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What changed in Aon plc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Aon plc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+374 added−312 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in Aon plc's 2023 10-K

374 paragraphs added · 312 removed · 272 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeColleagues As of December 31, 2022, we employed approximately 50,000 employees and conducted our operations in more than 120 countries and sovereignties. Our colleagues’ diverse talents, expertise, and insights contribute to the success of both our firm and our clients, and we seek to attract, grow, and retain the best talent in the industry.
Biggest changeOur colleagues’ diverse talents, expertise, and insights contribute to the success of both our firm and our clients, and we seek to attract, grow, and retain the best talent in the industry. Our Inclusive People Leadership strategy is a central part of our Aon United strategy and is a key enabler to realizing our aspirations and purpose as a firm.
Collaboration and innovation drive our culture, bringing the best of Aon to clients in a holistic and seamless manner. Our Aon United strategy defines how Aon colleagues work together to deliver value to clients, setting a new standard for client leadership.
Collaboration and innovation drive our culture, bringing the best of Aon to clients in a holistic and seamless manner. Our Aon United strategy defines how our colleagues work together to deliver value to clients, setting a new standard for client leadership.
For discussion of the risks related to the attraction and retention of senior management and other professional personnel, see the “Risk Factors” section in Part I, Item 1A of this report. Rewards In addition to an inspired purpose and culture, we are proud to offer our colleagues a total rewards program that combines competitive pay, incentive opportunities, and benefits.
For discussion of the risks related to the attraction and retention of senior management and other professional personnel, see the “Risk Factors” section in Part I, Item 1A of this report. 8 Rewards In addition to an inspired purpose and culture, we are proud to offer our colleagues a total rewards program that combines competitive pay, incentive opportunities, and benefits.
Aon United is brought to life through our common client value creation model which scales strategies from across 9 the firm to bring the best of Aon to clients. Each year, Aon makes significant philanthropic contributions to various organizations, supports numerous colleague volunteer opportunities, and offers paid time off to volunteer.
Aon United is brought to life through our common client value creation model which scales strategies from across the firm to bring the best of Aon to clients. Each year, Aon makes significant philanthropic contributions to various organizations, supports numerous colleague volunteer opportunities, and offers paid time off to volunteer.
In addition, other services provided by Aon and its subsidiaries and affiliates, such as trustee services and retirement and employee benefit program administrative services, are subject in various jurisdictions to pension, investment, securities, and insurance laws and regulations, and supervision. Clientele Our clients operate in many businesses and industries throughout the world.
In addition, other services provided by Aon and its subsidiaries and affiliates, such as trustee services and retirement and employee benefit program administrative services, are subject in various jurisdictions to pension, investment, securities, and insurance laws and regulations, and supervision. 7 Clientele Our clients operate in many businesses and industries throughout the world.
Payment terms are consistent with current industry practices. Funds Held on Behalf of Clients We typically hold funds on behalf of clients, including premiums received from clients and claims due to clients that are in transit to and from insurers.
Payment terms are consistent with current industry practices. 6 Funds Held on Behalf of Clients We typically hold funds on behalf of clients, including premiums received from clients and claims due to clients that are in transit to and from insurers.
Management is focused on strengthening Aon and uniting the firm with one portfolio of capability enabled by data and analytics and one operating model to deliver additional insight, connectivity, and efficiency. Our clients are in over 120 countries and sovereignties and include all market segments and almost every industry.
Management remains focused on strengthening Aon and uniting the firm with one portfolio of capability enabled by data and analytics and one operating model to deliver additional insight, connectivity, and efficiency. Our clients are in over 120 countries and sovereignties and include all market segments and almost every industry.
We support clients across the full employee lifecycle, including talent assessment and selection, compensation benchmarking, total rewards strategy optimization, workforce analytics and benchmarking, workforce resilience planning, human capital integration in transaction situations, Corporate Governance, ESG consulting, and strategic employee communication. Wealth Solutions includes retirement consulting, pension administration, and investments consulting.
We support clients across the full employee lifecycle, including talent assessment and selection, compensation benchmarking, total rewards strategy optimization, workforce analytics and benchmarking, workforce resilience planning, talent integration in transaction situations, Corporate Governance, ESG consulting, and strategic employee communication. Wealth Solutions includes retirement consulting, pension administration, and investments consulting.
Aon United, Our Culture, and Human Capital Strategy Our Culture Our culture is driven by our values – committed as one firm to our purpose, united through trust as one inclusive, diverse team, and passionate about making our colleagues and clients successful. Our colleagues are the cornerstone of Aon's success.
Aon United, Our Culture, and Human Capital Strategy Our Culture Our culture is driven by our values – committed as one firm to our purpose, united through trust and integrity as one inclusive, diverse team, and passionate about making our colleagues and clients successful. Our colleagues are the cornerstone of our success.
We also compete with insurance and reinsurance companies that directly market and service their insurance products without the assistance of brokers or agents. Additionally, we compete with 8 other businesses that do not fall into the categories above, including large financial institutions and independent consulting firms and consulting organizations affiliated with accounting, information systems, technology, and financial services firms.
We also compete with insurance and reinsurance companies that directly market and service their insurance products without the assistance of brokers or agents. Additionally, we compete with other businesses that do not fall into the categories above, including large financial institutions and independent consulting firms and consulting organizations affiliated with accounting, information systems, technology, human resources, and financial services firms.
The pulse surveys for 2022 were focused on topics such as manager and leadership support, delivering on our Aon Story, colleague wellbeing, I&D, talent acquisition and performance & rewards. Aon’s feedback from our workforce provides management a better understanding of evolving colleague viewpoints, and ensures we are taking appropriate steps to drive colleague engagement and retention.
The pulse surveys for 2023 were focused on topics such as manager and leadership support, delivering on our Aon Story, colleague wellbeing, I&D, talent acquisition and performance and rewards. Feedback from our workforce provides management with a better understanding of evolving colleague viewpoints, and ensures we are taking appropriate steps to drive colleague engagement and retention.
While not all of the information that we post to such website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in our company to review the information that we share at our investor relations link located at the bottom of the page on www.aon.com.
While not all of the information that we post to such website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in our company to review the information that we share on our investor relations page on www.aon.com.
Our Apprenticeship Program Apprenticeship programs help build a talent pipeline of highly skilled and diverse professionals while providing apprentices with advanced education and work experience. By removing some of the traditional barriers to entry-level employment, Aon can contribute to local workforce development and cultivate talent while improving retention rates in these entry-level roles.
Apprenticeship Program Apprenticeship programs help build a talent pipeline of highly skilled and diverse professionals while providing apprentices with advanced education and work experience. By removing some of the traditional barriers to entry-level employment, as a firm we can contribute to local workforce development and cultivate talent while improving retention rates in these entry-level roles.
Aon's two-year Apprenticeship Program, which was implemented in the U.K. and U.S. in 2012 and 2017, respectively, serves as an alternate route into a permanent role that normally requires a specific degree or professional experience.
Our two-year Apprenticeship Program, which was implemented in the UK and U.S. in 2012 and 2017, respectively, serves as an alternate route into a permanent role that normally requires a specific degree or professional experience.
Also posted on our website are the charters for our Audit, Organization and Compensation, Governance/Nominating, and Finance Committees, and Compliance and Inclusion & Diversity Sub-Committees, our Governance Guidelines, and our Code of Business Conduct.
Also posted on our website are the charters for our Audit, Organization and Compensation, Governance/Nominating, and Finance Committees, and Inclusion & Wellbeing Sub-Committees, our Governance Guidelines, and our Code of Business Conduct.
No one client accounted for more than 2% of our consolidated total revenues in 2022. Additionally, we place insurance with many insurance carriers, none of which individually accounted for more than 10% of the total premiums we placed on behalf of our clients in 2022.
No one client accounted for more than 2% of our consolidated total revenues in 2023. Additionally, we place insurance with many insurance carriers, none of which individually accounted for more than 10% of the tot al premiums we placed on behalf of our clients in 2023.
Our human capital team delivers data, analytics, and advice to business leaders so they can make better workforce decisions and align their business and people strategies.
Our talent team delivers data, analytics, and advice to business leaders so they can make better workforce decisions and align their business and people strategies.
At the manager level, 13% of U.S. senior leaders and 18% of U.S. managers with one or more direct report were racially or ethnically diverse. New colleague hires for the year in the U.S. were 31% racially or ethnically diverse.
At the manager level, 11% of U.S. senior leaders and 18% of U.S. managers with one or more direct report were racially or ethnically diverse. New colleague hires for the year in the U.S. were 34% racially or ethnically diverse.
Aon provides motivated, high-potential individuals with the required training (on the job and in the classroom), professional skills development, mentorship, and experiential learning to bridge the gap. Over 585 Aon apprentices have been hired since the inception of the program across the U.S. and U.K.
We provide motivated, high-potential individuals with the required training (on the job and in the classroom), professional skills development, mentorship, and experiential learning to bridge the gap . 702 Aon apprentices have been hired since the inception of the program across the U.S. and U.K.
Item 1. Business OVERVIEW Aon plc (which may be referred to as “Aon,” the “Company,” “we,” “us,” or “our”) is a leading global professional services firm providing a broad range of risk, health, and wealth solutions. Through our experience, global reach, and comprehensive analytics, we are better able to help clients meet rapidly changing, increasingly complex, and interconnected challenges.
Item 1. Business OVERVIEW Aon plc (which may be referred to as “Aon,” the “Company,” “we,” “us,” or “our”) is a leading global professional services firm providing a broad range of risk and human capital solutions. Through our experience, global reach, and comprehensive analytics, we help clients meet rapidly changing, increasingly complex, and interconnected challenges related to risk and people.
As a founding member of seven apprentice networks within the U.S., we partner with companies and organizations to assist them in building their own programs through sharing best practices and learnings. Across these networks, we have over 160 organizations committed as of December 31, 2022.
As a founding member of seven apprentice networks within the U.S., we partner with companies and organizations to assist them in building their own programs through sharing best practices and learnings. Across these networks, we ha ve 206 organizations committed as of December 31, 2023.
Website Access to Reports and Other Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports are made available free of charge through our website (http://www.aon.com) as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
Both programs are certified apprenticeship programs, by the Department of Labor in the U.S. and the Department of Education in the U.K. 9 Website Access to Reports and Other Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports are made available free of charge through our website (https://www.aon.com) as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
We maintain a global commitment to colleague wellbeing and play a key role in supporting colleagues across the physical, emotional, financial, and social spectrum. Our comprehensive benefit programs are competitive for the markets in which we operate and aligned with our values and culture.
We maintain a global commitment to colleague wellbeing and play a key role in supporting colleagues across the physical, emotional, financial, and social spectrum. Our comprehensive benefit programs are competitive for the markets in which we operate and aligned with our values and culture. Our compensation philosophy aligns with our Aon United strategy and delivering long-term shareholder value creation.
Reinsurance Solutions includes treaty reinsurance, facultative reinsurance, Strategy and Technology Group and capital markets. Treaty reinsurance addresses underwriting and capital objectives on a portfolio level, allowing our clients to more effectively manage the combination of premium growth, return on capital, and rating agency interests on an integrated basis.
Treaty reinsurance addresses underwriting and capital objectives on a portfolio level, allowing our clients to more effectively manage the combination of premium growth, return on capital, and rating agency interests on an integrated basis. This includes the development of more competitive, innovative, and efficient risk transfer options.
These channels include open forums and town halls with executives, colleague surveys, and engagement through our Business Resource Groups. Business Resource Groups are our independent, voluntary, non-profit associations that provide input, take action, and help identify opportunities for our firm to further commitments to I&D and belonging.
Business Resource Groups are our independent, voluntary, non-profit associations that provide input, take action, and help identify opportunities for our firm to further commitments to Inclusion and Diversity (I&D) and belonging.
In retail brokerage, our dedicated teams of risk professionals utilize comprehensive analytics capabilities and insights providing clients with risk advice for their organizations.
Principal Products and Services Commercial Risk Solutions includes retail brokerage, specialty solutions, global risk consulting and captives management, and Affinity programs. In retail brokerage, our dedicated teams of risk professionals utilize comprehensive analytics capabilities and insights providing clients with risk advice for their organizations.
New colleague hires for the year were 51% women and 49% men. Aon’s U.S. workforce was 25% racially or ethnically diverse, calculated as a percentage of colleagues that have voluntarily disclosed their race or ethnicity to Aon.
A t the manager level, 28% of senior leaders and 43% of managers with one or more direct report were women. New colleague hires for the year were 53% women and 47% men. Our U.S. workforce w as 25% racially or ethnically diverse, calculated as a percentage of colleagues that have voluntarily disclosed their race or ethnicity to Aon.
Capital markets is a global investment bank with expertise in insurance-linked securities, 7 capital raising, strategic advice, restructuring, and mergers and acquisitions. We partner with insurers, reinsurers, investment firms, and corporations in executing innovative risk management products, capital market solutions and corporate finance advisory services. Health Solutions includes consulting and brokerage, consumer benefits solutions, and human capital solutions.
We partner with insurers, reinsurers, investment firms, and corporations in executing innovative risk management products, capital market solutions and corporate finance advisory services. Health Solutions includes consulting and brokerage, consumer benefits solutions, and talent.
Inclusive People Leadership at Aon ensures that all colleagues – at every stage of their career journey – are equipped and motivated to deliver on our purpose and able to achieve their full potential. Colleagues benefit from our “Smart Working” approach.
All our colleagues are called upon to be leaders in embracing and modeling our Aon United values and behaviors. Inclusive People Leadership at Aon is designed to ensure that all colleagues – at every stage of their career journey – are equipped and motivated to deliver on our purpose and able to achieve their full potential.
BUSINESS SEGMENT The Company operates as one segment that includes all of Aon’s continuing operations, which, as a global professional services firm, provides advice and solutions to clients focused on risk, health and wealth through four principal products and services: Commercial Risk Solutions, Reinsurance Solutions, Health Solutions, and Wealth Solutions.
BUSINESS SEGMENT We operate as one segment that includes all of our continuing operations, which, as a global professional services firm, provides a broad range of risk and human capital solutions through four solution lines — Commercial risk, Reinsurance, Health, and Wealth, which make up our principal products and services.
The aim of Smart Working is to create a healthy, productive, inclusive, and sustainable way of working, enabling colleagues to deliver their best work for clients from wherever they are best placed to do so. This strategy, which supports in person, hybrid, and virtual working, continues to be a source of positive feedback and strong engagement based on colleague surveys.
Colleagues benefit from our Smart Working approach, which aims to create a healthy, productive, inclusive, and sustainable way of working, enabling colleagues to deliver their best work for clients from wherever they are best placed to do so.
Affinity programs include development, marketing, and administration of customized and targeted insurance programs, facilities, and other structured solutions, including Aon Client Treaty. We collaborate with sponsors and other privileged distribution channels through which Aon can deliver differentiated, highly targeted, and highly valuable solutions for unique risk solutions.
