Published: 2022-10-28 00:00:00 ET

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The accompanying Condensed Consolidated Financial Statements and Notes thereto have been prepared in accordance with U.S. GAAP. The Condensed Consolidated Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries (“Aon” or the “Company”). Intercompany accounts and transactions have been eliminated. The Condensed Consolidated Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented.

Certain information and disclosures normally included in the Consolidated Financial Statements prepared in accordance with U.S. GAAP have been condensed or omitted. The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2022.

Use of Estimates

The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the Condensed Consolidated Financial Statements in future periods.

Revision of Previously Issued Financial Statements

During the fourth quarter of 2021, the Company identified and corrected an immaterial presentation error related to Funds held on behalf of clients in the Consolidated Statements of Cash Flows. The Company made appropriate revisions to its Condensed Consolidated Statements of Cash Flows for historical periods. Further information is contained in Note 1 “Basis of Presentation” of the Notes to Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Reclassification

Certain amounts in prior periods' Condensed Consolidated Financial Statements have been reclassified to conform to the current year presentation. In prior periods, commercial paper issuances and repayments were included in Issuance of debt and Repayment of debt, respectively, in the Condensed Consolidated Statements of Cash Flows. The net amount of commercial paper activity is now disclosed separately in Commercial paper issuances, net of repayments in the Condensed Consolidated Statements of Cash Flows. For the nine months ended September 30, 2021, commercial paper issuances reclassified from Issuance of debt was $2,174 million and commercial paper repayments reclassified from Repayment of debt was $2,024 million. Further information on the gross commercial paper activity for the current and prior year periods is included within the Liquidity and Financial Conditions section of Part I Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Disaggregation of Revenue

The following table summarizes revenue from contracts with customers by principal service line (in millions):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2022						2021						2022						2021
Commercial Risk Solutions						$	1,482					$	1,505					$	4,893					$	4,788
Reinsurance Solutions						396						353						1,909						1,775
Health Solutions						494						497						1,546						1,503
Wealth Solutions						326						351						1,014						1,062
Eliminations						(2)						(4)						(13)						(15)
Total revenue						$	2,696					$	2,702					$	9,349					$	9,113

Consolidated revenue from contracts with customers by geographic area, which is attributed on the basis of where the services are performed, is as follows (in millions):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2022						2021						2022						2021
United States						$	1,338					$	1,329					$	4,094					$	3,900
Americas other than United States						250						230						814						748
United Kingdom						331						340						1,348						1,368
Ireland						22						22						76						94
Europe, Middle East, & Africa other than United Kingdom and Ireland						403						438						1,930						2,028
Asia Pacific						352						343						1,087						975
Total revenue						$	2,696					$	2,702					$	9,349					$	9,113

Contract Costs

An analysis of the changes in the net carrying amount of costs to fulfill contracts with customers are as follows (in millions):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2022						2021						2022						2021
Balance at beginning of period						$	239					$	222					$	361					$	339
Additions						320						340						1,022						1,022
Amortization						(291)						(310)						(1,109)						(1,110)
Impairment						—						—						—						—
Foreign currency translation and other						(12)						(3)						(18)						(2)
Balance at end of period						$	256					$	249					$	256					$	249

An analysis of the changes in the net carrying amount of costs to obtain contracts with customers are as follows (in millions):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2022						2021						2022						2021
Balance at beginning of period						$	182					$	175					$	179					$	184
Additions						8						12						35						40
Amortization						(12)						(11)						(36)						(36)
Impairment						—						—						—						—
Foreign currency translation and other						(2)						(2)						(2)						(14)
Balance at end of period						$	176					$	174					$	176					$	174

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Cash and cash equivalents include cash balances and all highly liquid instruments with initial maturities of three months or less. Short-term investments consist of money market funds. The estimated fair value of Cash and cash equivalents and Short-term investments approximates their carrying values.

At September 30, 2022, Cash and cash equivalents and Short-term investments were $943 million compared to $836 million at December 31, 2021, an increase of $107 million. Of the total balances, $144 million and $160 million were restricted as to their use at September 30, 2022 and December 31, 2021, respectively. Included within Short-term investments as of September 30, 2022 and December 31, 2021, were £91.4 million ($97.7 million at September 30, 2022 exchange rates) and £84.3 million ($112.8 million at December 31, 2021 exchange rates), respectively, of operating funds required to be held by the Company in the U.K. by the FCA, a U.K.-based regulator.

Condensed Consolidated Statements of Income Information

Other Income (Expense)

Other income (expense) consists of the following (in millions):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Foreign currency remeasurement			$	40					$	20					$	39					$	11
Gain from sales of businesses			6						1						53						2
Equity earnings			2						3						6						7
Pension and other postretirement			(3)						5						(9)						19
Financial instruments and other			(29)						(19)						(18)						(32)
Total			$	16					$	10					$	71					$	7

Condensed Consolidated Statements of Financial Position Information

Allowance for Doubtful Accounts

Changes in the net carrying amount of allowance for doubtful accounts are as follows (in millions):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Balance at beginning of period			$	91					$	102					$	90					$	98
Provision			2						3						12						30
Accounts written off, net of recoveries			1						(8)						(11)						(31)
Foreign currency translation and other			(12)						1						(9)						1
Balance at end of period			$	82					$	98					$	82					$	98

Other Current Assets

The components of Other current assets are as follows (in millions):

As of			September 30, 2022						December 31, 2021
Costs to fulfill contracts with customers (1)			$	256					$	361
Prepaid expenses			123						137
Taxes receivable			64						53
Other			120						165
Total			$	563					$	716

(1)Refer to Note 3 “Revenue from Contracts with Customers” for further information.

