Guarantee of Registered Securities | Guarantee of Registered Securities As described in Note 17 “Claims, Lawsuits, and Other Contingencies,” in connection with the Redomestication, Aon plc entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, including the 5.00% Notes due September 2020, the 8.205% Notes due January 2027, and the 6.25% Notes due September 2040 (collectively, the “Aon Corp Notes”). Additionally, Aon plc has agreed to guarantee the obligations of Aon Corporation arising under the 4.50% Senior Notes due 2028, the 3.75% Senior Notes due 2029, and the 2.20% Senior Notes due 2022. Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. All guarantees of Aon plc are full and unconditional. There are no other subsidiaries of Aon plc that are guarantors of the Aon Corp Notes. In addition, Aon Corporation entered into an agreement pursuant to which it agreed to guarantee the obligations of Aon plc arising under the 4.25% Notes due 2042 exchanged for Aon Corporation’s outstanding 8.205% Notes due January 2027 and has also agreed to guarantee the obligations of Aon plc arising under the 4.45% Notes due 2043, the 4.00% Notes due November 2023, the 2.875% Notes due May 2026, the 3.50% Notes due June 2024, the 4.60% Notes due June 2044, the 4.75% Notes due May 2045, the 2.80% Notes due March 2021, and the 3.875% Notes due December 2025 (collectively, the “Aon plc Notes”). In each case, the guarantee of Aon Corporation is full and unconditional. There are no subsidiaries of Aon plc, other than Aon Corporation, that are guarantors of the Aon plc Notes. As a result of the existence of these guarantees, the Company has elected to present the financial information set forth in this footnote in accordance with Rule 3-10 of Regulation S-X. In December 2018, Aon plc obtained direct ownership in two subsidiaries that were previously indirectly owned by Aon Corporation. In 2019, Aon Corporation obtained indirect ownership of subsidiaries that were previously indirectly owned by Aon plc. The financial results of both subsidiaries are included in the Other Non-Guarantor Subsidiaries column of the Condensed Consolidating Financial Statements. The Company has reflected this transfer on the Condensed Consolidating Statements of Income and Condensed Consolidating Statements of Comprehensive Income for the periods ended December 31, 2017 and December 31, 2018 and the Condensed Consolidating Statement of Financial Position for the period ended December 31, 2018. The following tables set forth Condensed Consolidating Statements of Income and Condensed Consolidating Statements of Comprehensive Income for the years ended December 31, 2019 , 2018 , and 2017 , Condensed Consolidating Statements of Financial Position as of December 31, 2019 , 2018 , and 2017 , and Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2019 , 2018 , and 2017 , in accordance with Rule 3-10 of Regulation S-X. The condensed consolidating financial information includes the accounts of Aon plc, the accounts of Aon Corporation, and the combined accounts of the non-guarantor subsidiaries. The condensed consolidating financial statements are presented in all periods as a merger under common control. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions. Condensed Consolidating Statement of Income Year Ended December 31, 2019 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Revenue Total revenue $ — $ — $ 11,013 $ — $ 11,013 Expenses Compensation and benefits 49 20 5,985 — 6,054 Information technology — — 494 — 494 Premises — 23 316 — 339 Depreciation of fixed assets — — 172 — 172 Amortization and impairment of intangible assets — — 392 — 392 Other general expense 10 4 1,379 — 1,393 Total operating expenses 59 47 8,738 — 8,844 Operating income (loss) (59 ) (47 ) 2,275 — 2,169 Interest income — 39 — (31 ) 8 Interest expense (188 ) (133 ) (17 ) 31 (307 ) Intercompany interest income (expense) 21 (464 ) 443 — — Intercompany other income (expense) 185 (362 ) 177 — — Other income (expense) 18 (60 ) 51 (8 ) 1 Income (loss) from continuing operations before income taxes (23 ) (1,027 ) 2,929 (8 ) 1,871 Income tax expense (benefit) (12 ) (182 ) 491 — 297 Net income (loss) from continuing operations (11 ) (845 ) 2,438 (8 ) 1,574 Net income (loss) from discontinued operations — — (1 ) — (1 ) Net income (loss) before equity in earnings of subsidiaries (11 ) (845 ) 2,437 (8 ) 1,573 Equity in earnings of subsidiaries 1,551 1,254 409 (3,214 ) — Net income 1,540 409 2,846 (3,222 ) 1,573 Less: Net income attributable to noncontrolling interests — — 41 — 41 Net income attributable to Aon shareholders $ 1,540 $ 409 $ 2,805 $ (3,222 ) $ 1,532 Condensed Consolidating Statement of Income Year Ended December 31, 2018 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Revenue Total revenue $ — $ — $ 10,770 $ — $ 10,770 Expenses Compensation and benefits 74 (1 ) 6,030 — 6,103 Information technology — — 484 — 484 Premises — — 370 — 370 Depreciation of fixed assets — — 176 — 176 Amortization and impairment of intangible assets — — 593 — 593 Other general expense 4 90 1,406 — 1,500 Total operating expenses 78 89 9,059 — 9,226 Operating income (loss) (78 ) (89 ) 1,711 — 1,544 Interest income — 58 — (53 ) 5 Interest expense (203 ) (101 ) (27 ) 53 (278 ) Intercompany interest income (expense) 15 (514 ) 499 — — Intercompany other income (expense) 65 (373 ) 308 — — Other income (expense) 41 (48 ) 3 (21 ) (25 ) Income (loss) from continuing operations before income taxes (160 ) (1,067 ) 2,494 (21 ) 1,246 Income tax expense (benefit) (60 ) (192 ) 398 — 146 Net income (loss) from continuing operations (100 ) (875 ) 2,096 (21 ) 1,100 Net income (loss) from discontinued operations — — 74 — 74 Net income (loss) before equity in earnings of subsidiaries (100 ) (875 ) 2,170 (21 ) 1,174 Equity in earnings of subsidiaries 1,255 1,009 134 (2,398 ) — Net income 1,155 134 2,304 (2,419 ) 1,174 Less: Net income attributable to noncontrolling interests — — 40 — 40 Net income attributable to Aon shareholders $ 1,155 $ 134 $ 2,264 $ (2,419 ) $ 1,134 Condensed Consolidating Statement of Income Year Ended December 31, 2017 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Revenue Total revenue $ — $ — $ 9,998 $ — $ 9,998 Expenses Compensation and benefits 150 26 5,827 — 6,003 Information technology — — 419 — 419 Premises — — 348 — 348 Depreciation of fixed assets — — 187 — 187 Amortization and impairment of intangible assets — — 704 — 704 Other general expense 12 20 1,240 — 1,272 Total operating expenses 162 46 8,725 — 8,933 Operating income (loss) (162 ) (46 ) 1,273 — 1,065 Interest income — 52 4 (29 ) 27 Interest expense (202 ) (94 ) (15 ) 29 (282 ) Intercompany interest income (expense) 14 (543 ) 529 — — Intercompany other income (expense) 282 (385 ) 103 — — Other income (expense) (62 ) 12 (93 ) 18 (125 ) Income (loss) from continuing operations before income taxes (130 ) (1,004 ) 1,801 18 685 Income tax expense (benefit) (43 ) (110 ) 403 — 250 Net income (loss) from continuing operations (87 ) (894 ) 1,398 18 435 Net income (loss) from discontinued operations — — 828 — 828 Net income (loss) before equity in earnings of subsidiaries (87 ) (894 ) 2,226 18 1,263 Equity in earnings of subsidiaries 1,295 1,141 247 (2,683 ) — Net income 1,208 247 2,473 (2,665 ) 1,263 Less: Net income attributable to noncontrolling interests — — 37 — 37 Net income attributable to Aon shareholders $ 1,208 $ 247 $ 2,436 $ (2,665 ) $ 1,226 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2019 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Net income $ 1,540 $ 409 $ 2,846 $ (3,222 ) $ 1,573 Less: Net income attributable to noncontrolling interests — — 41 — 41 Net income attributable to Aon shareholders 1,540 409 2,805 (3,222 ) 1,532 Other comprehensive income (loss), net of tax: Change in fair value of financial instruments — 3 — — 3 Foreign currency translation adjustments — — 6 8 14 Postretirement benefit obligation — (44 ) (97 ) — (141 ) Total other comprehensive income (loss) — (41 ) (91 ) 8 (124 ) Equity in