Affinity programs include development, marketing, and administration of customized and targeted insurance programs, facilities, and other structured solutions, including Aon Client Treaty.
Strategy and Technology Group combines strategic advice with data-driven consulting, analytics, and modeling tools, including Tyche, ReMetrica, and PathWise, to help clients deploy capital efficiently and effectively. We develop highly customized solutions that help clients drive growth and operational efficiency, improve balance sheet strength and resiliency, and comply with regulatory and operational requirements, including through the execution of reinsurance transactions.
We develop highly customized solutions that help clients drive growth and operational efficiency, improve balance sheet strength and resiliency, and comply with regulatory and operational requirements, including through the execution of reinsurance transactions. Capital markets is a global investment bank with expertise in insurance-linked securities, capital raising, strategic advice, restructuring, and mergers and acquisitions.
Colleague Engagement and Retention Providing an engaging and rewarding colleague experience is a top priority for our firm and understanding colleagues’ feedback helps us reach that goal. We use a variety of channels to facilitate open, on-going, and direct communication with colleagues.
Our investment in technology and use of virtual and in-person based learning and development programs allows us to deliver targeted offerings designed to advance all colleagues’ development. Colleague Engagement and Retention Providing an engaging and rewarding colleague experience is a top priority for us and understanding colleagues’ feedback helps us to reach that goal.
Inclusion and Diversity We believe that inclusive and diverse teams produce better insight, better solutions, and ultimately the best outcomes for clients and Aon’s long-term success. 10 We are focused on being a firm that is representative of the communities in which we operate. We achieve this by aligning I&D actions to the following pillars: Recruitment, Education, Promotion, and Representation.
We are focused on being a firm that is representative of the communities in which we operate. We achieve this by aligning inclusion actions to the following pillars: Recruitment, Education, Promotion, and Representation. We strongly believe that only when colleagues can be their authentic selves will they reach their full potential.
We strongly believe that only when colleagues can be their authentic selves will they reach their full potential. Our commitment to I&D starts from the top with our Board of Directors, including its I&D Sub-Committee. Our Global Inclusive Leadership Council is sponsored by our Chief Executive Officer and Chief People Officer.
Our commitment to inclusion starts from the top with our Board of Directors, including its Inclusion & Wellbeing Sub-Committee. Our Global Inclusive Leadership Council is sponsored by our Chief Executive Officer and Chief People Officer. Regional Inclusive Leadership Councils and our Executive Leadership Teams are aligned to drive actions to increase the diversity of our teams.
Training and Development We invest significant resources to develop the talent needed to remain at the forefront of innovation and remain an attractive employer. Colleagues are invited to complete a variety of curricula to meet their career stage goals and developmental needs. We provide our colleagues what they need to learn, grow, and become the leaders our clients seek.
Colleagues are invited to complete a broad spectrum of curricula to meet their career stage goals and developmental needs. We provide our colleagues what they need to learn, grow, and become the leaders our clients seek. From self-guided learning courses to advanced leadership programs, the curriculum is aligned to the Aon United strategy and Inclusive People Leader strategy.
Beginning in 2021, 20% of the short-term incentives for senior executives are based on quantifiable performance against firm-wide I&D initiatives.
Our executive incentives are based on driving results, delivery of strategic initiatives, and leadership. Beginning in 2021, 20% of the short-term incentives for senior executives are based on quantifiable performance against firm-wide inclusion initiatives. Inclusion We believe that inclusive and diverse teams produce better insight, better solutions and, ultimately, the best outcomes for clients and our long-term success.
Regional Inclusive Leadership Councils and our Executive Leadership Teams are aligned to drive actions to increase the diversity of our teams. Our colleague-led Business Resource Groups also support execution and provide additional opportunities for colleagues to enhance our inclusive environment.
Our colleague-led Business Resource Groups also support execution and provide additional opportunities for colleagues to enhance our inclusive environment. As of December 31, 2023, our global workforce wa s 54% women and 46% men, and the Aon Executive Committee, which leads the firm was 58% women and 42% men.
This includes the development of more competitive, innovative, and efficient risk transfer options. Facultative reinsurance empowers clients to better understand, manage, and transfer risk through innovative facultative solutions and provides the most efficient access to the global facultative reinsurance markets.
Facultative reinsurance empowers clients to better understand, manage, and transfer risk through innovative facultative solutions and provides the most efficient access to the global facultative reinsurance markets. Strategy and Technology Group combines strategic advice with data-driven consulting, analytics, and modeling tools, including Tyche, ReMetrica, and PathWise, to help clients deploy capital efficiently and effectively.
Removed
Collectively, these products and service lines make up our one segment: Aon United. In addition, the Company is continuing to expand on Aon United growth initiatives through its Aon Growth Ventures Group. In 2022, our consolidated total revenue was $12,479 million.
Added
On December 19, 2023, Aon entered into a definitive agreement (the “Merger Agreement”) with Randolph Acquisition Corp., a Delaware corporation and an indirect, wholly owned subsidiary of Aon (the “Acquirer”), Randolph Merger Sub LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of the Acquirer, NFP Intermediate Holdings A Corp., a Delaware corporation (“NFP”), and NFP Parent Co, LLC, a Delaware limited liability company (the “NFP Seller”), pursuant to which the Acquirer will acquire NFP for an aggregate purchase price of approximately $7 billion in cash and approximately 20,000,000 class A ordinary shares, nominal value of $0.01, in capital of Aon, in each case, subject to certain adjustments as set forth in the Merger Agreement (the “Transaction”).
Removed
This includes $6,715 million in Commercial Risk Solutions, $2,190 million in Reinsurance Solutions, $2,224 million in Health Solutions, and $1,367 million in Wealth Solutions, before certain intercompany eliminations. Principal Products and Services Commercial Risk Solutions includes retail brokerage, specialty solutions, global risk consulting and captives management, and Affinity programs.
Added
The Company expects to fund the cash portion of the consideration with approximately $7 billion of new debt, with $5 billion raised i n advance of the closing date and $2 billion raised at close of the acquisition.
Removed
Our Inclusive People Leadership strategy is a central part of our Aon United Blueprint and is a key enabler to realizing our aspirations and purpose as a firm. At Aon, all colleagues are called upon to be leaders in embracing and modelling our Aon United values and behaviors.
Added
The acquisition is expected to be completed by mid-2024, subject to satisfaction or waiver of the closing conditions set forth in the Merger Agreement, including applicable regulatory approval.
Removed
From self-guided learning courses to advanced leadership programs, the curriculum is aligned to the Aon United Blueprint and Inclusive People Leader strategy. Aon’s investment in technology and use of virtual based learning and development programs allows us to deliver targeted offerings designed to advance all colleagues’ development.
Added
The CODM assesses the performance of the Company and allocates resources based on one segment: Aon United. In 2023, our consolidated total revenue was $13,376 million. This includes $7,043 million in Commercial Risk Solutions, $2,481 million in Reinsurance Solutions, $2,433 million in Health Solutions, and $1,431 million in Wealth Solutions, before certain intercompany eliminations.
Removed
Eligible colleagues that were active on September 24, 2021 received a one-time stock based award enabling Aon colleagues to share in the future success of our Aon United mission. Our compensation philosophy aligns with our Aon United strategy and delivering long-term shareholder value creation. Our executive incentives are based on driving results, delivery of strategic initiatives, and leadership.
Added
We collaborate with sponsors and other privileged distribution channels through which Aon can deliver differentiated, highly targeted, and highly valuable solutions for unique risk solutions. 5 Reinsurance Solutions includes treaty reinsurance, facultative reinsurance, Strategy and Technology Group and capital markets.
Removed
As of December 31, 2022, Aon’s global workforce was 54% women and 46% men, and the Aon Executive Committee which leads the firm was 48% women and 52% men. At the manager level, 28% of senior leaders and 43% of managers with one or more direct report were women.
Added
In 2023, we announced our 3x3 Plan to go further, faster and continue evolving with our clients and build the capability to deliver the full value of our firm over the next three years. Colleagues As of December 31, 2023, we employed approximately 50,000 employees and conducted our operations in more than 120 countries and sovereignties.
Removed
Both programs are certified apprenticeship programs, by the Department of Labor in the U.S. and the Department of Education in the U.K.
Added
This strategy, which supports in person, hybrid, and virtual working, continues to be a source of positive feedback and strong engagement based on colleague surveys. Training and Development We invest significant resources to develop the talent needed to remain at the forefront of innovation and remain an attractive employer.
Added
We use a variety of channels to facilitate open, on-going, and direct communication with colleagues. These channels include open forums and town halls with executives, colleague surveys, and engagement through our Business Resource Groups.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeInnovations in software, cloud computing, data and analytics or other technologies that alter how our services are delivered could significantly undermine our investment in the business if we are slow to innovate or unable to take advantage of these developments.
Biggest changeInnovations in software, cloud computing, data and analytics, generative artificial intelligence, or other technologies that alter how our services are delivered could significantly undermine our investment in the business if we are slow to innovate or unable to take advantage of these developments. 12 In addition, innovation in technology, capabilities, sources of capital for our clients’ insurance and reinsurance needs, and the entry into new lines of business, services, or products require significant investment and present additional risks to the Company, particularly in instances where the markets are new or not fully developed or where participants in such markets are new entrants.
Further, we compete on pricing and the innovation and quality of our service offerings and could be affected by competitors’ lower cost structures, product development activities, and pricing policies, any or all of which could result in better market acceptance of our competitors’ offerings than those that we offer or develop.
Further, we compete on pricing and the innovation and quality of our service offerings, which could be affected by competitors’ lower cost structures, product development activities, and pricing policies, any or all of which could result in better market acceptance of our competitors’ offerings than those that we offer or develop.
In addition to movements in premium rates, our ability to generate premium-based commission revenue may be challenged by: • the growing availability of alternative methods for clients to meet their risk-protection needs, including a greater willingness on the part of corporations to “self-insure,” the use of so-called “captive” insurers, and the development of 13 capital markets-based solutions and other alternative capital sources for traditional insurance and reinsurance needs that increase market capacity, increase competition, and put pressure on premiums; • decreases in available underwriting capacity for insurance and reinsurance; • fluctuation in the need for, or relevancy of, insurance; • the level of compensation, as a percentage of premium, that insurance carriers are willing to compensate brokers for placement activity; • the growing desire of clients to move away from variable commission rates and instead compensate brokers based upon flat fees, which can negatively impact us as fees are not consistently indexed for inflation and may not rise as much as commission-based compensation; • competition from insurers seeking to sell their products directly to consumers, including online sales, without the involvement of an insurance broker; and • growing number of technology-enabled competitors offering new risk-transfer solutions that eliminate the traditional broker-client relationship in both commercial insurance and reinsurance markets.
In addition to movements in premium rates, our ability to generate premium-based commission revenue may be challenged by: • the growing availability of alternative methods for clients to meet their risk-protection needs, including a greater willingness on the part of corporations to “self-insure,” the use of so-called “captive” insurers, and the development of capital markets-based solutions and other alternative capital sources for traditional insurance and reinsurance needs that increase market capacity, increase competition, and put pressure on premiums; • decreases in available underwriting capacity for insurance and reinsurance; • fluctuation in the need for, or relevancy of, insurance; • the level of compensation, as a percentage of premium, that insurance carriers are willing to compensate brokers for placement activity; 13 • the growing desire of clients to move away from variable commission rates and instead compensate brokers based upon flat fees, which can negatively impact us as fees are not consistently indexed for inflation and may not rise as much as commission-based compensation; • competition from insurers seeking to sell their products directly to consumers, including online sales, without the involvement of an insurance broker; and • the growing number of technology-enabled competitors offering new risk-transfer solutions that eliminate the traditional broker-client relationship in both commercial insurance and reinsurance markets.
Accordingly, we may have a license revoked or be unable to obtain new licenses and therefore be precluded or suspended from carrying on or developing some or all of our activities or otherwise fined or penalized in a given jurisdiction.
Accordingly, we may have a license revoked or be unable to obtain new licenses and therefore be precluded or suspended from carrying on or developing some or all of our activities or otherwise be fined or penalized in a given jurisdiction.
Such risks include the investment of significant time and resources; the possibility that these efforts will not be successful and could result in reputational damage to us; the possibility that the marketplace does not accept our products or services or that we are unable to retain clients that adopt our new products or services; and the risk of new or additional liabilities associated with these efforts, including potential E&O or other claims.
Such risks include the investment of significant time and resources; the possibility that these efforts will not be successful and could result in reputational damage to us; the possibility that the marketplace does not accept our products or services or that we are unable to retain clients that adopt our new products or services; and the risk of new or additional liabilities associated with these efforts, including potential E&O or other claims.
We have implemented various measures to manage our risks related to system and network security and disruptions, but a security breach or a significant or extended disruption in the functioning of our information technology systems could damage our reputation, cause us to lose clients, adversely impact our operations, sales, and operating results, and require us to incur significant expense (in connection with incident response, remediation efforts, or otherwise) and divert resources to address and 24 remediate or otherwise resolve such issues.
We have implemented various measures to manage our risks related to system and network security and disruptions, but a security breach or a significant or extended disruption in the functioning of our information technology systems could damage our reputation, cause us to lose clients, adversely impact our operations, sales, and operating results, and require us to incur significant expense (in connection with incident response, remediation efforts, or otherwise) and divert resources to address and remediate or otherwise resolve such issues.
An interruption in or the cessation of service by any service provider as a result of systems failures, cybersecurity or data privacy incidents (including, but not limited to, ransomware), capacity constraints, financial difficulties, or for any other reason could disrupt our operations, impact our ability to offer certain products and services, and result in contractual or regulatory penalties, liability claims from clients, or employees, damage to our reputation, and harm to our business.
An interruption in or the cessation of service by any service provider as a result of systems failures, cybersecurity or data privacy incidents 22 (including, but not limited to, ransomware), capacity constraints, financial difficulties, or for any other reason could disrupt our operations, impact our ability to offer certain products and services, and result in contractual or regulatory penalties, liability claims from clients, or employees, damage to our reputation, and harm to our business.
Variations or developments in connection with any of these factors could cause 15 significant changes to our financial position and results of operations from year to year. In addition, contributions are generally based on statutory requirements and local funding practices, which may differ from measurements under U.S. GAAP. We have debt outstanding that could adversely affect our financial flexibility.
Variations or developments in connection with any of these factors could cause significant changes to our financial position and results of operations from year to year. In addition, contributions are generally based on statutory requirements and local funding practices, which may differ from measurements under U.S. GAAP. We have debt outstanding that could adversely affect our financial flexibility.
In addition, changes in laws, government regulations, or the way those regulations are interpreted in the jurisdictions in which we operate could affect the viability, value, use, or delivery of benefits and human resources programs, including changes in regulations relating to health and welfare plans (such as medical), defined 19 contribution plans (such as 401(k)), or defined benefit plans (such as pension), may adversely affect the demand for, or profitability of, our services.