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Other Non-Current Assets

The components of Other non-current assets are as follows (in millions):

As of			September 30, 2022						December 31, 2021
Costs to obtain contracts with customers (1)			$	176					$	179
Taxes receivable			88						95
Investments			62						64
Leases			48						63
Other			101						111
Total			$	475					$	512

(1)Refer to Note 3 “Revenue from Contracts with Customers” for further information.

Other Current Liabilities

The components of Other current liabilities are as follows (in millions):

As of			September 30, 2022						December 31, 2021
Deferred revenue (1)			$	250					$	321
Taxes payable			241						149
Leases			180						213
Other			809						648
Total			$	1,480					$	1,331

(1)During the three and nine months ended September 30, 2022, revenue of $108 million and $481 million, respectively, was recognized in the Condensed Consolidated Statements of Income. During the three and nine months ended September 30, 2021, revenue of $104 million and $448 million, respectively, was recognized in the Condensed Consolidated Statements of Income.

Other Non-Current Liabilities

The components of Other non-current liabilities are as follows (in millions):

As of			September 30, 2022						December 31, 2021
Taxes payable (1)			$	628					$	609
Compensation and benefits			61						58
Leases			33						46
Deferred revenue			33						70
Other			98						127
Total			$	853					$	910

(1)Includes $129 million and $145 million for the non-current portion of the one-time mandatory transition tax on accumulated foreign earnings as of September 30, 2022 and December 31, 2021, respectively.

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Completed Acquisitions

The Company completed two and four acquisitions during the three and nine months ended September 30, 2022, respectively, and completed one acquisition during the three and nine months ended September 30, 2021. The following table includes the preliminary fair values of consideration transferred, assets acquired, and liabilities assumed as a result of the Company’s acquisitions (in millions):

						September 30, 2022
Consideration transferred
Cash						$	153
Deferred and contingent consideration						6
Aggregate consideration transferred						$	159
Assets acquired
Goodwill						$	80
Intangible assets						75
Other assets (1)						23
Total assets acquired						178
Liabilities assumed:
Total liabilities assumed						19
Net assets acquired						$	159

(1)Includes Cash and cash equivalents of $2 million and an insignificant amount of funds held on behalf of clients.

The results of operations of these acquisitions are included in the Condensed Consolidated Financial Statements as of the respective acquisition dates. The Company’s results of operations would not have been materially different if these acquisitions had been reported from the beginning of the period in which they were acquired.

2022 Acquisitions

On September 12, 2022, the Company completed the purchase of certain assets of Praxiom Risk Management, a provider of professional risk management in the U.S.

On August 1, 2022, the Company completed the purchase of certain assets of U.S. Advisors, Inc., a broker based in the U.S.

On May 3, 2022, the Company completed the acquisition of 100% of the share capital of Karl Köllner group companies, a marine hull broker based in Germany.

On March 1, 2022, the Company completed the acquisition of Tyche, an actuarial software platform based in the U.K.

2021 Acquisitions

On December 22, 2021, the Company completed the acquisition of 100% of the share capital of For Welfare S.r.l, a company focused on bancassurance programs in Italy.

On September 1, 2021, the Company completed the acquisition of the remaining 51% of Aon India Insurance Brokers Limited (formerly known as Anviti Insurance Brokers Private Limited). Prior to the acquisition date, the Company accounted for its 49% interest in Anviti as an equity-method investment. The acquisition-date fair value of the previous equity interest was $15 million and was included in the measurement of consideration transferred. There was no significant impact as a result of remeasuring the carrying value of the Company’s prior equity interest in Anviti held before the business combination.

Completed Dispositions

The Company completed no dispositions during the three months ended September 30, 2022 and three dispositions during the nine months ended September 30, 2022, and two and three dispositions during the three and nine months ended September 30, 2021, respectively.

The pretax gains recognized related to dispositions for the three months ended September 30, 2022 were $6 million. The pretax gains recognized related to dispositions for the nine months ended September 30, 2022 were $53 million. The pretax gains and

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The changes in the net carrying amount of goodwill for the nine months ended September 30, 2022 are as follows (in millions):

Balance as of December 31, 2021			$	8,434
Goodwill related to current year acquisitions			80
Goodwill related to current year disposals			(11)
Foreign currency translation and other			(524)
Balance as of September 30, 2022			$	7,979

Other intangible assets by asset class are as follows (in millions):

			September 30, 2022																		December 31, 2021
			Gross Carrying Amount						Accumulated Amortization and Impairment						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization and Impairment						Net Carrying Amount
Customer-related and contract-based			$	2,115					$	1,734					$	381					$	2,289					$	1,848					$	441
Tradenames			14						14						—						14						13						1
Technology and other			417						342						75						407						357						50
Total			$	2,546					$	2,090					$	456					$	2,710					$	2,218					$	492

The estimated future amortization for finite-lived intangible assets as of September 30, 2022 is as follows (in millions):

Remainder of 2022			$	25
2023			93
2024			78
2025			66
2026			46
2027			33
Thereafter			115
Total			$	456

Notes

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, 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.