other comprehensive income (loss) of subsidiaries, net of tax (132 ) (131 ) (172 ) 435 — Less: Other comprehensive income (loss) attributable to noncontrolling interests — — — — — Total other comprehensive income (loss) attributable to Aon shareholders (132 ) (172 ) (263 ) 443 (124 ) Comprehensive income (loss) attributable to Aon shareholders $ 1,408 $ 237 $ 2,542 $ (2,779 ) $ 1,408 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2018 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Net income $ 1,155 $ 134 $ 2,304 $ (2,419 ) $ 1,174 Less: Net income attributable to noncontrolling interests — — 40 — 40 Net income attributable to Aon shareholders 1,155 134 2,264 (2,419 ) 1,134 Other comprehensive income (loss), net of tax: Change in fair value of financial instruments — — 11 — 11 Foreign currency translation adjustments — — (465 ) 21 (444 ) Postretirement benefit obligation — (2 ) 19 — 17 Total other comprehensive income (loss) — (2 ) (435 ) 21 (416 ) Equity in other comprehensive income (loss) of subsidiaries, net of tax (433 ) (415 ) (417 ) 1,265 — Less: Other comprehensive income (loss) attributable to noncontrolling interests — — (4 ) — (4 ) Total other comprehensive income (loss) attributable to Aon shareholders (433 ) (417 ) (848 ) 1,286 (412 ) Comprehensive income (loss) attributable to Aon shareholders $ 722 $ (283 ) $ 1,416 $ (1,133 ) $ 722 Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2017 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Net income $ 1,208 $ 247 $ 2,473 $ (2,665 ) $ 1,263 Less: Net income attributable to noncontrolling interests — — 37 — 37 Net income attributable to Aon shareholders 1,208 247 2,436 (2,665 ) 1,226 Other comprehensive income (loss), net of tax: Change in fair value of financial instruments — 3 9 — 12 Foreign currency translation adjustments — — 408 (18 ) 390 Postretirement benefit obligation — (101 ) 120 — 19 Total other comprehensive income (loss) — (98 ) 537 (18 ) 421 Equity in other comprehensive income (loss) of subsidiaries, net of tax 434 515 417 (1,366 ) — Less: Other comprehensive income (loss) attributable to noncontrolling interests — — 5 — 5 Total other comprehensive income (loss) attributable to Aon shareholders 434 417 949 (1,384 ) 416 Comprehensive income (loss) attributable to Aon shareholders $ 1,642 $ 664 $ 3,385 $ (4,049 ) $ 1,642 Condensed Consolidating Statement of Financial Position As of December 31, 2019 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Assets Current assets Cash and cash equivalents $ — $ 2,271 $ 468 $ (1,949 ) $ 790 Short-term investments — 28 110 — 138 Receivables, net — — 3,112 — 3,112 Fiduciary assets — — 11,834 — 11,834 Intercompany receivables 246 1,214 12,799 (14,259 ) — Other current assets — 7 595 — 602 Total current assets 246 3,520 28,918 (16,208 ) 16,476 Goodwill — — 8,165 — 8,165 Intangible assets, net — — 783 — 783 Operating lease right-of-use assets — 110 819 — 929 Fixed assets, net — — 621 — 621 Deferred tax assets 89 577 169 (190 ) 645 Intercompany receivables 868 261 7,046 (8,175 ) — Prepaid pension — 7 1,209 — 1,216 Other non-current assets — 32 538 — 570 Investment in subsidiary 8,899 19,470 (957 ) (27,412 ) — Total assets $ 10,102 $ 23,977 $ 47,311 $ (51,985 ) $ 29,405 Liabilities and equity Liabilities Current liabilities Accounts payable and accrued liabilities $ 2,157 $ 56 $ 1,675 $ (1,949 ) $ 1,939 Short-term debt and current portion of long-term debt 112 600 — — 712 Fiduciary liabilities — — 11,834 — 11,834 Intercompany payables 234 12,978 1,047 (14,259 ) — Other current liabilities — 80 1,006 — 1,086 Total current liabilities 2,503 13,714 15,562 (16,208 ) 15,571 Long-term debt 4,223 2,404 — — 6,627 Non-current operating lease liabilities — 143 801 — 944 Deferred tax liabilities — — 389 (190 ) 199 Pension, other postretirement, and other post-employment liabilities — 1,348 390 — 1,738 Intercompany payables — 7,212 963 (8,175 ) — Other non-current liabilities 1 113 763 — 877 Total liabilities 6,727 24,934 18,868 (24,573 ) 25,956 