10-KPeriod: FY2011

Aon plc Annual Report, Year Ended Dec 31, 2011

Filed February 24, 2012For Securities:AON

Summary

Aon plc's 2011 10-K filing reveals a company in transition, having completed significant acquisitions (Hewitt in 2010) and divested its underwriting businesses. The company is focused on growing its Risk Solutions and HR Solutions segments, emphasizing higher-margin, capital-light professional services with recurring revenue streams. Aon is also planning a significant strategic move by reincorporating in the U.K. and relocating its headquarters to London, anticipating enhanced focus on growth and financial flexibility. Financially, Aon saw a revenue increase driven by acquisitions, though operating margins experienced some pressure due to global economic challenges and integration costs. The company continued its share repurchase program and managed its debt effectively. Key financial metrics like organic revenue growth and adjusted diluted earnings per share showed resilience despite the prevailing economic headwinds. Investors should note the company's strategic shift towards professional services, the impact of acquisitions on its financial performance, and the potential implications of the U.K. reincorporation. The company's performance is susceptible to economic conditions, competitive pressures, and regulatory changes, as detailed in the risk factors section.

Financial Highlights

53 data points
Beta

Revenue

$11.29B

Net Income

$979.00M

8.7% Net Margin

EPS (Diluted)

$2.87

Total Assets

$29.55B

Cash & Equivalents

$272.00M

Free Cash Flow

$777.00M

Financial Statements
Beta
Revenue$11.29B
Operating Expenses$9.69B
Operating Income$1.60B
Interest Expense$245.00M
Net Income$979.00M
EPS (Basic)$2.92
EPS (Diluted)$2.87
Shares Outstanding (Basic)335.50M
Shares Outstanding (Diluted)340.90M

Key Highlights

  • 1Aon completed the acquisition of Hewitt Associates in October 2010, significantly expanding its HR Solutions segment and transforming its business portfolio.
  • 2The company is planning to reincorporate in the U.K. and move its headquarters to London, a strategic move expected to enhance focus on growth and financial flexibility.
  • 3Revenue increased by 33% to $11.3 billion in 2011, primarily driven by acquisitions, with organic revenue growth of 2%.
  • 4Operating expenses increased significantly due to acquisitions and integration costs, leading to a slight pressure on operating margins.
  • 5Adjusted diluted earnings per share from continuing operations increased by 5% to $3.29, demonstrating solid operational performance.
  • 6The company maintained its investment-grade credit rating and had access to committed credit facilities, with no borrowings drawn at year-end 2011.
  • 7Aon continued its share repurchase program, buying back $828 million in shares during 2011.

Frequently Asked Questions

Aon's revenue increased by 33% to $11.3 billion in 2011. This growth was primarily driven by acquisitions, notably the integration of Hewitt Associates, which significantly expanded the HR Solutions segment. Favorable foreign currency exchange rates and a 2% increase in organic revenue also contributed to the overall growth.

Aon announced its intention to change its jurisdiction of incorporation from Delaware to the U.K. and move its corporate headquarters to London. This strategic move is expected to enhance its focus on growth initiatives, product innovation, talent development, and financial flexibility, aiming to deliver significant value to shareholders.

The acquisition of Hewitt in October 2010 was a major factor in Aon's 2011 financial results, substantially increasing revenue and operating expenses, particularly in the HR Solutions segment. While it contributed to overall revenue growth, it also led to increased amortization expenses and integration costs, which put some pressure on operating margins. The integration also involved significant restructuring efforts.

Key risks include the challenging global economic environment impacting client spending and pricing, significant competitive pressures in both Risk and HR Solutions segments, substantial pension obligations, and a notable amount of outstanding debt. Additionally, the company faces risks related to regulatory changes, potential errors and omissions (E&O) claims, and the successful integration of acquired businesses like Hewitt. The planned U.K. reincorporation also carries tax and operational risks.