On December 2, 2021, Aon Corporation and Aon Global Holdings plc co-issued $500 million of 2.60% Senior Notes due December 2, 2031. The Company intends to use the net proceeds of the offering for general corporate purposes.

In November 2021, the Company’s $500 million 2.20% Senior Notes due November 2022 were classified as Short-term debt and current portion of long-term debt in the Condensed Consolidated Statements of Financial Position as the date of maturity was within one year.

On August 23, 2021, Aon Corporation and Aon Global Holdings plc co-issued $400 million of 2.05% Senior Notes due August 2031 and $600 million of 2.90% Senior Notes due August 2051. The Company intends to use the net proceeds of the offering

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for general corporate purposes.

On January 13, 2021, Aon Global Limited, a limited company organized under the laws of England and Wales and a wholly owned subsidiary of the Company, issued an irrevocable notice of redemption to holders of its 2.80% Senior Notes for the redemption of all $400 million outstanding aggregate principal amount of the notes, which were set to mature in March 2021 and classified as Short-term debt and current portion of long-term debt as of December 31, 2020. The redemption date was on February 16, 2021 and resulted in an insignificant loss due to extinguishment.

Revolving Credit Facilities

As of September 30, 2022, Aon had two primary committed credit facilities outstanding: its $1.0 billion multi-currency U.S. credit facility expiring in September 2026 and its $750 million multi-currency U.S. credit facility expiring in October 2023. In aggregate, these two facilities provide approximately $1.8 billion in available credit. Effective October 19, 2022, the expiration date of the $750 million multi-currency U.S. credit facility was extended one year to October 2024.

Each of these primary committed credit facilities includes customary representations, warranties, and covenants, including financial covenants that require Aon to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At September 30, 2022, Aon did not have borrowings under either of these primary committed credit facilities, and was in compliance with the financial covenants and all other covenants contained therein during the rolling 12 months ended September 30, 2022.

Commercial Paper

Aon Corporation has established a U.S. commercial paper program (the “U.S. Program”) and Aon Global Holdings plc has established a European multi-currency commercial paper program (the “European Program” and, together with the U.S. Program, the “Commercial Paper Programs”). Commercial paper may be issued in aggregate principal amounts of up to $1.0 billion under the U.S. Program and €625 million ($601 million at September 30, 2022 exchange rates) under the European Program, not to exceed the amount of the Company’s committed credit facilities, which was approximately $1.8 billion at September 30, 2022. The U.S. Program is fully and unconditionally guaranteed by Aon plc, Aon Global Limited, and Aon Global Holdings plc and the European Program is fully and unconditionally guaranteed by Aon plc, Aon Global Limited, and Aon Corporation.

Commercial paper outstanding, which is included in Short-term debt and current portion of long-term debt in the Condensed Consolidated Statements of Financial Position, is as follows (in millions):

			September 30, 2022			December 31, 2021
Commercial paper outstanding			$	211		$	665

The weighted average commercial paper outstanding and its related interest rates are as follows (in millions, except percentages):

						Three Months Ended September 30,									Nine Months Ended September 30,
						2022						2021			2022						2021
Weighted average commercial paper outstanding						$	483					$	386		$	476					$	157
Weighted average interest rate of commercial paper outstanding						1.66		%				0.09		%	0.69		%				0.11		%

The effective tax rate on Net income was 18.0% and 19.1% for the three and nine months ended September 30, 2022, respectively. The effective tax rate on Net income (loss) was (2.6)% and 51.4% for the three and nine months ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2022, the quarter-to-date tax rate was primarily driven by the geographical distribution of income and certain discrete items. The year-to-date tax rate was primarily driven by the geographical distribution of income and certain discrete items, primarily the favorable impacts of share-based payments.

For the three and nine months ended September 30, 2021, the quarter-to-date tax rate was primarily driven by the impact of the $1 billion payment made in connection with the termination of the proposed combination with WTW (the “Termination Fee”). The year-to-date tax rate was primarily driven by the Termination Fee, the U.K. tax rate increase, and the tax benefit of share-based payments. The U.K. enacted legislation on June 10, 2021, which increased the corporate income tax rate from 19% to 25% with effect from April 1, 2023, and the Company remeasured its U.K. deferred tax assets and liabilities accordingly.

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Ordinary Shares

Aon has a share repurchase program authorized by the Company’s Board of Directors (the “Repurchase Program”). The Repurchase Program was established in April 2012 with $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014, June 2017, and November 2020, and by $7.5 billion in February 2022 for a total of $27.5 billion in repurchase authorizations.