In addition, changes in laws, government regulations, or the way those regulations are interpreted in the jurisdictions in which we operate could affect the viability, value, use, or delivery of benefits and human resources programs, including changes in regulations relating to health and welfare plans (such as medical), defined contribution plans (such as 401(k)), or defined benefit plans (such as pension), may adversely affect the demand for, or profitability of, our services.
These currency exchange fluctuations create risk in both the translation of the financial results of our global subsidiaries into U.S. dollars for our consolidated financial statements, as well as in those of our operations that receive revenue and incur expenses other than in their respective local currencies, which can reduce the profitability of our operations based on the direction the respective currencies’ exchange rates move.
These currency exchange fluctuations create risk in both the translation of the financial 14 results of our global subsidiaries into U.S. dollars for our consolidated financial statements, as well as in those of our operations that receive revenue and incur expenses other than in their respective local currencies, which can reduce the profitability of our operations based on the direction the respective currencies’ exchange rates move.
Should we experience a local or regional disaster or other business continuity problem, such as a security incident or attack, a natural disaster, climate 22 event, terrorist attack, pandemic, power loss, telecommunications failure, or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel and office facilities, and the proper functioning of computer systems, telecommunications, and other related systems and operations.
Should we experience a local or regional disaster or other business continuity problem, such as a security incident or attack, a natural disaster, climate event, terrorist attack, pandemic, power loss, telecommunications failure, or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel and office facilities, and the proper functioning of computer systems, telecommunications, and other related systems and operations.
In addition, certain laws and regulations, such as the Foreign Corrupt Practices Act and the 18 Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act in the U.S., and the Bribery Act of 2010 in the U.K., impact our operations outside of the legislating country by imposing requirements for the conduct of overseas operations, and in several cases, requiring compliance by foreign subsidiaries.
In addition, certain laws and regulations, such as the Foreign Corrupt Practices Act and the Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act in the U.S., and the Bribery Act of 2010 in the U.K., impact our operations outside of the legislating country by imposing requirements for the conduct of overseas operations, and in several cases, requiring compliance by foreign subsidiaries.
The economic and political conditions of the countries and regions in which we operate could have an adverse impact on our business, financial condition, operating results, liquidity, and prospects for growth. Our operations in countries undergoing political change or experiencing economic instability are subject to uncertainty and risks that could materially adversely affect our business.
Operational Risks The economic and political conditions of the countries and regions in which we operate could have an adverse impact on our business, financial condition, operating results, liquidity, and prospects for growth. Our operations in countries undergoing political change or experiencing economic instability are subject to uncertainty and risks that could materially adversely affect our business.
If we are unsuccessful in maintaining such a work environment or adapting to colleague needs or expectations, we could experience difficulty attracting and retaining personnel, which could have a negative impact on our business. 21 Our global operations expose us to various international risks that could adversely affect our business. Our operations are conducted globally.
If we are unsuccessful in maintaining such a work environment or adapting to colleague needs or expectations, we could experience difficulty attracting and retaining personnel, which could have a negative impact on our business. Our global operations expose us to various international risks that could adversely affect our business. Our operations are conducted globally.
Economic downturns, volatility, or uncertainty in the broader economy or in specific markets (including as a result of endemics or pandemics, climate change, political unrest, actions by central banks, or otherwise) may cause reductions in technology and discretionary spending by our clients, which may result in reductions in the growth of new business or reductions in existing business.
Economic downturns, volatility, or uncertainty in the broader economy or in specific markets (including as a result of endemics or pandemics, climate change, political unrest, actions by central banks, or otherwise) may cause reductions in technology and discretionary spending by our clients, which may result in 11 reductions in the growth of new business or reductions in existing business.
As a holding company without significant operations of its own, our principal assets are the shares of capital stock of our subsidiaries. We rely on dividends, interest, and other payments from these subsidiaries to meet our obligations for paying principal and interest on outstanding debt, paying dividends to shareholders, repurchasing ordinary shares, and corporate 17 expenses.
As a holding company without significant operations of its own, our principal assets are the shares of capital stock of our subsidiaries. We rely on dividends, interest, and other payments from these subsidiaries to meet our obligations for paying principal and interest on outstanding debt, paying dividends to shareholders, repurchasing ordinary shares, and corporate expenses.
As we adapt to changes in our business and the market, adapt to the regulatory environment, enter into new engagements, acquire additional businesses, and take on new employees in new locations, we may not be able to manage our large, diverse and changing workforce, control our costs, or improve our efficiency.
As we adapt to changes in our business and the market, adapt to the regulatory environment, enter into new engagements, acquire additional businesses, and take on new employees in new locations, we may not be able to manage our large, diverse and changing workforce, effectively control our costs, or improve our efficiency.
In addition, certain discretionary services within our business, such as Human Capital, project-related work within Commercial Risk Solutions and Health Solutions, and transaction liability, may see a decrease in activity if the overall level of economic activity results in a reduction to our clients’ discretionary spending.
In addition, certain discretionary services within our business, such as Human Capital, project-related work within Commercial Risk Solutions and Health Solutions, and transaction services, may see a decrease in activity if the overall level of economic activity results in a reduction to our clients’ discretionary spending.
Furthermore, as we enter new jurisdictions or businesses and further develop and expand our services, including through acquisitions, we may become subject to additional types of laws and governmental oversight and supervision, such as those applicable to the financial lending or other service institutions.
Furthermore, as 18 we enter new jurisdictions or businesses and further develop and expand our services, including through acquisitions, we may become subject to additional types of laws and governmental oversight and supervision, such as those applicable to the financial lending or other service institutions.
If we dispose of or otherwise exit certain businesses, there can be no assurance that we will 23 not incur certain disposition related charges, will not be subject to post-closing liabilities, obligations or restrictions, will be able to reduce overhead related to the divested assets, or will realize the intended benefits of the disposition.
If we dispose of or otherwise exit certain businesses, there can be no assurance that we will not incur certain disposition related charges, will not be subject to post-closing liabilities, obligations or restrictions, will be able to reduce overhead related to the divested assets, or will realize the intended benefits of the disposition.
All information technology systems are potentially vulnerable to damage or interruption from a variety of sources, including but not limited to cyber-attacks, computer viruses, security breaches, and unauthorized access or improper actions by insiders or employees.
All information technology systems are potentially vulnerable to damage or interruption from a variety of sources, including but not limited to cyber-attacks, 23 computer viruses, security breaches, and unauthorized access or improper actions by insiders or employees.
Additionally, our acquisitions of new businesses and our continued operational changes and entry into new jurisdictions and new service offerings increases our legal and regulatory compliance complexity, as well as the type of governmental oversight to which we may be subject.
Additionally, our acquisitions of new businesses and our continued operational changes and entry into new jurisdictions and development of new service offerings increases our legal and regulatory compliance complexity, as well as the type of governmental oversight to which we may be subject.
Our failure to comply with or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability, result in proceedings or fines against us by governmental entities or others, or impair our reputation in the marketplace.
Our failure to comply with or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability, result in proceedings or fines against us by governmental 24 entities or others, or impair our reputation in the marketplace.
For instance, increased scrutiny by competition authorities may increase our costs of doing business or force us to change the way we conduct business or refrain from or otherwise alter the way we engage in certain activities.
For instance, increased scrutiny by competition authorities may increase our costs of 19 doing business or force us to change the way we conduct business or refrain from or otherwise alter the way we engage in certain activities.
Damage to our reputation, including as a result of negative perceptions or publicity regarding a class of business, environmental matters, climate change, workforce diversity, pay equity, harassment, social justice, cyber security or data privacy, or our inability to meet commitments or client and stakeholder expectations with respect to such matters, could affect the confidence of our clients, rating agencies, regulators, stockholders, employees and third parties in transactions that are important to our business adversely affecting our business, financial condition, and operating results.
Damage to our reputation, including as a result of negative perceptions or publicity regarding a class of business, environmental matters, climate change, workforce make-up, pay equity, harassment, social justice, cyber security or data privacy, or our inability to meet commitments or client and stakeholder expectations with respect to such matters, could affect the confidence of our clients, rating agencies, regulators, stockholders, employees and third parties in transactions that are important to our business adversely affecting our business, financial condition, and operating results.
We also are subject to risks that, at the time any of our outstanding debt matures, we will not be able to retire or refinance the debt on terms that are acceptable to us, or at all. As of December 31, 2022, we had two committed credit facilities outstanding.
We also are subject to risks that, at the time any of our outstanding debt matures, we will not be able to retire or refinance the debt on terms that are acceptable to us, or at all. As of December 31, 2023, we had two committed credit facilities outstanding.
We strive to maintain an equitable work environment that unlocks the full potential of all of our personnel - this includes our commitment to diversity and inclusion, focus on colleague wellness and mental health, and building a flexible work environment that meets colleague and client needs.
We strive to maintain an equitable work environment that unlocks the full potential of all of our personnel - this includes our commitment to inclusion, focus on colleague wellness and mental health and belonging, and building a flexible work environment that meets colleague and client needs.
Our business is exposed to risks associated with the handling of client funds. Certain of our businesses collect premiums from insureds and remits the premiums to the respective insurers. We also collect claims or refunds from insurers on behalf of insureds, which are then remitted to the insureds.
Our business is exposed to risks associated with the handling of client funds. Certain of our businesses collect premiums from insureds and remit the premiums to the respective insurers. We also collect claims or refunds from insurers on behalf of insureds, which are then remitted to the insureds.
Changes in the regulatory scheme, or even changes in how existing regulations are interpreted, could have an adverse impact on our results of operations by limiting revenue streams or increasing costs of compliance.
Changes in the regulatory scheme, or even changes in how applicable regulations are interpreted, could have an adverse impact on our results of operations by limiting revenue streams or increasing costs of compliance.
The effort to gain necessary expertise and achieve internal efficiencies through technology and data and analytics require us to incur significant expenses, and we may not be successful in identifying the optimal funding priorities.
The effort to gain necessary expertise and achieve internal efficiencies through technology and data and analytics requires us to incur significant expenses, and we may not be successful in identifying the optimal funding priorities.
Also, we can be affected indirectly by the governmental regulation and supervision of insurance companies. For instance, if we are providing or managing general underwriting services for an insurer, we may have to contend with regulations affecting our client.
Also, we can be affected indirectly by the governmental regulation and supervision of insurance companies. For instance, if we are providing or managing general underwriting services for an insurer, we may have to adhere to regulations affecting our insurer client.
Changes in interest rates and deterioration of credit quality could reduce the value of our cash balances and investment portfolios and adversely affect our financial condition or results. Operating funds available for corporate use were $1,142 million at December 31, 2022 and are reported in Cash and cash equivalents and Short-term investments.
Changes in interest rates and deterioration of credit quality could reduce the value of our cash balances and investment portfolios and adversely affect our financial condition or results. Operating funds available for corporate use were $1,147 million at December 31, 2023 and are reported in Cash and cash equivalents and Short-term investments.
Further, we operate in many jurisdictions and effective trademark, copyright, patent, and trade secret protection may not be available or adequate in every country or jurisdiction in which we offer our services or employ our colleagues. Additionally, our competitors may develop products similar to our products that do not conflict with our related intellectual property rights.
Further, we operate in many jurisdictions and effective trademark, copyright, patent, and trade secret protection may not be available or adequate in every country or jurisdiction in which we offer our services or employ our colleagues. Additionally, our competitors may develop products similar to our products that do not infringe our intellectual property rights.
As a global professional services firm, we compete with global, national, regional, and local insurance companies that market and service their own products, other financial services providers, brokers, and investment managers, independent firms, and consulting organizations affiliated with accounting, information systems, technology, human resources consulting, and financial services firms.
As a global professional services firm, we compete with a broad variety of firms, including global, national, regional, and local insurance companies that market and service their own products, other financial services providers, brokers, and investment managers, independent firms, and consulting organizations affiliated with accounting, information systems, technology, human resources consulting, and financial services firms.
As of December 31, 2022, these long-term investments had a carrying value of $60 million. Adverse changes in interest rates, performance, and counterparty credit quality, including default, could reduce the value of these funds and investments, thereby adversely affecting our financial condition or results.
As of December 31, 2023, these long-term investments had a carrying value of $45 million. Adverse changes in interest rates, performance, and counterparty credit quality, including default, could reduce the value of these funds and investments, thereby adversely affecting our financial condition or results.
We are exposed to various risks arising out of natural disasters, including earthquakes, hurricanes, fires, floods, tornadoes, extreme weather, or other climate events; pandemic health events, and man-made disasters, including acts of terrorism, civil unrest, violence, military actions, and cyber-terrorism (including, but not limited to, ransomware).
We are exposed to various risks arising out of natural disasters, including earthquakes, hurricanes, fires, floods, tornadoes, extreme weather, or other climate events; pandemic health events (such as the COVID-19 pandemic), and man-made disasters, including acts of terrorism, civil unrest, violence, military actions, and cyber-terrorism (including, but not limited to, ransomware).
Our senior debt ratings at December 31, 2022 were A- with a stable outlook (S&P), BBB+ with a stable outlook (Fitch), and Baa2 with a stable outlook (Moody’s). Our commercial paper ratings were A-2 (S&P), F-2 (Fitch) and P-2 (Moody’s).
Our senior debt ratings at December 31, 2023 were A- with a negative outlook (S&P), BBB+ with a negative outlook (Fitch), and Baa2 with a stable outlook (Moody’s). Our commercial paper ratings were A-2 (S&P), F-2 (Fitch) and P-2 (Moody’s).
As of December 31, 2022, we had total consolidated debt outstanding of approximately $10.8 billion . The level of debt outstanding could adversely affect our financial flexibility by reducing our ability to use cash from operations for other purposes, including working capital, dividends to shareholders, share repurchases, acquisitions, capital expenditures and general corporate purposes.
As of December 31, 2023, we had total consolidated debt outstanding of approximately $11.2 billion . The level of debt outstanding could adversely affect our financial flexibility by reducing our ability to use cash from operations for other purposes, including working capital, dividends to shareholders, share repurchases, acquisitions, capital expenditures and general corporate purposes.
Of the total balance, $115 million was restricted to its use as of December 31, 2022. Funds held on behalf of clients and insurers were $6.4 billion at December 31, 2022 and are reported in Fiduciary assets. We also carry an investment portfolio of other long-term investments.
Of the total balance, $120 million was restricted to its use as of December 31, 2023. Funds held on behalf of clients and insurers were $6.9 billion at December 31, 2023 and are reported in Fiduciary assets. We also carry an investment portfolio of other long-term investments.
Problems with the information technology systems of vendors, including breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, difficulties in the migration of services or data to third parties or the cloud hosted by third parties, cyber-attacks, and security breaches could adversely affect our ability to deliver products and services to customers and otherwise conduct business.
Aon has from time-to-time experienced and may experience in the future problems with the information technology systems of vendors, including breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, difficulties in the migration of services or data to third parties or the cloud hosted by third parties, cyber-attacks, and security breaches could adversely affect our ability to deliver products and services to customers and otherwise conduct business.
