi s segment primarily under the Aon Hewitt brand which

was formed following the acquisition of Hewitt

Aon Hewitt works to maximize the value of clients human resources spending increase employee

productivity and improve employee performance Our approach addresses trend towards more

diverse workforces demographics nationalities cultures and work/lifestyle preferences that require

more choices and flexibility among employers so that they can provide benefit options suited to

individual needs

We work with our clients to identify options in human resource outsourcing and process

improvements The primary areas where companies choose to use outsourcing services include benefits

administration core human resource processes workforce and talent management

Aon Hewitt offers broad range of human capital services in the following practice areas

Health and Benefits advises clients about structuring funding and administering employee benefit

programs which attract retain and motivate employees Benefits consulting and brokerage includes

health and welfare

executive benefits

workforcestrategies

andproductivity

absence

managementdata-driven health compliance employee commitment and elective benefits services Effective

January 2012 the Health and Benefits consulting business will move from the HR Solutions segment

to the Risk Solutions segment The move will allow the business to benefit fro m broa de r global

distribution channel and to promote our deep health and benefits capabilities in data and analytics with

clients and insurance carriers

Retirement specializes in providing global actuarial services defined contribution consulting

investment consulting tax and ERISA consulting and pension administration

Compensation focuses on compensation advisory/counsel including compensation planning design

executive reward strategies salary survey and benchmarking market share studies and sales force

effectiveness assessments with special expertise in the financial services and technology industries

Strategic Human Capital delivers advice to complex global organizations on talent change and

organizational effectiveness issues including talent strategy and acquisition executive

on-boarding

performance management leadership assessment and development communication strategy workforce

training and change management

Benefits Administration applies our HR expertise primarily through defined benefit pension

defined contribution 401k and health and welfare administrative services Our model replaces the

8/13/2019 Aon PLC 2011

11/166

r e s o u r c e - i n t e n s i v e p r o c e s s e s o n c e r e q u i r e d t o a d m i n i s t e r b e n e f i t p l a n s w i t h m o r e e f f i c i e n t , e f f e c t i v e ,a n d l e s s c o s t l y s o l u t i o n s . I n a d d i t i o n , w e a r e b u i l d i n g a n d o p e r a t i n g h e a l t h c a r e e x c h a n g e s t h a t p r o v i d ee m p l o y e r s w i t h a c o s t e f f e c t i v e a l t e r n a t i v e t o t r a d i t i o n a l e m p l o y e e a n d r e t i r e e h e a l t h c a r e , w h i l e h e l p i n gi n d i v i d u a l s s e l e c t t h e i n s u r a n c e t h a t b e s t m e e t s t h e i r n e e d s .H u m a n R e s o u r c e B u s i n e s s P r o c e s s O u t s o u r c i n g ( H R B P O ) p r o v i d e s m a r k e t - l e a d i n g s o l u t i o n s t om a n a g e e m p l o y e e d a t a ; a d m i n i s t e r b e n e f i t s , p a y r o l l a n d o t h e r h u m a n r e s o u r c e s p r o c e s s e s ; a n d r e c o r d

a n d m a n a g e t a l e n t , w o r k f o r c e a n d o t h e r c o r e H R p r o c e s s t r a n s a c t i o n s a s w e l l a s o t h e r c o m p l e m e n t a r ys e r v i c e s s u c h a s a b s e n c e m a n a g e m e n t , f l e x i b l e s p e n d i n g , d e p e n d e n t a u d i t a n d p a r t i c i p a n t a d v o c a c y .C o m p e n s a t i o n

R e v e n u e s a r e p r i n c i p a l l y d e r i v e d f r o m f e e s p a i d b y c l i e n t s f o r a d v i c e a n d s e r v i c e s . I n a d d i t i o n ,i n s u r a n c e c o m p a n i e s p a y u s c o m m i s s i o n s f o r p l a c i n g i n d i v i d u a l a n d g r o u p i n s u r a n c e c o n t r a c t s , p r i m a r i l yl i f e , h e a l t h a n d a c c i d e n t c o v e r a g e s , a n d p a y u s f e e s f o r c o n s u l t i n g a n d o t h e r s e r v i c e s t h a t w e p r o v i d e t ot h e m . P a y m e n t t e r m s a r e c o n s i s t e n t w i t h c u r r e n t i n d u s t r y p r a c t i c e .C o m p e t i t i o n