Under the Repurchase Program, the Company’s class A ordinary shares may be repurchased through the open market or in privately negotiated transactions, from time to time, based on prevailing market conditions, and will be funded from available capital.

The following table summarizes the Company’s share repurchase activity (in millions, except per share data):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Shares repurchased			4.2						4.4						8.7						5.7
Average price per share			$	284.39					$	283.38					$	289.14					$	272.11
Repurchase costs recorded to accumulated deficit			$	1,200					$	1,251					$	2,528					$	1,543

At September 30, 2022, the remaining authorized amount for share repurchases under the Repurchase Program was approximately $6.7 billion. Under the Repurchase Program, the Company has repurchased a total of 158.4 million shares for an aggregate cost of approximately $20.8 billion.

Weighted Average Ordinary Shares

Weighted average ordinary shares outstanding are as follows (in millions):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Basic weighted average ordinary shares outstanding			210.9						225.4						213.2						226.5
Dilutive effect of potentially issuable shares			1.7						—						1.4						1.2
Diluted weighted average ordinary shares outstanding			212.6						225.4						214.6						227.7

Potentially issuable shares are not included in the computation of Diluted net income (loss) per share attributable to Aon shareholders if their inclusion would be antidilutive. There were 1.0 million and 0.9 million shares excluded from the calculation for the three and nine months ended September 30, 2022, respectively. Due to the net loss for the three months ended September 30, 2021, 1.5 million shares were excluded from the calculation. There were no shares excluded from the calculation for the nine months ended September 30, 2021.

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Accumulated Other Comprehensive Loss

Changes in Accumulated other comprehensive loss by component, net of related tax, are as follows (in millions):

			Change in Fair Value of Financial Instruments (1)						Foreign Currency Translation Adjustments						Postretirement Benefit Obligation (2)						Total
Balance at December 31, 2021			$	2					$	(1,333)					$	(2,540)					$	(3,871)
Other comprehensive income (loss) before reclassifications, net			(13)						(1,119)						20						(1,112)
Amounts reclassified from accumulated other comprehensive income
Amounts reclassified from accumulated other comprehensive income			(3)						—						90						87
Tax expense			—						—						(23)						(23)
Amounts reclassified from accumulated other comprehensive income, net (3)			(3)						—						67						64
Net current period other comprehensive income (loss)			(16)						(1,119)						87						(1,048)
Balance at September 30, 2022			$	(14)					$	(2,452)					$	(2,453)					$	(4,919)

			Change in Fair Value of Financial Instruments (1)						Foreign Currency Translation Adjustments						Postretirement Benefit Obligation (2)						Total
Balance at December 31, 2020			$	1					$	(1,045)					$	(2,817)					$	(3,861)
Other comprehensive income (loss) before reclassifications, net			4						(108)						8						(96)
Amounts reclassified from accumulated other comprehensive income
Amounts reclassified from accumulated other comprehensive income			1						—						104						105
Tax expense			—						—						(25)						(25)
Amounts reclassified from accumulated other comprehensive income, net (3)			1						—						79						80
Net current period other comprehensive income (loss)			5						(108)						87						(16)
Balance at September 30, 2021			$	6					$	(1,153)					$	(2,730)					$	(3,877)

(1)Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Total revenue, Interest expense, and Compensation and benefits in the Condensed Consolidated Statements of Income. Refer to Note 13 “Derivatives and Hedging” for further information regarding the Company’s derivative and hedging activity.

(2)Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income (expense) in the Condensed Consolidated Statements of Income.

(3)It is the Company’s policy to release income tax effects from Accumulated other comprehensive loss using the portfolio approach.

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The following table provides the components of the net periodic (benefit) cost recognized in the Condensed Consolidated Statements of Income for Aon’s significant U.K., U.S., and other major pension plans, which are located in the Netherlands and Canada. Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):

			Three Months Ended September 30,
			U.K.												U.S.												Other
			2022						2021						2022						2021						2022						2021
Service cost			$	—					$	—					$	—					$	—					$	—					$	—
Interest cost			20						16						17						15						5						3
Expected return on plan assets, net of administration expenses			(32)						(34)						(27)						(33)						(8)						(8)
Amortization of prior-service cost			1						1						—						—						—						—
Amortization of net actuarial loss			7						8						17						19						3						4
Net periodic (benefits) cost			(4)						(9)						7						1						—						(1)
Loss on pension settlement			—						—						—						—						—						—
Total net periodic (benefit) cost			$	(4)					$	(9)					$	7					$	1					$	—					$	(1)

			Nine Months Ended September 30,
			U.K.												U.S.												Other
			2022						2021						2022						2021						2022						2021
Service cost			$	—					$	—					$	—					$	—					$	—					$	—
Interest cost			64						49						51						43						14						9
Expected return on plan assets, net of administration expenses			(102)						(103)						(81)						(97)						(25)						(24)
Amortization of prior-service cost			2						3						—						—						—						—
Amortization of net actuarial loss			22						24						50						58						10						11
Net periodic (benefits) cost			(14)						(27)						20						4						(1)						(4)
Loss on pension settlement			—						—						1						—						—						—
Total net periodic (benefit) cost			$	(14)					$	(27)					$	21					$	4					$	(1)					$	(4)

In the first quarter of 2022, the Company recognized a non-cash settlement charge of approximately $1 million. Settlements from a certain U.S. pension plan exceeded the plan’s service and interest cost. This triggered settlement accounting which required the immediate recognition of a portion of the accumulated losses associated with the plan.