We are at risk of attack by a growing list of adversaries through new and increasingly sophisticated methods of attack, including methods that take advantage of remote work scenarios due to COVID-19.
We are at risk of attack by a growing list of adversaries through new and increasingly sophisticated methods of attack, including methods that take advantage of remote work scenarios.
We expect additional jurisdictions to continue to adopt new privacy regulations and there to be amendments to existing regulations as governments continue to legislate in respect of personal data. We have and will continue to incur expenses and devote resources to bring our practices into compliance with these regulations and future regulations.
We expect additional jurisdictions to continue to adopt new privacy regulations and that existing regulations may be amended as governments continue to legislate in respect of personal data. We have incurred expenses and devoted resources, and will continue to incur expenses and devote resources, to bring our practices into compliance with these regulations and future regulations.
Approximately 55% of our consolidated revenue is non-U.S., attributed on the basis of where the services are performed, and where products are sold, and the exposures created can have significant currency volatility.
Appro ximately 55% of o ur consolidated revenue is non-U.S., attributed on the basis of where the services are performed, and where products are sold, and the exposures created can have significant currency volatility.
The OECD recommendations have been nominally accepted by many countries within and without the OECD, but the implementation in each country remains subject to the possibility of significant variation, which could lead to a risk of multiple levels of taxation on Aon’s income.
The OECD proposed tax regime has been nominally accepted by many countries within and without the OECD, although implementation in each country remains subject to the possibility of significant variation, which could lead to a risk of multiple levels of taxation on Aon’s income.
Readers should consider these risks in addition to the other information contained in this report because our business, financial condition, or results of operations could be materially adversely affected if any of these risks were to actually occur and the occurrence of such risks could cause our actual results to differ materially from those stated in or implied by the forward-looking statements in this document and elsewhere. 11 Risks Related to Our Business An overall decline in economic and business activity could have a material adverse effect on the financial condition and results of operations of our business.
Readers should consider these risks in addition to the other information contained in this report because our business, financial condition, or results of operations could be materially adversely affected if any of these risks were to actually occur and the occurrence of such risks could cause our actual results to differ materially from those stated in or implied by the forward-looking statements in this document and elsewhere.
E&O claims could include, for example, the failure of our employees or sub-agents, whether negligently or intentionally, to place coverage correctly or notify carriers of claims on behalf of clients, to provide insurance carriers with complete and accurate information relating to the risks being insured, or the failure to give error-free consulting or investment advice.
E&O claims against us may allege our potential liability for damages arising from these services. 17 E&O claims could include, for example, the failure of our employees or sub-agents, whether negligently or intentionally, to place coverage correctly or notify carriers of claims on behalf of clients, to provide insurance carriers with complete and accurate information relating to the risks being insured, or the failure to give error-free consulting or investment advice.
We may be unsuccessful in developing innovative strategies, or our competitors may be more successful in innovating and delivering services to meet new and existing client needs. Competitors may be able to innovate faster and respond better to evolving client demand and industry conditions, or price their services more aggressively than we do.
We may be unsuccessful in developing innovative strategies, or our competitors may be more successful in innovating and delivering services to meet new and existing client needs. Competitors may be able to innovate faster and respond better to evolving client demand and industry conditions, or may price their products in a manner that clients find more attractive than Aon.
Although we use various derivative financial instruments to help protect against certain adverse foreign exchange rate fluctuations, we cannot eliminate such risks, and, as a result, changes in exchange rates may adversely affect our results.
Although we use various derivative financial instruments to limit the impact of foreign exchange rate fluctuations, we cannot eliminate such risks, and, as a result, changes in exchange rates may adversely affect our results.
These risks include, particularly in emerging markets, the possibility we would be subject to undeveloped or evolving legal systems, unstable governments and economies, impacts from geopolitical conflicts, and potential governmental actions affecting the flow of goods, services, and currency.
These risks include, particularly in emerging markets, the possibility we would be subject to undeveloped or evolving legal systems, unstable governments and economies, impacts from geopolitical conflicts, and potential governmental actions affecting the flow of goods, services, and currency. We may not realize all of the expected benefits from our restructuring plan and other operational improvement initiatives.
Any significant system or network disruption due to a breach in the security of our information technology systems could have a negative impact on our reputation, operations, sales, and operating results.
Risks Related to Technology, Cybersecurity, and Data Protection We rely on complex information technology systems and networks to operate our business. Any significant system or network disruption due to a breach in the security of our information technology systems could have a negative impact on our reputation, operations, sales, and operating results.
These consequences could, among other things, result in a decline in business and increased claims from those areas. They could also result in reduced underwriting capacity, making it more difficult for our professionals to place business. Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations.
These consequences could, among other things, result in a decline in business and increased claims from those areas. They could also result in reduced underwriting capacity, making it more difficult for our professionals to place business.
Successful challenges against us could require us to modify or discontinue our use of technology or business processes where such use is found to infringe or violate the rights of others, or require us to purchase licenses from third parties, any of which could adversely affect our business, financial condition, and operating results. 20 Operational Risks Our results of operations have been adversely affected and could be materially adversely affected in the future by the COVID-19 global pandemic.
Successful challenges against us could require us to modify or discontinue our use of technology or business processes where such use is found to infringe or violate the rights of others, or require us to purchase licenses from third parties, any of which could adversely affect our business, financial condition, and operating results.
Significant judgment is required in determining our worldwide provision for income taxes, and our determination of the amount of our tax liability is always subject to review by applicable tax authorities.
Significant judgment is required in determining our worldwide provision for income taxes, and our determination of the amount of our tax liability is always subject to review by applicable tax authorities. Our actual global tax rate may vary from our expectation and that variance may be material.
We are, and anticipate we will be, subject to tax audits conducted by Ireland, the U.K., the U.S., and other tax authorities, and the resolution of such audits could impact our tax rate in future periods, as would any reclassification or other changes (such as those in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements.
In any event, until further clarifications are provided, there is a risk that the global minimum tax regime could have a material adverse effect on our global effective tax rate, results of operations, cash flows and financial condition. 16 We are, and anticipate we will be, subject to tax audits conducted by Ireland, the U.K., the U.S., and other tax authorities, and the resolution of such audits could impact our tax rate in future periods, as would any reclassification or other changes (such as those in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements.
Our competitors have or are developing competing data and analytics tools, and their success in this space may impact our ability to differentiate our services to our clients through the use of unique technological solutions.
Our competitors have or are developing competing data and analytics tools, and their success in this space may impact our ability to differentiate our own data and analytics tools.
We assist our clients with various matters, including advising on and placing insurance and reinsurance coverage and handling related claims, consulting on various human resources matters, and providing actuarial, investment consulting, and asset management services. E&O claims against us may allege our potential liability for damages arising from these services.
We assist our clients with various matters, including advising on and placing insurance and reinsurance coverage and handling related claims, consulting on various human resources matters, and providing actuarial, investment consulting, and asset management services.
Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the U.S. 25 In addition, depending on the circumstances, the acquisition, ownership and/or disposition of our ordinary shares may subject shareholders to different or additional tax consequences under Irish law including, but not limited to, Irish stamp duty, dividend withholding tax and capital acquisitions tax.
In addition, depending on the circumstances, the acquisition, ownership and/or disposition of our ordinary shares may subject shareholders to different or additional tax consequences under Irish law including, but not limited to, Irish stamp duty, dividend withholding tax and capital acquisitions tax.
A substantial portion of our outstanding debt, including certain intercompany debt obligations, contains financial and other covenants. The terms of these covenants may limit our ability to obtain, or increase the costs of obtaining, additional financing to fund working capital, capital expenditures, acquisitions, or general corporate requirements.
The terms of these covenants may limit our ability to obtain, or increase the costs of obtaining, additional financing to fund working capital, capital expenditures, acquisitions, or general corporate requirements.
We make investments in technology and data and analytics to operate our businesses and achieve intended efficiencies; however, our investments and enhancements may not be sufficient to respond needs across all of our businesses. In addition, if we are not successful in developing and maintaining expertise in process excellence, technology and data trends, our business performance may be compromised.
We make investments in technology and data and 21 analytics to operate our businesses and achieve intended efficiencies; however, our investments and enhancements may not be sufficient to respond to needs across all of our businesses.
If we are unsuccessful in innovating, if we cannot innovate as quickly as our competitors, if we are not able to make sufficient investment in innovation, if our competitors develop more cost-effective technologies, or if our ideas are not accepted in the marketplace, it could have a material adverse effect on our ability to obtain and complete client engagements. 12 For example, we have invested significantly in the development of our proprietary data and analytics tools including repositories of global insurance and reinsurance placement information, which we use to drive results for our clients in the insurance and reinsurance placement process.
If we are unsuccessful in innovating, if we cannot innovate as quickly as our competitors, if we are not able to make sufficient investment in innovation, if our competitors develop more cost-effective technologies (including through the use of artificial intelligence or other emerging technologies), or if our ideas are not accepted in the marketplace, it could have a material adverse effect on our ability to obtain and complete client engagements.
We have had to implement new requirements set out in these laws within our business before the effective date causing distraction from other aspects of our business.
We have had to implement new requirements set out in these laws within our business before the effective date, requiring significant time and resources.
Each of these facilities is intended to support our commercial paper obligations and our general working capital needs. In addition, each of these facilities included customary representations, warranties, and covenants, including financial covenants that require us to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, tested quarterly.
In addition, each of these facilities included customary representations, warranties, and covenants, including financial covenants that require us to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, tested quarterly. 15 A substantial portion of our outstanding debt, including certain intercompany debt obligations, contains financial and other covenants.
Risks Related to Being an Irish-incorporated Company We are incorporated in Ireland, and Irish law differs from the laws in effect in the U.S. and may afford less protection to holders of our securities.
As a result, Aon’s actual global effective tax rate may vary from expectations following the Transaction and that variance may be material. Risks Related to Being an Irish-incorporated Company We are incorporated in Ireland, and Irish law differs from the laws in effect in the U.S. and may afford less protection to holders of our securities.
Because the techniques used to obtain unauthorized access or sabotage systems change frequently, we may be unable to anticipate these techniques, implement adequate preventative measures, or detect and respond quickly enough in the event of an incident or attack. We regularly experience social engineering attempts, and increasingly sophisticated attempted attacks to our systems and networks.
Because the techniques used to obtain unauthorized access or sabotage systems change frequently (including as a result of the use of generative artificial intelligence, such as deepfakes), we may be unable to anticipate these techniques, implement adequate preventative measures, or detect and respond quickly enough in the event of an incident or attack.
This could occur, for example, when we are providing services to multiple parties in connection with a transaction. We also provide services to advise and assist in satisfying all our clients’ needs from all our businesses, creating a greater potential for conflicts with advisory services.
This could occur, for example, when we are providing services to multiple parties in connection with a transaction. We also may provide multiple types of services to certain clients from more than one of our solution lines, creating a greater potential for conflicts with advisory services.
We may enter new lines of business or offer new products and services within existing lines of business either through acquisitions or through initiative to generate organic revenue growth. These new lines of business, products, and services present the Company with additional risks, particularly in instances where the markets are new or not fully developed.
These new lines of business, products, and services may present the Company with additional risks, particularly in instances where the markets are new or not fully developed or where participants in such markets are new entrants.
Discussion of some of these claims, lawsuits, and proceedings are contained in the Notes to Consolidated Financial Statements. In addition, we provide a variety of guarantees and indemnifications to our customers and others. In the event of a default, our potential exposure is equal to the amount of the guarantee or indemnification.
Amounts related to settlement provisions are recorded in Other general expenses in the Consolidated Statements of Income. Discussion of some of these claims, lawsuits, and proceedings are contained in the Notes to Consolidated Financial Statements. In addition, we provide a variety of guarantees and indemnifications to our customers and others.
The occurrence of natural or man-made disasters could result in declines in business and increases in claims that could adversely affect our financial condition and results of operations.
In addition, if we are not successful in developing and maintaining expertise in process excellence, technology and data trends, our business performance may be compromised. The occurrence of natural or man-made disasters could result in declines in business and increases in claims that could adversely affect our financial condition and results of operations.
In the U.S., the Inflation Reduction Act introduced, among other changes, a 1% excise tax on certain stock redemptions by U.S. corporations (which the U.S. Treasury indicated may also apply to certain stock redemptions of foreign corporations deemed funded by their U.S. affiliates).
Treasury indicated may also apply to certain stock redemptions of foreign corporations deemed funded by their U.S. affiliates).
While it is our intention to maintain a sufficient level of distributable profits in order to pay dividends on our ordinary shares and make share repurchases, there is no assurance that the Company will maintain the necessary level of distributable profits to do so. Item 1B. Unresolved Staff Comments None.
Distributable profits may be created through the earnings of the Company or other methods (including certain intra-group reorganizations involving the capitalization of the Company’s un-distributable profits and their subsequent reduction). 27 While it is our intention to maintain a sufficient level of distributable profits in order to pay dividends on our ordinary shares and make share repurchases, there is no assurance that the Company will maintain the necessary level of distributable profits to do so.
However, we may not realize the benefits we anticipate from the Ireland Reorganization, which could have an adverse effect on our business. Financial Risks We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
Financial Risks • We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
The OECD, a global coalition of member countries, proposed a plan to reform international taxation which includes the introduction of a global minimum tax.
The OECD, a global coalition of member countries, proposed a plan (commonly referred to as “Pillar Two”) to reform international taxation which includes the introduction of a 15% global minimum tax on book income with specified adjustments and determined on a country-by-country basis.
These accruals and receivables are adjusted from time to time as developments warrant and may also be adversely affected by disputes we may have with our insurers over coverage. Amounts related to settlement provisions are recorded in Other general expenses in the Consolidated Statements of Income.
Accruals for these exposures, and related insurance receivables, when applicable, have been provided to the extent that losses are deemed probable and are reasonably estimable. These accruals and receivables are adjusted from time to time as developments warrant and may also be adversely affected by disputes we may have with our insurers over coverage.
However, we may be unable to maintain, at commercially reasonable rates, our current levels of insurance coverage for E&O claims or other risks in future periods. Also, we have exhausted or materially depleted our coverage under some of the policies that protect us for certain years and, consequently, are self-insured or materially self-insured for some historical claims.
Also, we have exhausted or materially depleted our coverage under some of the policies that protect us for certain years and, consequently, are self-insured or materially self-insured for some historical claims. Additionally, parts or all of an E&O claim could fall within insurance deductibles, self-insured retentions, or policy exclusions.
Our success depends on our ability to retain, attract and develop experienced and qualified personnel, including our senior management team and other personnel.
Unanticipated costs or unrealized savings in connection with the Program and other operational improvement initiatives could adversely affect our consolidated financial statements. Our success depends on our ability to retain, attract and develop experienced and qualified personnel, including our senior management team and other personnel.
