10-KPeriod: FY2013

Aon plc Annual Report, Year Ended Dec 31, 2013

Filed February 18, 2014For Securities:AON

Summary

Aon plc's 2013 10-K filing highlights a year of continued strategic execution and modest revenue growth, with total revenue reaching $11.8 billion, 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 billion, 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.

Financial Highlights

53 data points
Beta

Revenue

$11.81B

Net Income

$1.11B

9.4% Net Margin

EPS (Diluted)

$3.53

Total Assets

$30.25B

Cash & Equivalents

$477.00M

Free Cash Flow

$1.52B

Financial Statements
Beta
Revenue$11.81B
Operating Expenses$10.14B
Operating Income$1.67B
Interest Expense$210.00M
Net Income$1.11B
EPS (Basic)$3.57
EPS (Diluted)$3.53
Shares Outstanding (Basic)311.40M
Shares Outstanding (Diluted)315.40M

Key Highlights

  • 1Total revenue grew 3% to $11.8 billion, driven by 3% organic growth in both Risk Solutions and HR Solutions segments.
  • 2Net income attributable to Aon shareholders increased 12% to $1.1 billion ($3.53 diluted EPS).
  • 3Adjusted diluted earnings per share (non-GAAP) rose 16% to $4.89.
  • 4Free cash flow (non-GAAP) increased 22% to $1.4 billion.
  • 5Risk Solutions segment accounted for 66% of total revenue, with HR Solutions making up 34%.
  • 6The company continued its share repurchase program, buying back $1.1 billion worth of shares in 2013.
  • 7Aon made progress on its "Redomestication" initiative, relocating its corporate headquarters to London, U.K.

Frequently Asked Questions

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.

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.

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.

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.