Contributions

Assuming no additional contributions are agreed to with, or required by, the pension plan trustees, the Company expects to make total cash contributions of approximately $7 million, $52 million, and $15 million, (at December 31, 2021 exchange rates) to its significant U.K., U.S., and other major pension plans, respectively, during 2022. The following table summarizes contributions made to the Company’s significant pension plans (in millions):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Contributions to U.K. pension plans			$	1					$	2					$	6					$	8
Contributions to U.S. pension plans			7						8						32						54
Contributions to other major pension plans			2						2						12						12
Total contributions			$	10					$	12					$	50					$	74

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The following table summarizes share-based compensation expense recognized in the Condensed Consolidated Statements of Income in Compensation and benefits (in millions):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Restricted share units			$	54					$	46					$	196					$	156
Performance share awards			35						36						98						136
Employee share purchase plans and other (1)			4						48						10						54
Total share-based compensation expense			$	93					$	130					$	304					$	346

(1)The three and nine months ended September 30, 2021 include expenses related to the Aon United Growth Ownership Plan.

Restricted Share Units

RSUs generally vest between three and five years. The fair value of RSUs is based upon the market value of the Company’s class A ordinary shares at the date of grant. With certain limited exceptions, any break in continuous employment will cause the forfeiture of all non-vested awards. Compensation expense associated with RSUs is recognized on a straight-line basis over the requisite service period. Dividend equivalents are paid on certain RSUs, based on the initial grant amount.

The following table summarizes the status of the Company’s RSUs (shares in thousands, except fair value):

			Nine Months Ended September 30,
			2022												2021
			Shares						Fair Value (1)						Shares						Fair Value (1)
Non-vested at beginning of period			3,075						$	203					3,309						$	163
Granted			1,058						$	278					1,164						$	250
Vested			(1,067)						$	186					(1,147)						$	151
Forfeited			(152)						$	218					(166)						$	176
Non-vested at end of period			2,914						$	235					3,160						$	199

(1)Represents per share weighted average fair value of award at date of grant.

Unamortized deferred compensation expense amounted to $511 million as of September 30, 2022, with a remaining weighted average amortization period of approximately 2.0 years.

Performance Share Awards

The vesting of PSAs is contingent upon meeting a cumulative level of earnings per share related performance over a three-year period. The actual issuance of shares may range from 0-200% of the target number of PSAs granted, based on the terms of the plan and level of achievement of the related performance target. The grant date fair value of PSAs is based upon the market price of the Company’s class A ordinary shares at the date of grant. The performance conditions are not considered in the determination of the grant date fair value for these awards. Compensation expense is recognized over the performance period based on management’s estimate of the number of units expected to vest. Management evaluates its estimate of the actual number of shares expected to be issued at the end of the programs on a quarterly basis. The cumulative effect of the change in estimate is recognized in the period of change as an adjustment to Compensation and benefits in the Condensed Consolidated Statements of Income, if necessary. Dividend equivalents are not paid on PSAs.

The following table summarizes the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the nine months ended September 30, 2022 and the years ended December 31, 2021 and 2020, respectively (shares in thousands and dollars in millions, except fair value per share):

			September 30, 2022						December 31, 2021						December 31, 2020
Target PSAs granted during period			300						382						500
Weighted average fair value per share at date of grant			$	311					$	225					$	163
Number of shares that would be issued based on current performance levels			299						726						958
Unamortized expense, based on current performance levels			$	76					$	75					$	13

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The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes.

Foreign Exchange Risk Management

The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, enters into monetary intercompany transfers or other transactions denominated in a currency that differs from its functional currency. The Company uses foreign exchange derivatives, typically forward contracts, options and cross currency swaps, to reduce its overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income.

The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company’s global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 90-day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income (expense) in the Condensed Consolidated Statements of Income.

The notional and fair values of derivative instruments are as follows (in millions):

			Notional Amount												Net Amount of Derivative Assets  Presented in the Statements of Financial Position (1)												Net Amount of Derivative Liabilities  Presented in the Statements of Financial Position (2)
			September 30, 2022						December 31, 2021						September 30, 2022						December 31, 2021						September 30, 2022						December 31, 2021
Foreign exchange contracts
Accounted for as hedges			$	612					$	629					$	6					$	27					$	(2)					$	—
Not accounted for as hedges (3)			313						412						—						2						(2)						—
Total			$	925					$	1,041					$	6					$	29					$	(4)					$	—

(1)Included within Other current assets ($2 million at September 30, 2022 and $21 million at December 31, 2021) or Other non-current assets ($4 million at September 30, 2022 and $8 million at December 31, 2021).

(2)Included within Other current liabilities ($3 million at September 30, 2022) and Other non-current liabilities ($1 million at September 30, 2022).