Furthermore, our ability to limit our potential liability is restricted in certain jurisdictions and in connection with claims involving breaches of fiduciary or agency duties or other alleged errors or omissions. 14 The anticipated benefits of the redomiciliation from the U.K. to Ireland may not be realized.
Furthermore, our ability to limit our potential liability is restricted in certain jurisdictions and in connection with claims involving breaches of fiduciary or agency duties or other alleged errors or omissions. Financial Risks We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
The ultimate outcome of claims, lawsuits, proceedings, guarantees and indemnifications cannot be ascertained, and liabilities in indeterminate amounts may be imposed on us. It is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by an unfavorable resolution of these matters.
It is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by an unfavorable resolution of these matters. Our businesses are subject to extensive governmental regulation, which could reduce our profitability, limit our growth, or subject us to legal and regulatory actions.
This transaction carries inherent risks, including the risk that we will not earn the $500 million of additional consideration or otherwise realize the intended value of the transaction. Risks Related to Technology, Cybersecurity, and Data Protection We rely on complex information technology systems and networks to operate our business.
Risks Related to Technology, Cybersecurity, and Data Protection • We rely on complex information technology systems and networks to operate our business.
If and when effective, the global minimum tax could have a material adverse effect on our global effective tax rate, results of operations, cash flows and financial condition.
Risks Related to Our Business An overall decline in economic and business activity could have a material adverse effect on the financial condition and results of operations of our business.
Our actual global tax rate may vary from our expectation and that variance may be material. 16 The overall tax environment in the jurisdictions in which we are or may be subject to taxes is highly uncertain and increasingly complex. Countries around the world are considering changes in their tax laws and regulations.
The overall tax environment in the jurisdictions in which we are or may be subject to taxes is highly uncertain and increasingly complex. In the U.S., the Inflation Reduction Act introduced, among other changes, a 1% excise tax on certain stock redemptions by U.S. corporations (which the U.S.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSee Note 8 “Lease Commitments” of the Notes 26 to Consolidated Financial Statements in Part II, Item 8 of this report for information with respect to our lease commitments as of December 31, 2022.
Biggest changeSee Note 9 “Lease Commitments” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for information with respect to our lease commitments as of December 31, 2023.
Randolph Street, Chicago, Illinois 312,000 2028 165 Broadway, New York, New York 217,000 2028 122 Leadenhall Street, London, England 178,000 2034 4 Overlook Point, Lincolnshire, Illinois 174,000 2024 As leases expire, we do not anticipate difficulty in negotiating renewals or finding other satisfactory space if the premise becomes unavailable.
Randolph Street, Chicago, Illinois 312,000 2030 165 Broadway, New York, New York 217,000 2028 122 Leadenhall Street, London, England 178,000 2034 4 Overlook Point, Lincolnshire, Illinois 174,000 2024 As leases expire, we do not anticipate difficulty in negotiating renewals or finding other satisfactory space if the premise becomes unavailable.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosure Not applicable. 27 Information about our Executive Officers The executive officers of Aon, as of February 17, 2023 unless otherwise noted, their business experience during a period of the last five years or longer, and their ages and positions held are set forth below. Name Age Position Eric Andersen 58 President. Mr.
Biggest changeItem 4. Mine Safety Disclosure Not applicable. 29 Information about our Executive Officers The executive officers of Aon, as of February 16, 2024 unless otherwise noted, their business experience during a period of the last five years or longer, and their ages and positions held are set forth below. Name Age Position Eric Andersen 59 President. Mr.
Neller served from July 2009 to August 2011 as a Senior Manager of KPMG LLP, an international public accounting firm, in its Department of Professional Practice (National Office). He was named Senior Vice President and Global Controller in February 2018. Mindy Simon 46 Chief Operating Officer. Ms. Simon joined Aon as Chief Operating Officer in October 2022.
Neller served from July 2009 to August 2011 as a Senior Manager of KPMG LLP, an international public accounting firm, in its Department of Professional Practice (National Office). He was named Senior Vice President and Global Controller in February 2018. Mindy Simon 47 Chief Operating Officer. Ms. Simon joined Aon as Chief Operating Officer in October 2022.
Stevens held a variety of roles during her 29-year career at Wells Fargo, most recently as Executive Vice President where she led the Western Region for the Community Bank. Andy Weitz 46 Chief Marketing Officer. Mr. Weitz joined Aon in 2014 as Senior Vice President for Global Marketing and Communications. Before joining Aon, Mr.
Stevens held a variety of roles during her 29-year career at Wells Fargo, most recently as Executive Vice President where she led the Western Region for the Community Bank. Andy Weitz 47 Chief Marketing Officer. Mr. Weitz joined Aon in 2014 as Senior Vice President for Global Marketing and Communications. Before joining Aon, Mr.
Davies served for 5 years in various capacities at Microsoft Corporation, an international software company, most recently serving as Chief Financial Officer of the Platform and Services Division. Before joining Microsoft in 2002, Ms. Davies served at ninemsn, an Australian joint venture with Microsoft. Michael Neller 44 Chief Accounting Officer and Global Controller. Mr.
Davies served for 5 years in various capacities at Microsoft Corporation, an international software company, most recently serving as Chief Financial Officer of the Platform and Services Division. Before joining Microsoft in 2002, Ms. Davies served at ninemsn, an Australian joint venture with Microsoft. Michael Neller 45 Chief Accounting Officer and Global Controller. Mr.
Zeidel worked for Honeywell, where he held business segment general counsel roles in the aerospace strategic business unit and at Honeywell UOP LLC. Mr. Zeidel began his career as an Associate in the Mergers and Acquisitions group in the New York office of Skadden, Arps, Slate, Meagher & Flom, LLP. 28 PART II
Zeidel worked for Honeywell, where he held business segment general counsel roles in the aerospace strategic business unit and at Honeywell UOP LLC. Mr. Zeidel began his career as an Associate in the Mergers and Acquisitions group in the New York office of Skadden, Arps, Slate, Meagher & Flom, LLP. 30 PART II
Case worked for the investment banking firm of Piper, Jaffray and Hopwood and the Federal Reserve Bank of Kansas City. Christa Davies 51 Chief Financial Officer. Ms. Davies became Executive Vice President - Global Finance in November 2007. In March 2008, Ms. Davies assumed the additional role of Chief Financial Officer. Prior to joining Aon, Ms.
Case worked for the investment banking firm of Piper, Jaffray and Hopwood and the Federal Reserve Bank of Kansas City. Christa Davies 52 Chief Financial Officer. Ms. Davies became Executive Vice President - Global Finance in November 2007. In March 2008, Ms. Davies assumed the additional role of Chief Financial Officer. Prior to joining Aon, Ms.
Slyfield held client executive and commercial insurance executive positions at Marsh and Wells Fargo Insurance Services. Lisa Stevens 52 Chief People Officer and Head of Global Human Capital Solutions. Ms. Stevens joined Aon in December 2018 as Global Executive Vice President and was named as Chief People Officer in October 2019. Prior to joining Aon, Ms.
Slyfield held client executive and commercial insurance executive positions at Marsh and Wells Fargo Insurance Services. Lisa Stevens 53 Chief People Officer and Head of Global Human Capital Solutions. Ms. Stevens joined Aon in December 2018 as Global Executive Vice President and was named as Chief People Officer in October 2019. Prior to joining Aon, Ms.
Weitz was President and CEO of the U.S. region for Hill + Knowlton Strategies, a global strategic communications consultancy. Prior to Hill + Knowlton, Mr. Weitz worked at Marsh, Inc., a global insurance brokerage, and served in various roles at Trilogy, Inc. a software company. Darren Zeidel 51 General Counsel and Company Secretary. Mr.
Weitz was President and CEO of the U.S. region for Hill + Knowlton Strategies, a global strategic communications consultancy. Prior to Hill + Knowlton, Mr. Weitz worked at Marsh, Inc., a global insurance brokerage, and served in various roles at Trilogy, Inc. a software company. Darren Zeidel 52 General Counsel and Company Secretary. Mr.
Simon held a variety of roles in finance and information technology with Conagra Brands since joining the company in 2000, including serving as VP Global Business Services from January 2016 to June 2017, and VP Information Technology from 2008 to 2016. Jillian Slyfield 49 Chief Innovation Officer. Ms.
Simon held a variety of roles in finance and information technology with Conagra Brands since joining the company in 2000, including serving as VP Global Business Services from January 2016 to June 2017, and VP Information Technology from 2008 to 2016. Jillian Slyfield 50 Chief Innovation Officer. Ms.
Andersen was appointed Co-President of the Company in May 2018 and became President in February 2020. He was named an Executive Officer in February 2017. Gregory C. Case 60 Chief Executive Officer. Mr. Case became Chief Executive Officer of Aon in April 2005. He also served as Aon’s President from April 2005 to May 2018. Prior to joining Aon, Mr.
Andersen was appointed Co-President of the Company in May 2018 and became President in February 2020. He was named an Executive Officer in February 2017. Gregory C. Case 61 Chief Executive Officer. Mr. Case became Chief Executive Officer of Aon in April 2005. He also served as Aon’s President from April 2005 to May 2018. Prior to joining Aon, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following information relates to the repurchases of equity securities by Aon or any affiliated purchaser during each month within the fourth quarter of the fiscal year covered by this report: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (2) 10/1/22 – 10/31/22 896,708 $ 278.80 896,708 $ 6,442,274,888 11/1/22 – 11/30/22 660,458 $ 296.76 660,458 $ 6,246,278,509 12/1/22 – 12/31/22 753,523 $ 303.90 753,523 $ 6,017,286,196 2,310,689 $ 292.12 2,310,689 $ 6,017,286,196 (1) Does not include commissions paid to repurchase shares.
Biggest changeThe following information relates to the repurchases of equity securities by Aon or any affiliated purchaser during each month within the fourth quarter of the fiscal year covered by this report: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (2) 10/1/23 – 10/31/23 811,155 $ 320.98 811,155 $ 3,806,897,048 11/1/23 – 11/30/23 858,950 $ 327.18 858,950 $ 3,525,862,650 12/1/23 – 12/31/23 660,279 $ 315.92 660,279 $ 3,317,269,632 2,330,384 $ 321.83 2,330,384 $ 3,317,269,632 (1) Does not include commissions paid to repurchase shares.
Information relating to the compensation plans under which equity securities of Aon are authorized for issuance is set forth under Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this report and is incorporated herein by reference. We did not make any unregistered sales of equity in 2022.
Information relating to the compensation plans under which equity securities of Aon are authorized for issuance is set forth under Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this report and is incorporated herein by reference. We did not make any unregistered sales of equity in 2023.
We have approximately 409 holders of record of our class A ordinary shares as of February 16, 2023.
We have approximately 392 holders of record of our class A ordinary shares as of February 16, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our class A ordinary shares, $0.01 nominal value per share, are traded on the NYSE under the trading symbol AON. On February 16, 2023, the last reported sale price of our ordinary shares as reported by the NYSE was $310.25 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our class A ordinary shares, $0.01 nominal value per share, are traded on the NYSE under the trading symbol AON. In February 2024, Aon paid a quarterly cash dividend of $0.615 per share.
Added
The declaration of future cash dividends is at the discretion of our Board of Directors and will depend upon our future earnings, liquidity, cash flows, capital allocation, financial conditions, and other factors. On February 15, 2024, the last reported sale price of our ordinary shares as reported by the NYSE was $314.37 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA reconciliation of this non-GAAP measure to the reported Total revenue is as follows (in millions, except percentages): Years Ended Dec 31, 2022 Dec 31, 2021 % Change Less: Currency Impact (1) Less: Fiduciary Investment Income (2) Less: Acquisitions, Divestitures & Other Organic Revenue Growth (3) Commercial Risk Solutions $ 6,715 $ 6,635 1 % (4) % 1 % (2) % 6 % Reinsurance Solutions 2,190 1,997 10 (3) 1 4 8 Health Solutions 2,224 2,154 3 (3) — (2) 8 Wealth Solutions 1,367 1,426 (4) (5) — (2) 3 Elimination (17) (19) N/A N/A N/A N/A N/A Total revenue $ 12,479 $ 12,193 2 % (4) % 1 % (1) % 6 % Years Ended Dec 31, 2021 Dec 31, 2020 % Change Less: Currency Impact (1) Less: Fiduciary Investment Income (2) Less: Acquisitions, Divestitures & Other Organic Revenue Growth (3) Commercial Risk Solutions $ 6,635 $ 5,861 13 % 2 % — % — % 11 % Reinsurance Solutions 1,997 1,814 10 2 — — 8 Health Solutions 2,154 2,067 4 2 — (8) 10 Wealth Solutions 1,426 1,341 6 3 — 1 2 Elimination (19) (17) NA NA NA NA NA Total revenue $ 12,193 $ 11,066 10 % 2 % — % (1) % 9 % (1) Currency impact is determined by translating last year’s revenue at this year’s foreign exchange rates.
Biggest changeA reconciliation of this non-GAAP measure to the reported Total revenue is as follows (in millions, except percentages): Years Ended December 31, 2023 December 31, 2022 % Change Less: Currency Impact (1) Less: Fiduciary Investment Income (2) Less: Acquisitions, Divestitures & Other Organic Revenue Growth (3) Revenue Commercial Risk Solutions $ 7,043 $ 6,715 5 % — % 2 % (2) % 5 % Reinsurance Solutions 2,481 2,190 13 (1) 4 — 10 Health Solutions 2,433 2,224 9 — — (1) 10 Wealth Solutions 1,431 1,367 5 — — 1 4 Elimination (12) (17) N/A N/A N/A N/A N/A Total revenue $ 13,376 $ 12,479 7 % — % 2 % (2) % 7 % Years Ended December 31, 2022 December 31, 2021 % Change Less: Currency Impact (1) Less: Fiduciary Investment Income (2) Less: Acquisitions, Divestitures & Other Organic Revenue Growth (3) Revenue Commercial Risk Solutions $ 6,715 $ 6,635 1 % (4) % 1 % (2) % 6 % Reinsurance Solutions 2,190 1,997 10 (3) 1 4 8 Health Solutions 2,224 2,154 3 (3) — (2) 8 Wealth Solutions 1,367 1,426 (4) (5) — (2) 3 Elimination (17) (19) N/A N/A N/A N/A N/A Total revenue $ 12,479 $ 12,193 2 % (4) % 1 % (1) % 6 % (1) Currency impact represents the effect on prior year period results if they were translated at current period foreign exchange rates.
Generally, the primary drivers of cash flow used for financing activities are repayments of debt, share repurchases, dividends paid to shareholders, cash paid for employee taxes on withholding shares, transactions with noncontrolling interests, and other financing activities, such as collection of or payments for deferred consideration in connection with prior year business acquisitions and divestitures.
Generally, the primary drivers of cash flow used for financing activities are repayments of debt, share repurchases, cash paid for employee taxes on withholding shares, dividends paid to shareholders, transactions with noncontrolling interests, and other financing activities, such as collection of or payments for deferred consideration in connection with prior year business acquisitions and divestitures.