Equity Total Aon shareholders' equity 3,375 (957 ) 28,369 (27,412 ) 3,375 Noncontrolling interests — — 74 — 74 Total equity 3,375 (957 ) 28,443 (27,412 ) 3,449 Total liabilities and equity $ 10,102 $ 23,977 $ 47,311 $ (51,985 ) $ 29,405 Condensed Consolidating Statement of Financial Position As of December 31, 2018 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Assets Current assets Cash and cash equivalents $ — $ 862 $ 575 $ (781 ) $ 656 Short-term investments — 56 116 — 172 Receivables, net — — 2,760 — 2,760 Fiduciary assets — — 10,166 — 10,166 Intercompany receivables 191 897 11,634 (12,722 ) — Other current assets — 16 602 — 618 Total current assets 191 1,831 25,853 (13,503 ) 14,372 Goodwill — — 8,171 — 8,171 Intangible assets, net — — 1,149 — 1,149 Fixed assets, net — — 588 — 588 Deferred tax assets 94 467 144 (144 ) 561 Intercompany receivables 403 261 7,225 (7,889 ) — Prepaid pension — 5 1,128 — 1,133 Other non-current assets 1 30 417 — 448 Investment in subsidiary 8,433 19,031 (983 ) (26,481 ) — Total assets $ 9,122 $ 21,625 $ 43,692 $ (48,017 ) $ 26,422 Liabilities and equity Liabilities Current liabilities Accounts payable and accrued liabilities $ 274 $ 70 $ 2,380 $ (781 ) $ 1,943 Short-term debt and current portion of long-term debt 250 — 1 — 251 Fiduciary liabilities — — 10,166 — 10,166 Intercompany payables 213 11,875 634 (12,722 ) — Other current liabilities — 69 867 — 936 Total current liabilities 737 12,014 14,048 (13,503 ) 13,296 Long-term debt 4,231 1,762 — — 5,993 Deferred tax liabilities — — 325 (144 ) 181 Pension, other postretirement, and other post-employment liabilities — 1,275 361 — 1,636 Intercompany payables — 7,390 499 (7,889 ) — Other non-current liabilities 3 167 927 — 1,097 Total liabilities 4,971 22,608 16,160 (21,536 ) 22,203 Equity Total Aon shareholders' equity 4,151 (983 ) 27,464 (26,481 ) 4,151 Noncontrolling interests — — 68 — 68 Total equity 4,151 (983 ) 27,532 (26,481 ) 4,219 Total liabilities and equity $ 9,122 $ 21,625 $ 43,692 $ (48,017 ) $ 26,422 Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2019 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities Cash provided by (used for) operating activities - continuing operations $ 280 $ (140 ) $ 2,408 $ (713 ) $ 1,835 Cash provided by operating activities - discontinued operations — — — — — Cash provided by (used for) operating activities 280 (140 ) 2,408 (713 ) 1,835 Cash flows from investing activities Proceeds from investments — 29 189 (157 ) 61 Payments for investments — (62 ) (52 ) 1 (113 ) Net sales (purchases) of short-term investments — non-fiduciary — 28 7 — 35 Acquisition of businesses, net of cash acquired — — (39 ) — (39 ) Sale of businesses, net of cash sold — — 52 — 52 Capital expenditures — — (225 ) — (225 ) Cash used for investing activities - continuing operations — (5 ) (68 ) (156 ) (229 ) Cash used for investing activities - discontinued operations — — — — — Cash used for investing activities — (5 ) (68 ) (156 ) (229 ) Cash flows from financing activities Share repurchase (1,960 ) — — — (1,960 ) Advances from (to) affiliates 2,350 314 (2,365 ) (299 ) — Issuance of shares for employee benefit plans (131 ) — — — (131 ) Issuance of debt 2,739 3,313 — — 6,052 Repayment of debt (2,868 ) (2,073 ) — — (4,941 ) Cash dividends to shareholders (410 ) — — — (410 ) Noncontrolling interests and other financing activities — — (103 ) — (103 ) Cash provided by (used for) financing activities - continuing operations (280 ) 1,554 (2,468 ) (299 ) (1,493 ) Cash used for financing activities - discontinued operations — — — — — Cash provided by (used for) financing activities (280 ) 1,554 (2,468 ) (299 ) (1,493 ) Effect of exchange rate changes on cash and cash equivalents — — 21 — 21 Net increase (decrease) in cash and cash equivalents — 1,409 (107 ) (1,168 ) 134 Cash and cash equivalents at beginning of year — 862 575 (781 ) 656 Cash and cash equivalents at end of year $ — $ 2,271 $ 468 $ (1,949 ) $ 790 Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2018 