(3)These contracts typically are for 90-day durations and executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date.

The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements are as follows (in millions):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2022						2021						2022						2021
(Loss) Gain recognized in Accumulated other comprehensive loss						$	(12)					$	(6)					$	(18)					$	5

The amounts of derivative gains (losses) reclassified from Accumulated other comprehensive loss to the Condensed Consolidated Statements of Income are as follows (in millions):

						Three Months Ended September 30,												Nine Months Ended September 30,
						2022						2021						2022						2021
Total revenue						$	—					$	(1)					$	3					$	(2)
Compensation and benefits						(1)						1						—						1
Total						$	(1)					$	—					$	3					$	(1)

The Company estimates that approximately $10 million of pretax loss currently included within Accumulated other comprehensive loss will be reclassified into earnings in the next twelve months.

During the three and nine months ended September 30, 2022, the Company recorded a loss of $28 million and $11 million, respectively, in Other income (expense) for foreign exchange derivatives not designated or qualifying as hedges. During the

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Accounting standards establish a three tier fair value hierarchy that prioritizes the inputs used in measuring fair values as follows:

•Level 1 — observable inputs such as quoted prices for identical assets in active markets;

•Level 2 — inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and

•Level 3 — unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.

The following methods and assumptions are used to estimate the fair values of the Company’s financial instruments:

Money market funds consist of institutional prime, treasury, and government money market funds. The Company reviews treasury and government money market funds to obtain reasonable assurance that the fund net asset value is $1 per share, and reviews the floating net asset value of institutional prime money market funds for reasonableness.

Equity investments consist of equity securities and equity derivatives valued using the closing stock price on a national securities exchange. Over-the-counter equity derivatives are valued using observable inputs such as underlying prices of the underlying security and volatility. On a sample basis, the Company reviews the listing of Level 1 equity securities in the portfolio, agrees the closing stock prices to a national securities exchange, and independently verifies the observable inputs for Level 2 equity derivatives and securities.

Fixed income investments consist of certain categories of bonds and derivatives. Corporate, government, and agency bonds are valued by pricing vendors who estimate fair value using recently executed transactions and proprietary models based on observable inputs, such as interest rate spreads, yield curves, and credit risk. Asset-backed securities are valued by pricing vendors who estimate fair value using DCF models utilizing observable inputs based on trade and quote activity of securities with similar features. Fixed income derivatives are valued by pricing vendors using observable inputs such as interest rates and yield curves. The Company obtains an understanding of the models, inputs, and assumptions used in developing prices provided by its vendors through discussions with the fund managers. The Company independently verifies the observable inputs, as well as assesses assumptions used for reasonableness based on relevant market conditions and internal Company guidelines. If an assumption is deemed unreasonable, based on internal Company guidelines, it is then reviewed by management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and historically are not material to the fair value estimates used in the Condensed Consolidated Financial Statements.

Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatility.

Debt is carried at outstanding principal balance, less any unamortized issuance costs, discount or premium. Fair value is based on quoted market prices or estimates using DCF analyses based on current borrowing rates for similar types of borrowing arrangements.

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The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021 (in millions):

									Fair Value Measurements Using
			Balance at September 30, 2022						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets
Money market funds (1)			$	2,864					$	2,864					$	—					$	—
Other investments
Government bonds			$	1					$	—					$	1					$	—
Derivatives (2)
Gross foreign exchange contracts			$	12					$	—					$	12					$	—
Liabilities
Derivatives (2)
Gross foreign exchange contracts			$	9					$	—					$	9					$	—

									Fair Value Measurements Using
			Balance at December 31, 2021						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Assets
Money market funds (1)			$	2,918					$	2,918					$	—					$	—
Other investments
Government bonds			$	1					$	—					$	1					$	—
Derivatives (2)
Gross foreign exchange contracts			$	40					$	—					$	40					$	—
Liabilities															0
Derivatives (2)
Gross foreign exchange contracts			$	11					$	—					$	11					$	—

(1)Included within Fiduciary assets or Short-term investments in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity.

(2)Refer to Note 13 “Derivatives and Hedging” for additional information regarding the Company’s derivatives and hedging activity. 

There were no transfers of assets or liabilities between fair value hierarchy levels in the three and nine months ended September 30, 2022 or 2021. The Company recognized no realized or unrealized gains or losses in the Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2022 or 2021 related to assets and liabilities measured at fair value using unobservable inputs.

The fair value of debt is classified as Level 2 of the fair value hierarchy. The following table provides the carrying value and fair value for the Company’s term debt (in millions):

			September 30, 2022												December 31, 2021
			Carrying Value						Fair Value						Carrying Value						Fair Value
Current portion of long-term debt			$	500					$	498					$	499					$	507
Long-term debt			$	10,116					$	8,875					$	8,228					$	9,204

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general expense in the Condensed Consolidated Statements of Income to the extent that losses are deemed probable and are reasonably estimable. These amounts are adjusted from time to time as developments warrant. Matters that are not probable and reasonably estimable are not accrued for in the financial statements.