On February 28, 2022, Aon Corporation and Aon Global Holdings plc co-issued $600 million of 2.85% Senior Notes due May 2027 and $900 million of 3.90% Senior Notes due February 2052. The Company intends to use the net proceeds from the offering for general corporate purposes.
The Company intends to use the net proceeds from the offering for general corporate purposes. On February 28, 2022, Aon Corporation and Aon Global Holdings plc co-issued $600 million of 2.85% Senior Notes due May 2027 and $900 million of 3.90% Senior Notes due February 2052.
Revenue primarily includes insurance commissions and fees for services rendered.
Revenue primarily includes insurance commissions and fees for services rendered.
We also estimate forfeitures at the time of grant based on our actual experience to date and revise our estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Restricted Share Units RSUs are service-based awards for which we recognize the associated compensation cost on a straight-line basis over the requisite service period.
We also estimate forfeitures at the time of grant based on our actual experience to date and revise our estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. 52 Restricted Share Units RSUs are service-based awards for which we recognize the associated compensation cost on a straight-line basis over the requisite service period.
Senior Notes rank pari passu in right of payment with all other present and future unsecured debt which is not expressed to be subordinate or junior in rank to any other unsecured debt of the company. There are no subsidiaries other than those listed above that guarantee the Aon Corporation Notes.
Senior Notes rank pari passu in right of payment with all other present and future unsecured debt which is not expressed to be subordinate or junior in rank to any other unsecured debt of Aon Corporation. There are no subsidiaries other than those listed above that guarantee the Aon Corporation Notes.
Commissions and fees for brokerage services may be invoiced at the effective date of the underlying policy or over the term of the arrangement in installments during the policy period. Payment terms for other services vary but are typically over the contract term in installments. Wealth Solutions includes retirement consulting, pension administration and investments.
Commissions and fees for brokerage services may be invoiced at the effective date of the underlying policy or over the term of the arrangement in installments during the policy period. Payment terms for other services vary but are typically over the contract term in installments. 49 Wealth Solutions includes retirement consulting, pension administration and investments.
We do not use the market-related valuation approach to determine the funded status of the U.S. plans recorded in the Consolidated Statements of Financial Position. Instead, we record and present the funded status in the Consolidated Statements of Financial Position based on the fair value of the plan assets.
We do not use the market-related valuation approach to determine the funded status of the U.S. plans recorded in the Consolidated Statements of Financial Position. Instead, we record and present the 50 funded status in the Consolidated Statements of Financial Position based on the fair value of the plan assets.
The levels of funds held on behalf of clients and liabilities can fluctuate significantly depending on when we collect the premiums, claims, and refunds, make payments to underwriters and insureds, and collect funds from clients and make 37 payments on their behalf, and upon the impact of foreign currency movements.
The levels of funds held on behalf of clients and liabilities can fluctuate significantly depending on when we collect the premiums, claims, and refunds, make payments to underwriters and insureds, and collect funds from clients and make payments on their behalf, and upon the impact of foreign currency movements.
Funds held on behalf of clients, because of their nature, are generally invested in very liquid securities with highly rated, credit-worthy financial institutions.
Funds held on behalf of clients, because of their nature, are generally invested in highly liquid securities with highly rated, credit-worthy financial institutions.
We amortize any prior service expense or credits that arise as a result of plan changes over a period consistent with the amortization of gains and losses. As of December 31, 2022, our pension plans have deferred losses that have not yet been recognized through income in the Consolidated Financial Statements.
We amortize any prior service expense or credits that arise as a result of plan changes over a period consistent with the amortization of gains and losses. As of December 31, 2023, our pension plans have deferred losses that have not yet been recognized through income in the Consolidated Financial Statements.
Nonqualified pension and other postretirement benefit obligations are based on estimated future benefit payments. We may make additional discretionary contributions. Refer to Note 11 “Employee Benefits” of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this report for further information.
Nonqualified pension and other postretirement benefit obligations are based on estimated future benefit payments. We may make additional discretionary contributions. Refer to Note 12 “Employee Benefits” of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this report for further information.
Senior Notes rank pari passu in right of payment with all other present and future 42 unsecured debt which is not expressed to be subordinate or junior in rank to any other unsecured debt of the company. There are no subsidiaries other than those listed above that guarantee the Aon Global Limited Notes.
Senior Notes rank pari passu in right of payment with all other present and future unsecured debt which is not expressed to be subordinate or junior in rank to any other unsecured debt of Aon Global Limited. There are no subsidiaries other than those listed above that guarantee the Aon Global Limited Notes.
For purposes of measuring share-based compensation expense, we consider whether an adjustment to the observable market price is necessary to reflect material nonpublic information that is known to us at the time the award is granted. No adjustments were necessary for the years ended December 31, 2022, 2021, or 2020.
For purposes of measuring share-based compensation expense, we consider whether an adjustment to the observable market price is necessary to reflect material nonpublic information that is known to us at the time the award is granted. No adjustments were necessary for the years ended December 31, 2023, 2022, or 2021.
As disclosed in Note 14 “Fair Value Measurements and Financial Instruments” of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this report, the majority of our investments carried at fair value are money market funds. These money market funds are held throughout the world with various financial institutions.
As disclosed in Note 15 “Fair Value Measurements and Financial Instruments” of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this report, the majority of our investments carried at fair value are money market funds. These money market funds are held throughout the world with various financial institutions.
As this approach recognizes gains or losses over a five-year period, the future value of assets and therefore, our net periodic benefit cost will be impacted as previously deferred gains or losses are recorded. As of December 31, 2022, the market-related value of assets was $1.8 billion.
As this approach recognizes gains or losses over a five-year period, the future value of assets and therefore, our net periodic benefit cost will be impacted as previously deferred gains or losses are recorded. As of December 31, 2023, the market-related value of assets was $1.8 billion.
GAAP and should be viewed in addition to, not instead of, our Consolidated Financial Statements. A reconciliation of this non-GAAP measure to reported diluted earnings per share is as follows (in millions, except per share data and percentages): Year Ended December 31, 2022 U.S.
GAAP and should be viewed in addition to, not instead of, our Consolidated Financial Statements. A reconciliation of this non-GAAP measure to reported diluted earnings per share is as follows (in millions, except per share data and percentages): Year Ended December 31, 2023 U.S.
No balances or transactions of non-guarantor subsidiaries are presented in the summarized financial information, including investments of the Obligor group in non-guarantor subsidiaries.
No balances or transactions of non-guarantor subsidiaries are presented in the summarized financial information, including investments of the revised Obligor group in non-guarantor subsidiaries.
As of December 31, 2022, the fair value of plan assets was $1.5 billion. Our non-U.S. plans use fair value to determine expected return on assets. Rate of Return on Plan Assets and Asset Allocation The following table summarizes the expected long-term rate of return on plan assets for future pension expense as of December 31, 2022: U.K. U.S.
As of December 31, 2023, the fair value of plan assets was $1.5 billion. Our non-U.S. plans use fair value to determine expected return on assets. Rate of Return on Plan Assets and Asset Allocation The following table summarizes the expected long-term rate of return on plan assets for future pension expense as of December 31, 2023: U.K. U.S.
The following table discloses our accumulated other comprehensive loss, the number of years over which we are amortizing the loss, and the estimated 2023 amortization of loss by country (in millions, except amortization period): U.K. U.S.
The following table discloses our accumulated other comprehensive loss, the number of years over which we are amortizing the loss, and the estimated 2024 amortization of loss by country (in millions, except amortization period): U.K. U.S.
Consolidated Results for 2021 Compared to 2020 We have elected not to include a discussion of our consolidated results for 2021 compared to 2020 in this report in reliance upon Instruction 1 to Item 303(b) of Regulation S-K.
Consolidated Results for 2022 Compared to 2021 We have elected not to include a discussion of our consolidated results for 2022 compared to 2021 in this report in reliance upon Instruction 1 to Item 303(b) of Regulation S-K.
At December 31, 2022, we did not have borrowings under either facility, and we were in compliance with the financial covenants and all other covenants contained therein during the rolling year ended December 31, 2022.
At December 31, 2023, we did not have borrowings under either facility, and we were in compliance with the financial covenants and all other covenants contained therein during the rolling year ended December 31, 2023.
Through our experience, global reach, and comprehensive analytics, we are better able to help clients meet rapidly changing, increasingly complex, and interconnected challenges. We are committed to accelerating innovation to address unmet and evolving client needs, so that our clients are better informed, better advised, and able to make better decisions to protect and grow their business.
Through our experience, global reach, and comprehensive analytics, we help clients meet rapidly changing, increasingly complex, and interconnected challenges related to risk and people. We are committed to accelerating innovation to address unmet and evolving client needs so that our clients are better informed, better advised, and able to make better decisions to protect and grow their business.
Management is focused on strengthening Aon and uniting the firm with one portfolio of capability enabled by data and analytics and one operating model to deliver additional insight, connectivity, and efficiency.
Management remains focused on strengthening Aon and uniting the firm with one portfolio of capability enabled by data and analytics and one operating model to deliver additional insight, connectivity, and efficiency.
Commissions and fees for brokerage services may be invoiced at the inception of the reinsurance period for certain reinsurance brokerage, or more commonly for treaty reinsurance arrangements, over the term of the arrangement in installments based on deposit or minimum premiums. Health Solutions includes consulting and brokerage, Human Capital, and Consumer Benefits Solutions.
Commissions and fees for brokerage services may be invoiced at the inception of the reinsurance period for certain reinsurance brokerage, or more commonly for treaty reinsurance arrangements, over the term of the arrangement in installments based on deposit or minimum premiums. Health Solutions includes consulting and brokerage, Talent, and Consumer Benefits Solutions.
At December 31, 2022, non-U.S. cash balances of one or more entities may have been negative; however, the overall balance was positive.
At December 31, 2023, non-U.S. cash balances of one or more entities may have been negative; however, the overall balance was positive.
Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services.
Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those services.
Newly co-issued and outstanding debt securities by Aon Corporation and Aon Global Holdings plc (together, the “Co-Issuers”) are guaranteed by Aon plc and Aon Global Limited and include the following (collectively, the “Co-Issued Notes”): Co-Issued Notes - Aon Corporation and Aon Global Holdings plc 2.85% Senior Notes due May 2027 2.05% Senior Notes due August 2031 2.60% Senior Notes due December 2031 5.00% Senior Notes due September 2032 2.90% Senior Notes due August 2051 3.90% Senior Notes due February 2052 All guarantees of Aon plc and Aon Global Limited of the Co-Issued Notes are joint and several as well as full and unconditional.
Newly co-issued and outstanding debt securities by Aon Corporation and Aon Global Holdings plc (together, the “Co-Issuers”) are guaranteed by Aon plc, Aon North America, Inc., and Aon Global Limited and include the following (collectively, the “Co-Issued Notes”): Co-Issued Notes - Aon Corporation and Aon Global Holdings plc 2.85% Senior Notes due May 2027 2.05% Senior Notes due August 2031 2.60% Senior Notes due December 2031 5.00% Senior Notes due September 2032 5.35% Senior Notes due February 2033 2.90% Senior Notes due August 2051 3.90% Senior Notes due February 2052 All guarantees of Aon plc, Aon Global Limited, and Aon North America, Inc. of the Co-Issued Notes are joint and several as well as full and unconditional.
We believe that cash flows from operations, available credit facilities, available cash reserves, and the capital markets will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, pension contributions, and anticipated working capital requirements in the next twelve months and over the long-term.
We believe that cash flows from operations, available credit facilities, available cash reserves, and the capital markets will be sufficient to meet our liquidity needs, including cash requirements to close our acquisition of NFP, principal and interest payments on debt obligations, capital expenditures, pension contributions, and anticipated working capital requirements in the next twelve months and over the long-term.
Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services 44 to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services.
Revenue is predominantly recognized at a point in time upon the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement using output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those services.
Revenue recognized for these arrangements is predominantly recognized over the term of the arrangement using input or output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services.
Revenue recognized for these arrangements is predominantly recognized over the term of the arrangement using input or output measures to depict the transfer of control of the services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those services.
The investment policy for U.K. and other non-U.S. pension plans is generally determined by the plans’ trustees. Because there are several pension plans maintained in the U.K. and other non-U.S. categories, our target allocation presents a range of the target allocation of each plan.
The investment policy for U.K. and other non-U.S. pension plans is generally determined by the plans’ trustees. Because there are several pension plans maintained in the U.K. and other non-U.S. categories, our target allocation presents a range of the target allocation of each plan. Target allocations are subject to change.
Credit Facilities We expect cash generated by operations for 2022 to be sufficient to service our debt and contractual obligations, finance capital expenditures, and continue to pay dividends to our shareholders.
Revolving Credit Facilities We expect cash generated by operations for 2023 to be sufficient to service our debt and contractual obligations, finance capital expenditures, and continue to pay dividends to our shareholders.
Currency fluctuations had an unfavorable impact of $0.44 on adjusted earnings per diluted share during the year ended December 31, 2022 if prior year period results were translated at current period foreign exchange rates.
Currency fluctuations had an unfavorable impact of $0.17 on adjusted earnings per diluted share during the year ended December 31, 2023 if prior year period results were translated at current period foreign exchange rates.
This amount represents Net income reported, generally adjusted for the following primary drivers including gains from sales of businesses, losses from sales of businesses, share-based compensation expense, depreciation expense, amortization and impairments, and other non-cash income and expenses, including pension settlement charges.
This amount represents Net income reported, generally adjusted for gains from sales of businesses, losses from sales of businesses, share-based compensation expense, depreciation expense, amortization and impairments, and other non-cash income and expenses, including pension settlement charges.
Currency fluctuations had an unfavorable impact of $0.33 on earnings per diluted share during the year ended December 31, 2022 if prior year period results were translated at current period foreign exchange rates.
Currency fluctuations had an unfavorable impact of $0.17 on earnings per diluted share during the year ended December 31, 2023 if prior year period results were translated at current period foreign exchange rates.
Capital Expenditures The Company’s additions to fixed assets, including capitalized software, which amounted to $196 million in 2022 and $137 million in 2021, primarily related to refurbishing and modernizing of office facilities, software development costs, and computer equipment purchases.
Capital Expenditures The Company’s additions to fixed assets including capitalized software, which amounted to $252 million in 2023 and $196 million in 2022, primarily related to the refurbishing and modernizing of office facilities, software development costs, and computer equipment purchases.
The unrecognized prior service cost (credit) at December 31, 2022 was $35 million, and $(6) million for the U.K. and other plans, respectively. For the U.S. pension plans, we use a market-related valuation of assets approach to determine the expected return on assets, which is a component of net periodic benefit cost recognized in the Consolidated Statements of Income.
