01—Abstract
Summary
Summary of the 10-K filed February 18, 2014. Cited figures are marked; the original filing is the authoritative source.
Aon plc's 2013 10-K filing highlights a year of continued strategic execution and modest revenue growth, with total revenue reaching $11.8 billiona, a 3% increase over the prior year.
This growth was driven by solid organic performance in both the Risk Solutions (66% of revenue) and HR Solutions (34% of revenue) segments, indicating successful client acquisition and retention strategies. The company continued to focus on its "higher margin, capital light professional services businesses." Key financial metrics show improvement, with net income attributable to Aon shareholders increasing by 12% to $1.1 billionb, and adjusted diluted earnings per share rising 16% to $4.89. Free cash flow also saw a significant increase of 22% to $1.4 billion, demonstrating strong operational cash generation.
Operationally, Aon benefited from the integration of Hewitt Associates and the ongoing execution of its "Aon Broking" strategy within Risk Solutions. The company also made progress on its "Redomestication" initiative, which involved changing its jurisdiction of incorporation to the U.K., aimed at enhancing growth, innovation, and financial flexibility. Despite facing headwinds like economic weakness in continental Europe and lower investment income, Aon's diversified business model and strategic initiatives positioned it for continued value creation for shareholders.
02—Key points
Key Highlights
- Total revenue grew 3% to $11.8 billion, driven by 3% organic growth in both Risk Solutions and HR Solutions segments.
- Net income attributable to Aon shareholders increased 12% to $1.1 billion ($3.53 diluted EPS).
- Adjusted diluted earnings per share (non-GAAP) rose 16% to $4.89.
- Free cash flow (non-GAAP) increased 22% to $1.4 billion.
- Risk Solutions segment accounted for 66% of total revenue, with HR Solutions making up 34%.
- The company continued its share repurchase program, buying back $1.1 billion worth of shares in 2013.
- Aon made progress on its "Redomestication" initiative, relocating its corporate headquarters to London, U.K.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 18, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $11.81B$11.51B | +2.6% |
| Operating Expenses | $10.14B$9.92B | +2.3% |
| Operating Income | $1.67B$1.60B | +4.7% |
| Interest Expense | $210.00M$228.00M | −7.9% |
| Net Income | $1.11B$993.00M | +12.1% |
| EPS (Basic) | $3.57$3.02 | +18.2% |
| EPS (Diluted) | $3.53$2.99 | +18.1% |
| Shares Outstanding (Basic) | 311.40M328.50M | −5.2% |
| Shares Outstanding (Diluted) | 315.40M332.60M | −5.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in 2013?
Revenue growth was primarily driven by organic revenue growth of 3% in both the Risk Solutions and HR Solutions segments. This was supported by strong client renewals and new business acquisition across the retail brokerage and reinsurance businesses within Risk Solutions, and solid new client wins and growth in healthcare exchanges within HR Solutions.
How did the Redomestication strategy impact Aon's performance or strategic goals?
The Redomestication, which moved Aon's corporate headquarters to London, was expected to strengthen the company's long-term strategy by enabling Risk Solutions to deliver superior client value, expanding HR Solutions' portfolio, optimizing fiscal planning, reducing the global tax rate, and enhancing financial flexibility for growth and capital allocation.
What is Aon's approach to capital allocation, particularly regarding share repurchases and dividends?
Aon focuses its capital allocation on achieving a strong return on invested capital (ROIC). In 2013, the company repurchased $1.1 billion of its Class A Ordinary Shares under an authorized $5 billion program and paid $212 million in dividends to shareholders, demonstrating a commitment to returning value to shareholders while maintaining financial flexibility.
What were the key financial performance indicators (non-GAAP) highlighted by management?
Management highlighted four key non-GAAP indicators: organic revenue growth (3%), adjusted operating margin (19.0% overall), adjusted diluted earnings per share ($4.89), and free cash flow ($1.4 billion). These metrics were used to measure performance against strategic goals, showing improvements across the board.
06—Continue