The Company has included in the current matters described below certain matters in which (1) loss (including interest and costs) is probable, (2) loss (including interest and costs) is reasonably possible (that is, more than remote but not probable), or (3) there exists the reasonable possibility of loss (including interest and costs) greater than the accrued amount. In addition, the Company may from time to time disclose matters for which the probability of loss could be remote but the claim amounts associated with such matters are potentially significant. The reasonably possible range of loss (including interest and costs) for the matters described below for which loss is estimable, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.1 billion, exclusive of any insurance coverage. These estimates are based on available information as of the date of this filing. As available information changes, the matters for which Aon is able to estimate, and the estimates themselves, may change. In addition, many estimates involve significant judgment and uncertainty. For example, at the time of making an estimate, Aon may only have limited information about the facts underlying the claim, and predictions and assumptions about future court rulings and outcomes may prove to be inaccurate. Although management at present believes that the ultimate outcome of all matters described below, individually or in the aggregate, will not have a material adverse effect on the consolidated financial position of Aon, legal proceedings are subject to inherent uncertainties and unfavorable rulings or other events. Unfavorable resolutions could include substantial monetary or punitive damages imposed on Aon or its subsidiaries. If unfavorable outcomes of these matters were to occur, future results of operations or cash flows for any particular quarterly or annual period could be materially adversely affected.

Current Matters

On October 3, 2017, CCC invoked arbitration to pursue a claim that it asserts against Aon New Zealand. Aon provided insurance broking services to CCC in relation to CCC’s 2010-2011 material damage and business interruption program. In December 2015, CCC settled its property and business interruption claim for its losses arising from the 2010-2011 Canterbury earthquakes against the underwriter of its material damage and business interruption program and the reinsurers of that underwriter. CCC contends that acts and omissions by Aon caused CCC to recover less in that settlement than it otherwise would have. CCC claims damages of approximately NZD 320 million ($180 million at September 30, 2022 exchange rates) plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims.

Aon Hewitt Investment Consulting, Inc., now known as Aon Investments USA, Inc. (“Aon Investments”), Lowe’s Companies, Inc. and the Administrative Committee of Lowe’s Companies, Inc. (collectively “Lowe’s”) were sued on April 27, 2018 in the U.S. District Court for the Western District of North Carolina (the “Court”) in a class action lawsuit brought on behalf of participants in the Lowe’s 401(k) Plan (the “Plan”). Aon Investments provided investment consulting services to Lowe’s under ERISA. The plaintiffs contend that in 2015 Lowe’s imprudently placed the Hewitt Growth Fund in the Plan’s lineup of investments, the Hewitt Growth Fund underperformed its benchmarks, and that Aon had a conflict of interest in recommending the proprietary fund for the Plan. The plaintiffs allege the Plan suffered over $200 million in investment losses when compared to the eight funds it replaced. The plaintiffs allege that Aon Investments breached its duties of loyalty and prudence pursuant to ERISA. The matter was tried to the Court the last week of June 2021, and the Court entered judgment in favor of Aon on all claims on October 12, 2021. Plaintiffs have filed an appeal with the United States Court of Appeals for the Fourth Circuit. Aon believes it has meritorious defenses and intends to vigorously defend itself against these claims and appeal.

Aon faces legal action arising out of a fatal plane crash in November 2016. Aon U.K. Limited placed an aviation civil liability reinsurance policy for the Bolivian insurer of the airline. After the crash, the insurer determined that there was no coverage under the airline’s insurance policy due to the airline’s breach of various policy conditions. In November 2018, the owner of the aircraft filed a claim in Bolivia against Aon, the airline, the insurer and the insurance broker. The claim is for $16 million plus any liability the owner has to third parties. In November 2019, a federal prosecutor in Brazil filed a public civil action naming three Aon entities as defendants, along with the airline, the insurer and the lead reinsurer. That claim seeks pecuniary damages for families affected by the crash in the sum of $300 million; or, in the alternative, $50 million; or, in the alternative, $25 million; plus “moral damages” of an equivalent sum. Separately, in March 2020, the Brazilian Federal Senate invited Aon to give evidence to a Parliamentary Commission of Inquiry in an investigation into the accident. Aon is cooperating with that inquiry. In August 2020, 43 individuals (surviving passengers and estates of the deceased) filed a motion in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida, seeking permission to commence proceedings against Aon (and the insurer and reinsurers) for claims totaling $844 million. Finally, in April 2021, representatives of 16 passengers issued a claim against Aon in the High Court in England seeking damages under the Fatal Accidents Act 1976 in the sum of £29 million ($31 million at September 30, 2022 exchange rates). Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims.

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In April 2017, the FCA announced an investigation relating to suspected competition law breaches in the aviation and aerospace broking industry, which, for Aon in 2016, represented less than $100 million in global revenue. The European Commission assumed jurisdiction over the investigation in place of the FCA, and the European Commission has now closed its investigation. Other antitrust agencies outside the E.U. are conducting formal or informal investigations regarding these matters. Aon intends to work diligently with all antitrust agencies concerned to ensure they can carry out their work as efficiently as possible. At this time, in light of the uncertainties and many variables involved, Aon cannot estimate the ultimate impact on our company from these investigations or any related private litigation, nor any damages, penalties, or fines related to them.