The unrecognized prior service cost (credit) at December 31, 2023 was $39 million, and $(5) million for the U.K. and other plans, respectively. For the U.S. pension plans, we use a market-related valuation of assets approach to determine the expected return on assets, which is a component of net periodic benefit cost recognized in the Consolidated Statements of Income.
The 2020 to 2022 performance period ended on December 31, 2022, the 2019 to 2021 performance period ended on December 31, 2021, and the 2018 to 2020 performance period ended on December 31, 2020. The LPP currently has two open performance periods: 2021 to 48 2023 and 2022 to 2024.
The 2021 to 2023 performance period ended on December 31, 2023, the 2020 to 2022 performance period ended on December 31, 2022, and the 2019 to 2021 performance period ended on December 31, 2021. The LPP currently has two open performance periods: 2022 to 2024 and 2023 to 2025.
Distributable profits are not linked to a U.S. GAAP reported amount (e.g. Accumulated deficit). As of December 31, 2022 and December 31, 2021, we had distributable profits in excess of $29.0 billion and $32.7 billion, respectively. We believe that we will have sufficient distributable profits for the foreseeable future.
Distributable profits are not linked to a U.S. GAAP reported amount (e.g. Accumulated deficit). As of December 31, 2023 and December 31, 2022, we had distributable profits in excess of $27.5 billion and $29.0 billion, respectively. We believe that we will have sufficient distributable profits for the foreseeable future.
Our ability to access the market as a source of liquidity is dependent on investor demand, market conditions, and other factors. Rating Agency Ratings The major rating agencies’ ratings of our debt at February 17, 2023 appear in the table below.
Our ability to access the market as a source of liquidity is dependent on investor demand, market conditions, and other factors. 45 Rating Agency Ratings The major rating agencies’ ratings of our debt at February 16, 2024 appear in the table below.
Acquisitions and Dispositions of Businesses During 2022, the Company completed the acquisition of five businesses for consideration of $162 million, net of cash and funds held on behalf of clients, and the disposition of three businesses for a $81 million cash inflow, net of cash and funds held on behalf of clients.
During 2022, the Company completed the acquisition of five businesses for consideration of $162 million, net of cash and funds held on behalf of clients, and the disposition of three businesses for an $81 million cash inflow, net of cash and funds held on behalf of clients.
Holding all other assumptions constant, the following table reflects what a 25 BPS increase and decrease in our discount rate would have on our estimated 2023 pension expense (in millions): 25 BPS Change in Discount Rate Increase (decrease) in expense Increase Decrease U.K. plans $ (3) $ 3 U.S. plans $ — $ — Other plans $ — $ — Holding all other assumptions constant, the following table reflects what a 25 BPS increase and decrease in our long-term rate of return on plan assets would have on our estimated 2023 pension expense (in millions): 25 BPS Change in Long-Term Rate of Return on Plan Assets Increase (decrease) in expense Increase Decrease U.K. plans $ (9) $ 9 U.S. plans $ (4) $ 4 Other plans $ (3) $ 3 Estimated Future Contributions We estimate cash contributions of approximately $61 million to our pension plans in 2023 as compared with cash contributions of $59 million in 2022.
Holding all other assumptions constant, the following table reflects what a 25 BPS increase and decrease in our discount rate would have on our estimated 2024 pension expense (in millions): 25 BPS Change in Discount Rate Increase (decrease) in expense Increase Decrease U.K. plans $ (2) $ 2 U.S. plans $ — $ (1) Other plans $ — $ — Holding all other assumptions constant, the following table reflects what a 25 BPS increase and decrease in our long-term rate of return on plan assets would have on our estimated 2024 pension expense (in millions): 25 BPS Change in Long-Term Rate of Return on Plan Assets Increase (decrease) in expense Increase Decrease U.K. plans $ (9) $ 9 U.S. plans $ (4) $ 4 Other plans $ (3) $ 3 51 Estimated Future Contributions We estimate cash contributions of approximately $68 million to our pension plans in 2024 as compared with cash contributions of $50 million in 2023.
After the Ireland Reorganization, newly issued and outstanding debt securities by Aon Global Limited are guaranteed by Aon plc, Aon Global Holdings plc, and Aon Corporation, and include the following (collectively, the “Aon Global Limited Notes”): Aon Global Limited Notes 4.00% Senior Notes due November 2023 3.50% Senior Notes due June 2024 3.875% Senior Notes due December 2025 2.875% Senior Notes due May 2026 4.25% Senior Notes due December 2042 4.45% Senior Notes due May 2043 4.60% Senior Notes due June 2044 4.75% Senior Notes due May 2045 All guarantees of Aon plc, Aon Global Holdings plc, and Aon Corporation of the Aon Global Limited Notes are joint and several as well as full and unconditional.
Newly issued and outstanding debt securities by Aon Global Limited are guaranteed by Aon plc, Aon Global Holdings plc, Aon North America, Inc., and Aon Corporation, and include the following (collectively, the “Aon Global Limited Notes”): Aon Global Limited Notes 3.50% Senior Notes due June 2024 3.875% Senior Notes due December 2025 2.875% Senior Notes due May 2026 4.25% Senior Notes due December 2042 4.45% Senior Notes due May 2043 4.60% Senior Notes due June 2044 4.75% Senior Notes due May 2045 All guarantees of Aon plc, Aon Global Holdings plc, Aon North America, Inc., and Aon Corporation of the Aon Global Limited Notes are joint and several as well as full and unconditional.
The increase in adjusted operating margin primarily reflects 6% organic revenue growth and a higher fiduciary investment income, partially offset by increased expenses and investments in long-term growth. • Adjusted diluted earnings per share, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Diluted Earnings per Share,” was $13.39 per share in 2022, an increase of $1.39 per share, or 12%, from $12.00 per share in 2021.
The increase in adjusted operating margin primarily reflects 7% organic revenue growth and higher fiduciary investment income, partially offset by increased expenses and investments in long-term growth. • Adjusted diluted earnings per share, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Diluted Earnings per Share,” was $14.14 per share in 2023, an increase of $0.75 per share, or 6%, from $13.39 per share in 2022.
The following is our measure of performance against these four metrics for 2022: • Organic revenue growth, a non-GAAP measure defined under the caption “Review of Consolidated Results — Organic Revenue Growth,” was 6% in 2022, compared to 9% organic growth in the prior year. • Adjusted operating margin, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Operating Margin,” was 30.8% in 2022, compared to 30.1% in the prior year.
The following is our measure of performance against these four metrics for 2023: • Organic revenue growth, a non-GAAP measure defined under the caption “Review of Consolidated Results — Organic Revenue Growth,” was 7% in 2023, compared to 6% organic growth in the prior year period. • Adjusted operating margin, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Operating Margin,” was 31.6% in 2023, compared to 30.8% in the prior year period.
A reconciliation of this non-GAAP measure to cash flow provided by operations is as follows (in millions): Years Ended December 31 2022 2021 Cash provided by operating activities $ 3,219 $ 2,182 Capital expenditures (196) (137) Free cash flow $ 3,023 $ 2,045 Impact of Foreign Currency Exchange Rate Fluctuations Because we conduct business in more than 120 countries and sovereignties, foreign currency exchange rate fluctuations have a significant impact on our business.
A reconciliation of this non-GAAP measure to cash flow provided by operations is as follows (in millions): Years Ended December 31 2023 2022 Cash provided by operating activities $ 3,435 $ 3,219 Capital expenditures (252) (196) Free cash flows $ 3,183 $ 3,023 Impact of Foreign Currency Exchange Rate Fluctuations Because we conduct business in more than 120 countries and sovereignties, foreign currency exchange rate fluctuations have a significant impact on our business.
The increase in adjusted diluted earnings per share primarily reflects strong operational performance and effective capital management, highlighted by $3.2 billion of share repurchase during 2022, partially offset by an unfavorable impact from foreign currency translation. • Free cash flow, a non-GAAP measure defined under the caption “Review of Consolidated Results — Free Cash Flow,” was $3.0 billion in 2022, an increase of $978 million, or 48%, from $2.0 billion in 2021, reflecting an increase in Cash flows from operations, partially offset by a $59 million increase in capital expenditures. 30 ENVIRONMENTAL, SOCIAL, AND GOVERNANCE For many companies, the management of ESG risks and opportunities has become increasingly important, and ESG-related challenges, such as extreme weather events, supply chain disruptions, cyber events, regulatory changes, ongoing public health impacts, and the increased focus on workforce resilience in highly varied work environments continue to create volatility and uncertainty for our clients.
The increase in adjusted diluted earnings per share primarily reflects strong operational performance and effective capital management, highlighted by $2.7 billion of share repurchase during 2023. • Free cash flow, a non-GAAP measure defined under the caption “Review of Consolidated Results — Free Cash Flow,” was $3.2 billion in 2023, an increase of $160 million, or 5%, from $3.0 billion in 2022, reflecting an increase in Cash flows from operations, partially offset by a $56 million increase in capital expenditures. 32 ENVIRONMENTAL, SOCIAL, AND GOVERNANCE For many companies, the management of ESG risks and opportunities has become increasingly important, and ESG-related challenges, such as extreme weather events, supply chain disruptions, cyber events, regulatory changes, ongoing public health impacts, and the increased focus on workforce resilience in various work environments, continue to create volatility and uncertainty for our clients.
A 10% upward adjustment in our estimated performance achievement percentage for both open performance periods would have increased our 2022 expense by approximately $2.6 million, while a 10% downward adjustment would have decreased our expense by approximately $7.7 million.
A 10% upward adjustment in our estimated performance achievement percentage for both open performance periods would have increased our 2023 expense by approximately $8.7 million, while a 10% downward adjustment would have decreased our expense by approximately $8.7 million.
Fiduciary assets include funds held on behalf of clients comprised of cash and cash equivalents of $6.4 billion and $6.1 billion at December 31, 2022 and 2021, and fiduciary receivables of $9.5 billion and $8.3 billion at December 31, 2022 and 2021, respectively.
Fiduciary assets include funds held on behalf of clients comprised of cash and cash equivalents of $6.9 billion and $6.4 billion at December 31, 2023 and 2022, respectively, and fiduciary receivables of $9.4 billion and $9.5 billion at December 31, 2023 and 2022, respectively.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY OF 2022 FINANCIAL RESULTS Aon plc is a leading global professional services firm providing a broad range of risk, health, and wealth solutions.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE SUMMARY OF 2023 FINANCIAL RESULTS Aon plc is a leading global professional services firm providing a broad range of risk and human capital solutions.
(2) Fiduciary investment income for the years ended December 31, 2022 2021, and 2020 was $76 million, $8 million, and $27 million, respectively.
(2) Fiduciary investment income for the years ended December 31, 2023, 2022, and 2021 was $274 million, $76 million, and $8 million, respectively.
The gains and losses corresponding to cash flows provided by proceeds from investments and used for payments for investments are primarily recognized in Other income (expense) in the Consolidated Statements of Income. 38 Short-term Investments Short-term investments increased $160 million at December 31, 2022 as compared to December 31, 2021.
The gains and losses corresponding to cash flows provided by proceeds from investments and used for payments for investments are primarily recognized in Other income (expense) in the Consolidated Statements of Income. Short-term Investments Short-term investments decreased $83 million to $369 million at December 31, 2023 as compared to December 31, 2022.
Holding all other assumptions constant, the following table reflects what a 25 BPS increase and decrease in our discount rate would have on our PBO at December 31, 2022 (in millions): Increase (decrease) in projected benefit obligation (1) 25 BPS Change in Discount Rate Increase Decrease U.K. plans $ (95) $ (98) U.S. plans $ (53) $ 56 Other plans $ (39) $ 41 (1) Increases to the PBO reflect increases to our pension obligations, while decreases in the PBO are recoveries toward fully-funded status.
Holding all other assumptions constant, the following table reflects what a 25 BPS increase and decrease in our discount rate would have on our PBO at December 31, 2023 (in millions): Increase (decrease) in projected benefit obligation (1) 25 BPS Change in Discount Rate Increase Decrease U.K. plans $ (94) $ 97 U.S. plans $ (53) $ 55 Other plans $ (40) $ 42 (1) Increases to the PBO reflect increases to our pension obligations, while decreases in the PBO are recoveries toward fully-funded status.
Revenue Recognition The Company recognizes revenue when control of the promised services is transferred to the customer in the amount that best reflects the consideration to which the Company expects to be entitled in exchange for those services.
Revenue Recognition We recognize revenue when control of the promised services is transferred to the customer in the amount that best reflects the consideration to which we expect to be entitled in exchange for those services.
Adjustments also include changes in working capital that relate primarily to the timing of payments of accounts payable and accrued liabilities and collection of receivables. Pension Contributions Pension contributions were $59 million for the year ended December 31, 2022, as compared to $87 million for the year ended December 31, 2021.
Adjustments also include changes in working capital, that relate primarily to the timing of payments of accounts payable and accrued liabilities, collection of receivables, and payments for Accelerating Aon United Program expenses. Pension Contributions Pension contributions were $50 million for the year ended December 31, 2023, as compared to $59 million for the year ended December 31, 2022.
Commercial paper activity during the years ended December 31, 2022 and 2021 is as follows (in millions): Years Ended December 31 2022 2021 (2) Total issuances (1) $ 12,301 $ 4,478 Total repayments (12,366) (3,807) Net issuances (repayments) $ (65) $ 671 (1) The proceeds of the commercial paper issuances were used primarily for short-term working capital needs.
Commercial paper activity during the years ended December 31, 2023 and 2022 is as follows (in millions): Years Ended December 31 2023 2022 Total issuances (1) $ 4,835 $ 12,301 Total repayments (4,862) (12,366) Net issuances (repayments) $ (27) $ (65) (1) The proceeds of the commercial paper issuances were used primarily for short-term working capital needs.
Adjustments are made to the tables to eliminate intercompany balances and transactions between the Obligor group. Intercompany balances and transactions between the Obligor group and non-guarantor subsidiaries are presented as separate line items within the summarized financial information.
Intercompany balances and transactions between the revised Obligor group and non-guarantor subsidiaries are presented as separate line items within the summarized financial information.
Other Expected return on plan assets, net of administration expenses 5.34% 6.82% 4.20 - 4.85% In determining the expected rate of return for the plan assets, we analyze investment community forecasts and current market conditions to develop expected returns for each of the asset classes used by the plans.
Other Expected return on plan assets, net of administration expenses 5.14% 7.79% 4.40 - 5.50% In determining the expected rate of return for the plan assets, we analyze investment community forecasts and current market conditions to develop expected returns for each of the asset classes used by the plans.
In aggregate, these two facilities provide approximately $1.8 billion in available credit. Each of these primary committed credit facilities includes customary representations, warranties, and covenants, including financial covenants that require us to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to consolidated adjusted EBITDA, tested quarterly.
Each of these primary committed credit facilities includes customary representations, warranties, and covenants, including financial covenants that require us to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to consolidated adjusted EBITDA, in each case, tested quarterly.