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities Cash provided by operating activities - continuing operations $ 1,575 $ 3 $ 3,608 $ (3,500 ) $ 1,686 Cash provided by operating activities - discontinued operations — — — — — Cash provided by operating activities 1,575 3 3,608 (3,500 ) 1,686 Cash flows from investing activities Proceeds from investments — 24 955 (908 ) 71 Payments for investments (13 ) (47 ) (33 ) 13 (80 ) Net sales (purchases) of short-term investments — non-fiduciary — 299 49 — 348 Acquisition of businesses, net of cash acquired — — (58 ) — (58 ) Sale of businesses, net of cash sold — — (10 ) — (10 ) Capital expenditures — — (240 ) — (240 ) Cash provided by (used for) investing activities - continuing operations (13 ) 276 663 (895 ) 31 Cash used for investing activities - discontinued operations — — — — — Cash provided by (used for) investing activities (13 ) 276 663 (895 ) 31 Cash flows from financing activities Share repurchase (1,470 ) — — — (1,470 ) Advances from (to) affiliates 156 (2,291 ) (4,041 ) 6,176 — Issuance of shares for employee benefit plans (149 ) — — — (149 ) Issuance of debt 1,723 4,028 3 — 5,754 Repayment of debt (1,441 ) (3,678 ) (298 ) — (5,417 ) Cash dividends to shareholders (382 ) — — — (382 ) Noncontrolling interests and other financing activities — — (35 ) — (35 ) Cash used for financing activities - continuing operations (1,563 ) (1,941 ) (4,371 ) 6,176 (1,699 ) Cash used for financing activities - discontinued operations — — — — — Cash used for financing activities (1,563 ) (1,941 ) (4,371 ) 6,176 (1,699 ) Effect of exchange rate changes on cash and cash equivalents — — (118 ) — (118 ) Net decrease in cash and cash equivalents (1 ) (1,662 ) (218 ) 1,781 (100 ) Cash and cash equivalents at beginning of year 1 2,524 793 (2,562 ) 756 Cash and cash equivalents at end of year $ — $ 862 $ 575 $ (781 ) $ 656 Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2017 (millions) Aon plc Aon Corporation Other Non-Guarantor Subsidiaries Consolidating Adjustments Consolidated Cash flows from operating activities Cash provided by operating activities - continuing operations $ 2,787 $ 503 $ 2,010 $ (4,631 ) $ 669 Cash provided by operating activities - discontinued operations — — 65 — 65 Cash provided by operating activities 2,787 503 2,075 (4,631 ) 734 Cash flows from investing activities Proceeds from investments 224 587 582 (1,325 ) 68 Payments for investments (261 ) (29 ) (576 ) 802 (64 ) Net sales (purchases) of short-term investments — non-fiduciary — (215 ) (17 ) — (232 ) Acquisition of businesses, net of cash acquired — — (1,029 ) — (1,029 ) Sale of businesses, net of cash sold — — 4,246 — 4,246 Capital expenditures — — (183 ) — (183 ) Cash provided by (used for) investing activities - continuing operations (37 ) 343 3,023 (523 ) 2,806 Cash used for investing activities - discontinued operations — — (19 ) — (19 ) Cash provided by (used for) investing activities (37 ) 343 3,004 (523 ) 2,787 Cash flows from financing activities Share repurchase (2,399 ) — — — (2,399 ) Advances from (to) affiliates 426 95 (4,975 ) 4,454 — Issuance of shares for employee benefit plans (121 ) — — — (121 ) Issuance of debt 544 1,100 10 — 1,654 Repayment of debt (835 ) (1,150 ) (14 ) — (1,999 ) Cash dividends to shareholders (364 ) — — — (364 ) Noncontrolling interests and other financing activities — — (36 ) — (36 ) Cash provided by (used for) financing activities - continuing operations (2,749 ) 45 (5,015 ) 4,454 (3,265 ) Cash used for financing activities - discontinued operations — — — — — Cash provided by (used for) financing activities (2,749 ) 45 (5,015 ) 4,454 (3,265 ) Effect of exchange rate changes on cash and cash equivalents — — 69 — 69 Net increase in cash and cash equivalents 1 891 133 (700 ) 325 Cash and cash equivalents at beginning of year (1) — 1,633 660 (1,862 ) 431 Cash and cash equivalents at end of year $ 1 $ 2,524 $ 793 $ (2,562 ) $ 756 (1) Includes $5 million of discontinued operations at December 31, 2016 |