Settled/Closed Matters

A retail insurance brokerage subsidiary of Aon was sued on September 6, 2018 in the United States District Court for the Southern District of New York by a client, Pilkington North America, Inc., that sustained damage from a tornado to its Ottawa, Illinois property. The lawsuit sought between $45 million and $85 million in property and business interruption damages from either its insurer or Aon. The insurer contended that insurance proceeds were limited to $15 million in coverage by a windstorm sub-limit purportedly contained in the policy procured by Aon for Pilkington. The insurer therefore tendered $15 million to Pilkington and denied coverage for the remainder of the loss. Pilkington sued the insurer and Aon seeking full coverage for the loss from the insurer or, in the alternative, seeking the same damages against Aon on various theories of professional liability if the court found that the $15 million sub-limit applied to the claim. In June 2022, the case was settled with no admission of liability on the part of Aon. In July 2022, Pilkington voluntarily dismissed all claims against Aon pursuant to the settlement.

Aon Investments and AGI were sued on September 16, 2020, in the U.S. District Court for the Southern District of New York by the Blue Cross and Blue Shield Association NEBC. Aon Investments and its predecessors provided investment advisory services to NEBC since 2009. The NEBC contended that it suffered investment losses exceeding $2 billion in several Structured Alpha funds managed by AGI and recommended by Aon. The NEBC asserted claims against Aon Investments for breach of fiduciary duty and breach of co-fiduciary duty, and alleged that Aon Investments and AGI were jointly and severally liable for damages, which included the restoration of investment losses, disgorgement of fees and profits, and attorneys’ fees. In March 2022, the NEBC voluntarily dismissed all claims against AGI pursuant to a settlement between the NEBC and AGI. In August 2022, the case was settled with no admission of liability on the part of Aon. In September 2022, NEBC and Aon each voluntarily dismissed all claims remaining in the action, including all claims asserted by NEBC against Aon, and all claims asserted by Aon against NEBC and third-party defendants, pursuant to the settlement.

Guarantees and Indemnifications

The Company provides a variety of guarantees and indemnifications to its customers and others. The maximum potential amount of future payments represents the notional amounts that could become payable under the guarantees and indemnifications if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or other methods. These amounts may bear no relationship to the expected future payments, if any, for these guarantees and indemnifications. Any anticipated amounts payable are included in the Financial Statements, and are recorded at fair value.

The Company expects that, as prudent business interests dictate, additional guarantees and indemnifications may be issued from time to time.

Guarantee of Registered Securities

On April 1, 2020, a scheme of arrangement under English law was completed, as described in the proxy statement filed with the SEC on December 20, 2019 (the “Ireland Reorganization”). In connection with the Ireland Reorganization, Aon plc and Aon Global Holdings plc, entered into various agreements pursuant to which they agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, which were previously guaranteed solely by Aon Global Limited and the obligations of Aon Global Limited arising under issued and outstanding debt securities, which were previously guaranteed solely by Aon Corporation. Those agreements include: (1) Second Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, and Aon Global Holdings plc and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) (amending and restating the Amended and Restated Indenture, dated April 2, 2012, among Aon Corporation, Aon Global Limited and the Trustee); (2) Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Indenture, dated December 12, 2012, among Aon Corporation, Aon Global Limited plc and the Trustee); (3) Second Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Amended and Restated Indenture, dated May 20, 2015, among Aon Corporation, Aon Global Limited and the Trustee); (4) Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Indenture, dated November 13, 2015, among Aon Corporation, Aon Global Limited and the Trustee); and (5) Amended and Restated

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Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Indenture, dated December 3, 2018, among Aon Corporation, Aon Global Limited and the Trustee).

Letters of Credit

Aon has entered into a number of arrangements whereby the Company’s performance on certain obligations is guaranteed by a third party through the issuance of LOCs. The Company had total LOCs outstanding of approximately $69 million at September 30, 2022, and $75 million at December 31, 2021. These LOCs cover the beneficiaries related to certain of Aon’s U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for Aon’s own workers compensation program. The Company has also obtained LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at its international subsidiaries.

Premium Payments

The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $132 million at September 30, 2022 compared to $153 million at December 31, 2021.

The Company operates as one segment that includes all of Aon’s operations, which as a global professional services firm provides a broad range of risk, health, and wealth solutions through four solution lines which make up its principal products and services. The CODM assesses the performance of the Company and allocates resources based on one segment: Aon United.

The Company’s reportable operating segment has been determined using a management approach, which is consistent with the basis and manner in which the CODM uses financial information for the purposes of allocating resources and evaluating performance. The CODM assesses performance and allocates resources based on total Aon results against its key four metrics, including organic revenue growth, expense discipline, and collaborative behaviors that maximize value for Aon and its shareholders, regardless of which solution line it benefits.

As Aon operates as one segment, segment profit or loss is consistent with consolidated reporting as disclosed in the Condensed Consolidated Statements of Income. Refer to Note 3 “Revenue from Contracts with Customers” for further information on revenue by principal service line.

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