The following table summarizes the Company’s Share Repurchase activity (in millions, except per share data): Years Ended December 31 2022 2021 Shares repurchased 11.1 12.4 Average price per share $ 289.76 $ 286.82 Repurchase costs recorded to accumulated deficit $ 3,203 $ 3,543 At December 31, 2022, the remaining authorized amount for share repurchase under the Repurchase Program was approximately $6.0 billion.
The following table summarizes the Company’s Share Repurchase activity (in millions, except per share data): Years Ended December 31 2023 2022 Shares repurchased 8.4 11.1 Average price per share $ 321.52 $ 289.76 Repurchase costs recorded to Accumulated deficit $ 2,700 $ 3,203 At December 31, 2023, the remaining authorized amount for share repurchase under the Repurchase Program was approximately $3.3 billion.
For arrangements where control is transferred over time, an input or output method is applied that represents a faithful depiction of the progress towards completion of the performance obligation. For arrangements that include variable consideration, the Company assesses whether any amounts should be constrained.
For arrangements where control is transferred over time, an input or output method is applied that represents a faithful depiction of the progress towards completion of the performance obligation. For arrangements that include variable consideration, we assesses whether any amounts should be constrained. For arrangements that include multiple performance obligations, we allocate consideration based on their relative fair values.
Our primary uses of liquidity are operating expenses and investments, capital expenditures, acquisitions, share repurchases, pension obligations, and shareholder dividends.
Our primary uses of liquidity are operating expenses and investments, capital expenditures, acquisitions, share repurchases, pension obligations, shareholder dividends, and Accelerating Aon United Program cash charges.
On September 12, 2022, Aon Corporation, a Delaware corporation, and Aon Global Holdings plc, a public limited company formed under the laws of England and Wales, both wholly owned subsidiaries of the Company, co-issued $500 million of 5.00% Senior Notes due September 2032. The Company intends to use the net proceeds from the offering for general corporate purposes.
On February 28, 2023, Aon Corporation, a Delaware corporation, and Aon Global Holdings plc, a public limited company formed under the laws of England and Wales, both wholly owned subsidiaries of the Company, co-issued $750 million 5.35% Senior Notes due in February 2033. The Company intends to use the net proceeds from the offering for general corporate purposes.
Target allocations are subject to change. 46 Impact of Changing Economic Assumptions Changes in the discount rate and expected return on assets can have a material impact on pension obligations and pension expense.
Impact of Changing Economic Assumptions Changes in the discount rate and expected return on assets can have a material impact on pension obligations and pension expense.
A non-cash settlement charge totaling $170 million was recognized in the fourth quarter of 2022 which is excluded from Adjusted Other income (expense).
A non-cash settlement charge totaling $27 million was recognized in the second quarter of 2023, which is excluded from Other income (expense) - as adjusted.
Currency fluctuations had a favorable impact of $0.17 on earnings per diluted share during the year ended December 31, 2021, if 2020 results were translated at 2021 rates.
Currency fluctuations had an unfavorable impact of $0.33 on earnings per diluted share during the year ended December 31, 2022, if 2021 results were translated at 2022 rates.
The increase was driven by 6% organic revenue growth and a 1% favorable impact from fiduciary investment income, partially offset by a 4% unfavorable impact from foreign currency translation and a 1% unfavorable impact from acquisitions, divestitures, and other. Commercial Risk Solutions revenue increased $80 million, or 1%, to $6.7 billion in 2022, compared to $6.6 billion in 2021.
The increase was driven by 7% organic revenue growth and a 2% favorable impact from fiduciary investment income, partially offset by a 2% unfavorable impact from acquisitions, divestitures, and other. Commercial Risk Solutions revenue increased $328 million, or 5%, to $7.0 billion in 2023, compared to $6.7 billion in 2022.
GAAP and should be viewed in addition to, not instead of, our Consolidated Financial Statements. Industry peers provide similar supplemental information about their revenue performance, although they may not make identical adjustments.
This supplemental information related to organic revenue growth represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Consolidated Financial Statements. Industry peers provide similar supplemental information about their revenue performance, although they may not make identical adjustments.
An operating segment shall be deemed to be a reporting unit if all of its components are similar, if none of its components are a reporting unit, or if the segment comprises only a single component.
An operating segment shall be deemed to be a reporting unit if all of its components are similar, if none of its components are a reporting unit, or if the segment comprises only a single component. We aggregate components of any operating segments that have similar economic characteristics into a single reporting unit.
(3) Organic revenue growth includes the impact of certain intercompany activity, changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures, transfers between revenue lines, and gains or losses on derivatives accounted for as hedges. 34 Adjusted Operating Margin We use adjusted operating margin as a non-GAAP measure of core operating performance of the Company.
(3) Organic revenue growth includes the impact of certain intercompany activity and excludes the impact of changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures (including held for sale disposal groups, which had a 1% favorable impact on total organic revenue growth for the year-ended December 31, 2023), transfers between revenue lines, and gains or losses on derivatives accounted for as hedges. 37 Adjusted Operating Margin We use adjusted operating margin as a non-GAAP measure of core operating performance of the Company.
Organic revenue growth is a non-GAAP measure that includes the impact of certain intercompany activity and excludes the impact of changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures, transfers between revenue lines, and gains or losses on derivatives accounted for as hedges. This supplemental information related to organic revenue growth represents a measure not in accordance with U.S.
Organic revenue growth is a non-GAAP measure that includes the impact of certain intercompany activity and excludes the impact of changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures (including held for sale disposal groups), transfers between revenue lines, and gains or losses on derivatives accounted for as hedges.
Aon offers a wide range of risk assessment, consulting and advisory solutions, many of which are significant parts of our core business offerings, designed to address and manage ESG issues for clients, and to enable our clients to create more sustainable value.
We offer a wide range of risk assessment, consulting, and advisory solutions, many of which are significant parts of our core business offerings, designed to address and manage ESG issues for clients, and to enable our clients to create more sustainable value. We see significant opportunity in enhancing our impact and delivering innovative client solutions on ESG matters.
For brokerage commissions, revenue is predominantly recognized at the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement to depict the transfer of control of the services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services using input or output measures, including units delivered or time elapsed, to provide a faithful depiction of the progress towards completion of the performance obligation.
For brokerage commissions, revenue is predominantly recognized at the effective date of the underlying policy (or policies), or for a limited number of arrangements, over the term of the arrangement using input or output methods to depict the transfer of control of the services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those services.
Program and €625 million under the European Program, not to exceed the amount of our committed credit facilities, which was approximately $1.8 billion at December 31, 2022. The aggregate capacity of the Commercial Paper Program remains fully backed by our committed credit facilities.
Program and €625 million ($690 million at December 31, 2023 exchange rates) under the European Program, not to exceed the amount of our committed credit facilities, which was $2.0 billion at December 31, 2023. The aggregate capacity of the Commercial Paper Programs remain fully backed by our committed credit facilities.
During 2021, the Company completed the acquisition of two businesses for consideration of $14 million, net of cash and funds held on behalf of clients, and the disposition of six business for a $218 million cash inflow, net of cash and funds held on behalf of clients.
During 2023, the Company completed the disposition of two businesses for a $5 million cash inflow, net of cash and funds held on behalf of clients.
Non-GAAP Metrics In our discussion of consolidated results, we sometimes refer to certain non-GAAP supplemental information derived from consolidated financial information specifically related to organic revenue growth, adjusted operating margin, adjusted diluted earnings per share, adjusted net income attributable to Aon shareholders, adjusted net income per share, other income (expense), as adjusted, adjusted effective tax rate, free cash flow, and the impact of foreign exchange rate fluctuations on operating results.
This discussion can be found in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 17, 2023. 36 Non-GAAP Metrics In our discussion of consolidated results, we sometimes refer to certain non-GAAP supplemental information derived from consolidated financial information specifically related to organic revenue growth, adjusted operating margin, adjusted diluted earnings per share, adjusted net income attributable to Aon shareholders, adjusted net income per share, other income (expense), as adjusted, adjusted effective tax rate, free cash flow, and the impact of foreign exchange rate fluctuations on operating results.
GAAP Adjustments Non-GAAP Adjusted Operating income $ 3,669 $ 171 $ 3,840 Interest income 18 — 18 Interest expense (406) — (406) Other income (expense) (1) (125) 170 45 Income before income taxes 3,156 341 3,497 Income tax expense (2) 510 75 585 Net income 2,646 266 2,912 Less: Net income attributable to noncontrolling interests 57 — 57 Net income attributable to Aon shareholders $ 2,589 $ 266 $ 2,855 Diluted net income per share attributable to Aon shareholders $ 12.14 $ 1.25 $ 13.39 Weighted average ordinary shares outstanding — diluted 213.2 — 213.2 Effective tax rates (2) 16.2 % 16.7 % Year Ended December 31, 2021 U.S.
GAAP Adjustments Non-GAAP Adjusted Operating income $ 3,669 $ 171 $ 3,840 Interest income 18 — 18 Interest expense (406) — (406) Other income (expense) (3) (125) 170 45 Income before income taxes 3,156 341 3,497 Income tax expense (2) 510 75 585 Net income 2,646 266 2,912 Less: Net income attributable to noncontrolling interests 57 — 57 Net income attributable to Aon shareholders $ 2,589 $ 266 $ 2,855 Diluted net income per share attributable to Aon shareholders $ 12.14 $ 1.25 $ 13.39 Weighted average ordinary shares outstanding — diluted 213.2 — 213.2 Effective tax rates (2) 16.2 % 16.7 % (1) To further our pension de-risking strategy, we settled certain pension obligations in the Netherlands through the purchase of annuities, where certain pension assets were liqu idated to purchase the annuities.
For arrangements that include multiple performance obligations, the Company allocates consideration based on their relative fair values. Costs incurred by the Company in obtaining a contract are capitalized and amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates, considering anticipated renewals when applicable.
Costs incurred in obtaining a contract are capitalized and amortized on a systematic basis that is consistent with the transfer of control of the services to which the asset relates, considering anticipated renewals when applicable.
A summary of our cash flows provided by and used for operating, investing, and financing activities is as follows (in millions): Years Ended December 31 2022 2021 Cash provided by operating activities $ 3,219 $ 2,182 Cash provided by (used for) investing activities $ (449) $ 49 Cash used for financing activities $ (1,790) $ (1,924) Effect of exchange rates on cash and cash equivalents and funds held on behalf of clients $ (549) $ (235) Operating Activities Net cash provided by operating activities during the year ended December 31, 2022 increased $1,037 million, or 48%, from the prior year to $3,219 million.
A summary of our cash flows provided by and used for operating, investing, and financing activities is as follows (in millions): Years Ended December 31 2023 2022 Cash provided by operating activities $ 3,435 $ 3,219 Cash provided by (used for) investing activities $ (188) $ (449) Cash used for financing activities $ (2,865) $ (1,790) Effect of exchange rates on cash and cash equivalents and funds held on behalf of clients $ 264 $ (549) Net increase in cash and cash equivalents and funds held on behalf of clients $ 646 $ 431 Operating Activities Net cash provided by operating activities during the year ended December 31, 2023 were $3.4 billion, an increase of $216 million compared to $3.2 billion of Cash flows provided by operating activities in the prior year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA corresponding increase in the year-end yield curve of 100 BPS would cause an increase, net of derivative positions, of $67 million to each of 2023 and 2024 pre-tax income. We have long-term debt outstanding, excluding the current portion, with a fair market value of $8.7 billion and $9.2 billion as of December 31, 2022 and December 31, 2021, respectively.
Biggest changeA corresponding increase in the year-end yield curve of 100 BPS would cause an increase, net of derivative positions, of $69 million to each of 2024 and 2025 pre-tax income.
At December 31, 2022, we have hedged approximately 45% of our U.K. subsidiaries’ expected exposures to the U.S. dollar, euro, and Japanese yen transactions for the years ending December 31, 2023 and 2024. We generally do not hedge exposures beyond three years.
At December 31, 2023, we have hedged approximately 45% of our U.K. subsidiaries’ expected exposures to the U.S. dollar, euro, and Japanese yen transactions for the years ending December 31, 2024 and 2025. We generally do not hedge exposures beyond three years.
We have selected hypothetical changes in foreign currency exchange rates, interest rates, and equity market prices to illustrate the possible impact of these changes; we are not predicting market events. 50
We have selected hypothetical changes in foreign currency exchange rates, interest rates, and equity market prices to illustrate the possible impact of these changes; we are not predicting market events. 55
Further, adjusted diluted earnings per share, a non-GAAP measure as defined and reconciled under the caption “Review of Consolidated Results — Adjusted Diluted Earnings Per Share,” would have an unfavorable $0.44 impact during the year ended December 31, 2022 if we were to translate prior year results at current quarter exchange rates.
Further, adjusted diluted earnings per share, a 54 non-GAAP measure as defined and reconciled under the caption “Review of Consolidated Results — Adjusted Diluted Earnings Per Share,” would have an unfavorable $0.17 impact during the year ended December 31, 2023 if we were to translate prior year results at current year exchange rates.
If we were to translate prior year results at current year exchange rates, diluted earnings per share would have an unfavorable $0.33 impact during the year ended December 31, 2022.
If we were to translate prior year results at current year exchange rates, diluted earnings per share would have an unfavorable $0.17 impact during the year ended December 31, 2023.
A hypothetical, instantaneous parallel decrease in the year-end yield curve of 100 BPS would cause a decrease, net of derivative positions, of $67 million to each of 2023 and 2024 pretax income.
A hypothetical, instantaneous parallel decrease in the year-end yield curve of 100 BPS would cause a decrease, net of derivative positions, of $69 million to each of 2024 and 2025 pretax income.
The potential loss in future earnings from foreign exchange derivative instruments resulting from a hypothetical 10% adverse change in year-end exchange rates would be $19 million and $9 million at December 31, 2023 and 2024, respectively. 49 The translated value of revenues and expenses from our international brokerage operations are subject to fluctuations in foreign exchange rates.
The potential loss in future earnings from foreign exchange derivative instruments resulting from a hypothetical 10% adverse change in year-end exchange rates would b e $28 million and $18 million at Dec ember 31, 2024 and 2025, respectively. The translated value of revenues and expenses from our international brokerage operations are subject to fluctuations in foreign exchange rates.
The fair value was less than the carrying value by $1.1 billion at December 31, 2022, and $0.9 billion greater than the carrying value at December 31, 2021. A hypothetical 1% increase or decrease in interest rates would change the fair value by a decrease of 7% or an increase of 8%, respectively, at December 31, 2022.
A hypothetical 1% increase or decrease in interest rates would change the fair value by a decrease of 7% or an increase of 8% , respectively, at December 31, 2023.
Added
We have long-term debt outstanding, excluding the current portion, with a fair market val ue of $9.2 billion and $8.7 billion as of December 31, 2023 and December 31, 2022, respectively. The fair value was greater than the carrying value by $0.8 billion at December 31, 2023, and $1.1 billion less than the carrying value at December 31, 2022.

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