UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
ý       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED June 30, 2014
 
OR
 
o          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number 1-7933

Aon plc
(Exact Name of Registrant as Specified in Its Charter)

	
			
ENGLAND AND WALES	 	98-1030901	
(State or Other Jurisdiction of	 	(I.R.S. Employer	
Incorporation or Organization)	 	Identification No.)	

	
			
8 DEVONSHIRE SQUARE, LONDON, ENGLAND	 	EC2M 4PL	
(Address of Principal Executive Offices)	 	(Zip Code)	
+44 20 7623 5500
(Registrant’s Telephone Number,
Including Area Code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES  ý   NO  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES  ý   NO  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

			
Large accelerated filer x	 	Accelerated filer o	
 	 	 	
Non-accelerated filer o	 	Smaller reporting company o	
(Do not check if a smaller reporting company)	 	 	
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o NO ý
 
Number of Class A Ordinary Shares of Aon plc, $0.01 nominal value, outstanding as of June 30, 2014 :  290,452,659

	

PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
 
Aon plc
Condensed Consolidated Statements of Income
(Unaudited)

	
																	
 	 	Three Months Ended	 	Six Months Ended	
(millions, except per share data)	 	June 30, 2014	 	June 30, 2013	 	June 30, 2014	 	June 30, 2013	
Revenue	 	 		 	 		 	 	 	 	
Commissions, fees and other	 	$	2,913		 	$	2,891		 	$	5,854		 	$	5,799		
Fiduciary investment income	 	6		 	6		 	12		 	13		
Total revenue	 	2,919		 	2,897		 	5,866		 	5,812		
Expenses	 	 		 	 		 	 	 	 	
Compensation and benefits	 	1,708		 	1,712		 	3,459		 	3,437		
Other general expenses	 	766		 	803		 	1,493		 	1,583		
Total operating expenses	 	2,474		 	2,515		 	4,952		 	5,020		
Operating income	 	445		 	382		 	914		 	792		
Interest income	 	2		 	2		 	4		 	3		
Interest expense	 	(65	)	 	(48	)	 	(123	)	 	(100	)	
Other (expense) income	 	(2	)	 	6		 	(1	)	 	15		
Income before income taxes	 	380		 	342		 	794		 	710		
Income taxes	 	67		 	90		 	145		 	186		
Net income	 	313		 	252		 	649		 	524		
Less: Net income attributable to noncontrolling interests	 	9		 	11		 	20		 	22		
Net income attributable to Aon shareholders	 	$	304		 	$	241		 	$	629		 	$	502		
 	 	 	 	 	 	 	 	 	
Basic net income per share attributable to Aon shareholders	 	$	1.02		 	$	0.77		 	$	2.09		 	$	1.59		
Diluted net income per share attributable to Aon shareholders	 	$	1.01		 	$	0.76		 	$	2.07		 	$	1.58		
Cash dividends per share paid on ordinary shares	 	$	0.25		 	$	0.18		 	$	0.43		 	$	0.33		
Weighted average ordinary shares outstanding - basic	 	298.5		 	313.7		 	301.0		 	315.0		
Weighted average ordinary shares outstanding - diluted	 	301.6		 	317.1		 	304.4		 	318.6		
 
See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

2

Aon plc
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

	
																	
 	 	Three Months Ended	 	Six Months Ended	
(millions)	 	June 30, 2014	 	June 30, 2013	 	June 30, 2014	 	June 30, 2013	
Net income	 	$	313		 	$	252		 	$	649		 	$	524		
Less: Net income attributable to noncontrolling interests	 	9		 	11		 	20		 	22		
Net income attributable to Aon shareholders	 	304		 	241		 	629		 	502		
Other comprehensive income (loss), net of tax:	 	 		 	 		 	 		 	 		
Change in fair value of investments	 	(2	)	 	13		 	(1	)	 	13		
Change in fair value of derivatives	 	12		 	(7	)	 	21		 	(21	)	
Foreign currency translation adjustments	 	74		 	(58	)	 	90		 	(232	)	
Post-retirement benefit obligation	 	18		 	18		 	44		 	41		
Total other comprehensive income (loss)	 	102		 	(34	)	 	154		 	(199	)	
Less: Other comprehensive loss attributable to noncontrolling interests	 	—		 	(2	)	 	(2	)	 	(2	)	
Total other comprehensive income (loss) attributable to Aon shareholders	 	102		 	(32	)	 	156		 	(197	)	
Comprehensive income attributable to Aon shareholders	 	$	406		 	$	209		 	$	785		 	$	305		
 
See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

3

Aon plc
Condensed Consolidated Statements of Financial Position

	
									
(millions, except nominal value)	 	June 30, 2014	 	Dec 31, 2013	
 	 	(Unaudited)	 	 	
ASSETS	 	 		 	 		
CURRENT ASSETS	 	 		 	 		
Cash and cash equivalents	 	$	418		 	$	477		
Short-term investments	 	308		 	523		
Receivables, net	 	2,803		 	2,896		
Fiduciary assets	 	12,786		 	11,871		
Other current assets	 	1,396		 	563		
Total Current Assets	 	17,711		 	16,330		
Goodwill	 	9,099		 	8,997		
Intangible assets, net	 	2,468		 	2,578		
Fixed assets, net	 	787		 	791		
Investments	 	138		 	132		
Other non-current assets	 	1,573		 	1,423		
TOTAL ASSETS	 	$	31,776		 	$	30,251		
 	 	 	 	 	