O u r H R S o l u t i o n s b u s i n e s s f a c e s s t r o n g c o m p e t i t i o n f r o m o t h e r w o r l d w i d e a n d n a t i o n a l c o n s u l t i n gc o m p a n i e s , a s w e l l a s r e g i o n a l a n d l o c a l f i r m s . C o m p e t i t o r s i n c l u d e i n d e p e n d e n t c o n s u l t i n g f i r m s a n dc o n s u l t i n g o r g a n i z a t i o n s a f f i l i a t e d w i t h a c c o u n t i n g , i n f o r m a t i o n s y s t e m s , t e c h n o l o g y , a n d f i n a n c i a ls e r v i c e s f i r m s , l a r g e f i n a n c i a l i n s t i t u t i o n s , a n d p u r e p l a y o u t s o u r c e r s . S o m e o f o u r c o m p e t i t o r s p r o v i d ea d m i n i s t r a t i v e o r c o n s u l t i n g s e r v i c e s a s a n a d j u n c t t o o t h e r p r i m a r y s e r v i c e s . W e b e l i e v e t h a t w e a r eo n e o f t h e l e a d i n g p r o v i d e r s o f h u m a n c a p i t a l s e r v i c e s i n t h e w o r l d .S e a s o n a l i t y

D u e t o b u y i n g p a t t e r n s i n t h e m a r k e t s w e s e r v e , r e v e n u e s t e n d t o b e s l i g h t l y h i g h e r i n t h e f o u r t hq u a r t e r .L i c e n s i n g a n d R e g u l a t i o n

O u r b u s i n e s s a c t i v i t i e s a r e s u b j e c t t o l i c e n s i n g r e q u i r e m e n t s a n d e x t e n s i v e r e g u l a t i o n u n d e r U . S .f e d e r a l a n d s t a t e l a w s , a s w e l l a s t h e l a w s o f o t h e r c o u n t r i e s i n w h i c h w e o p e r a t e . S e e t h e d i s c u s s i o nc o n t a i n e d i n t h e R i s k F a c t o r s s e c t i o n i n P a r t I , I t e m l A o f t h i s r e p o r t f o r i n f o r m a t i o n r e g a r d i n g h o wa c t i o n s b y r e g u l a t o r y a u t h o r i t i e s o r c h a n g e s i n l e g i s l a t i o n a n d r e g u l a t i o n i n t h e j u r i s d i c t i o n s i n w h i c h w eo p e r a t e m a y h a v e a n a d v e r s e e f f e c t o n o u r b u s i n e s s .

R i s k S o l u t i o n sR e g u l a t o r y a u t h o r i t i e s i n t h e s t a t e s o r c o u n t r i e s i n w h i c h t h e o p e r a t i n g s u b s i d i a r i e s o f o u r R i s kS o l u t i o n s s e g m e n t c o n d u c t b u s i n e s s m a y r e q u i r e i n d i v i d u a l o r c o m p a n y l i c e n s i n g t o a c t a s p r o d u c e r s ,b r o k e r s , a g e n t s , t h i r d p a r t y a d m i n i s t r a t o r s , m a n a g i n g g e n e r a l a g e n t s , r e i n s u r a n c e i n t e r m e d i a r i e s , o ra d j u s t e r s .U n d e r t h e l a w s o f m o s t s t a t e s i n t h e U . S . a n d m o s t f o r e i g n c o u n t r i e s , r e g u l a t o r y a u t h o r i t i e s h a v er e l a t i v e l y b r o a d d i s c r e t i o n w i t h r e s p e c t t o g r a n t i n g , r e n e w i n g a n d r e v o k i n g p r o d u c e r s ' , b r o k e r s ' a n da g e n t s ' l i c e n s e s t o t r a n s a c t b u s i n e s s i n t h e s t a t e o r c o u n t r y . T h e o p e r a t i n g t e r m s m a y v a r y a c c o r d i n g t ot h e l i c e n s i n g r e q u i r e m e n t s o f t h e p a r t i c u l a r s t a t e o r c o u n t r y , w h i c h m a y r e q u i r e , a m o n g o t h e r t h i n g s

t h a t a f i r m o p e r a t e s i n t h e s t a t e o r c o u n t r y t h r o u g h a l o c a l c o r p o r a t i o n . I n a f e w s t a t e s a n d c o u n t r i e s ,l i c e n s e s m a y b e i s s u e d o n l y t o i n d i v i d u a l r e s i d e n t s o r l o c a l l y o w n e d b u s i n e s s e n t i t i e s . I n s u c h c a s e s , o u rs u b s i d i a r i e s e i t h e r h a v e s u c h l i c e n s e s o r h a v e a r r a n g e m e n t s w i t h r e s i d e n t s o r b u s i n e s s e n t i t i e s l i c e n s e dt o a c t i n t h e s t a t e o r c o u n t r y .

6

resource-intensiveprocesses once required to

administer benefit plans with more efficient effective

and less costly s ol ut io ns I n addition we are building and operating health care exchanges that provide

employers with cost effective alternative to traditional employee and retiree healthcare while helping

individuals select the insurance that best meets their needs

Human Resource Business Process Outsourcing HR BPO provides market-leading solutions tomanage employee data administer benefits payroll and other human resources processes and record

andmanage

talent workforce and other core HR process

transactions as well as other

complementaryservices such as absence man