10-QPeriod: Q2 FY2022

Aon plc Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 29, 2022For Securities:AON

Summary

Aon plc reported a solid second quarter and first half of 2022, demonstrating resilience in a dynamic economic environment. Total revenue saw a 3% increase in Q2 and a 4% increase for the first six months, primarily driven by strong organic revenue growth of 8% across both periods. This growth was fueled by robust retention and net new business generation across key solution lines, particularly Commercial Risk Solutions, Reinsurance Solutions, and Health Solutions. While foreign currency translation presented a headwind, the company's ability to generate organic growth highlights its strong market position and client relationships. Profitability improved, with operating income increasing by 4% in Q2 and 10% for the first six months. Diluted earnings per share rose significantly to $2.33 in Q2 and $7.07 for the first half, compared to $1.66 and $5.66 in the prior year, respectively. The company also continues its commitment to shareholder returns through active share repurchases, with approximately $7.9 billion remaining under its authorized program. Despite facing some cost pressures and a $58 million charge related to legal settlements, Aon's diversified business model and focus on innovation appear to be supporting its financial performance.

Financial Highlights

51 data points
Beta

Revenue

$2.98B

Net Income

$501.00M

16.8% Net Margin

EPS (Diluted)

$2.33

Total Assets

$34.72B

Cash & Equivalents

$740.00M

Free Cash Flow

$623.00M

Financial Statements
Beta
Revenue$2.98B
Operating Expenses$2.28B
Operating Income$700.00M
Interest Expense$102.00M
Net Income$501.00M
EPS (Basic)$2.35
EPS (Diluted)$2.33
Shares Outstanding (Basic)213.30M
Shares Outstanding (Diluted)214.70M

Key Highlights

  • 1Total revenue increased by 3% to $3.0 billion for the second quarter and 4% to $6.7 billion for the first six months, driven by strong organic revenue growth of 8% in both periods.
  • 2Diluted EPS rose significantly to $2.33 in Q2 2022 ($7.07 for YTD) compared to $1.66 in Q2 2021 ($5.66 for YTD).
  • 3Operating margin improved to 23.5% in Q2 2022 (31.1% for YTD), up from 23.3% in Q2 2021 (29.9% for YTD).
  • 4Share repurchase activity continues, with $1.328 billion repurchased in the first six months of 2022 and approximately $7.9 billion remaining authorized.
  • 5A $58 million charge was recorded in Q2 2022 related to certain legal settlements.
  • 6Cash flow from operations for the first six months was $1.131 billion, a decrease of 16% from the prior year, primarily due to higher receivables and incentive compensation payments.
  • 7The company maintained a strong liquidity position, with $1.8 billion in available credit under its committed credit facilities and no borrowings outstanding as of June 30, 2022.

Frequently Asked Questions

The primary driver of revenue growth was strong organic revenue growth of 8%, stemming from robust client retention and new business generation across its various solution lines. This growth effectively offset headwinds from unfavorable foreign currency translation.

Profitability showed a marked improvement. Operating income increased by 4% to $700 million, and net income attributable to Aon shareholders grew by 31% to $501 million. Diluted EPS also saw a significant jump to $2.33 from $1.66 in the prior year period.

Aon continues to actively repurchase its shares. In the first six months of 2022, the company repurchased $1.328 billion worth of shares. As of June 30, 2022, approximately $7.9 billion remained authorized for future repurchases under its program.

Yes, the company recorded a $58 million charge in the second quarter of 2022 related to certain legal settlements. This charge, along with increased expenses associated with organic revenue growth and investments, impacted operating expenses.