LIABILITIES AND EQUITY	 	 		 	 		
LIABILITIES	 	 		 	 		
CURRENT LIABILITIES	 	 		 	 		
Fiduciary liabilities	 	$	12,786		 	$	11,871		
Short-term debt and current portion of long-term debt	 	799		 	703		
Accounts payable and accrued liabilities	 	1,498		 	1,931		
Other current liabilities	 	957		 	906		
Total Current Liabilities	 	16,040		 	15,411		
Long-term debt	 	5,155		 	3,686		
Pension, other post-retirement and other post-employment liabilities	 	1,533		 	1,607		
Other non-current liabilities	 	1,289		 	1,352		
TOTAL LIABILITIES	 	24,017		 	22,056		
 	 	 	 	 	
EQUITY	 	 		 	 		
Ordinary shares - $0.01 nominal value
Authorized: 750 shares (issued: 2014 - 290.5; 2013 - 300.7)	 	3		 	3		
Additional paid-in capital	 	4,933		 	4,785		
Retained earnings	 	4,982		 	5,731		
Accumulated other comprehensive loss	 	(2,218	)	 	(2,374	)	
TOTAL AON SHAREHOLDERS’ EQUITY	 	7,700		 	8,145		
Noncontrolling interests	 	59		 	50		
TOTAL EQUITY	 	7,759		 	8,195		
TOTAL LIABILITIES AND EQUITY	 	$	31,776		 	$	30,251		
 
See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

4

Aon plc
Condensed Consolidated Statement of Shareholders’ Equity
(Unaudited)

	
																								
(millions)	 	Shares	 	Ordinary
Shares and
Additional
Paid-in Capital	 	Retained
Earnings	 	Accumulated Other
Comprehensive
Loss, Net of Tax	 	Non-
controlling
Interests	 	Total	
Balance at December 31, 2013	 	300.7		 	$	4,788		 	$	5,731		 	$	(2,374	)	 	$	50		 	$	8,195		
Net income	 	—		 	—		 	629		 	—		 	20		 	649		
Shares issued - employee benefit plans	 	0.3		 	13		 	—		 	—		 	—		 	13		
Shares issued - employee compensation	 	4.1		 	(108	)	 	—		 	—		 	—		 	(108	)	
Shares purchased	 	(14.6	)	 	—		 	(1,250	)	 	—		 	—		 	(1,250	)	
Tax benefit - employee benefit plans	 	—		 	68		 	—		 	—		 	—		 	68		
Share-based compensation expense	 	—		 	175		 	—		 	—		 	—		 	175		
Dividends to shareholders	 	—		 	—		 	(128	)	 	—		 	—		 	(128	)	
Net change in fair value of investments	 	—		 	—		 	—		 	(1	)	 	—		 	(1	)	
Net change in fair value of derivatives	 	—		 	—		 	—		 	21		 	—		 	21		
Net foreign currency translation adjustments	 	—		 	—		 	—		 	92		 	(2	)	 	90		
Net post-retirement benefit obligation	 	—		 	—		 	—		 	44		 	—		 	44		
Purchase of subsidiary shares from non-controlling interests	 	—		 	—		 	—		 	—		 	1		 	1		
Dividends paid to non-controlling interests on subsidiary common stock	 	—		 	—		 	—		 	—		 	(10	)	 	(10	)	
Balance at June 30, 2014	 	290.5		 	$	4,936		 	$	4,982		 	$	(2,218	)	 	$	59		 	$	7,759		
 
See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

5

Aon plc
Condensed Consolidated Statements of Cash Flows
(Unaudited)  

									
 	 	Six Months Ended	
(millions)	 	June 30, 2014	 	June 30, 2013	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 		 	 		
Net income	 	$	649		 	$	524		
Adjustments to reconcile net income to cash provided by operating activities:	 	 		 	 		
Gain from sales of businesses and investments, net	 	(8	)	 	—		
Depreciation of fixed assets	 	122		 	118		
Amortization of intangible assets	 	173		 	198		
Share-based compensation expense	 	175		 	137		
Deferred income taxes	 	18		 	24		
Change in assets and liabilities:	 	 		 	 		
Fiduciary receivables	 	(563	)	 	(654	)	
Short term investments - funds held on behalf of clients	 	(175	)	 	(212	)	
Fiduciary liabilities	 	738		 	866		
Receivables, net	 	115		 	191		
Accounts payable and accrued liabilities	 	(492	)	 	(431	)	
Restructuring reserves	 	(62	)	 	(5	)	
Current income taxes	 	(145	)	 	(110	)	
Pension, other post-retirement and other post-employment liabilities	 	(226	)	 	(291	)	
Other assets and liabilities	 	14		 	32		
CASH PROVIDED BY OPERATING ACTIVITIES	 	333		 	387		
 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 		 	 		
Proceeds from sale of long-term investments	 	48		 	23		
Purchases of long-term investments	 	(14	)	 	(6	)	
Net sales of short-term investments - non-fiduciary	 	217		 	29		
Acquisition of businesses, net of cash acquired	 	(83	)	 	(23	)	
Proceeds from sale of businesses	 	1		 	1		
Capital expenditures	 	(115	)	 	(122	)	
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	 	54		 	(98	)	
 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 		 	 		
Share repurchase	 	(1,250	)	 	(525	)	
Issuance of shares for employee benefit plans	 	40		 	57		
Issuance of debt	 	3,324		 	2,914		
Repayment of debt	 	(1,745	)	 	(2,607	)	
Deposit with trustee	 	(681	)	 	—		
Cash dividends to shareholders	 	(128	)	 	(105	)	
Purchase of shares from noncontrolling interests	 	1		 	—		
Dividends paid to noncontrolling interests	 	(10	)	 	(6	)	
CASH USED FOR FINANCING ACTIVITIES	 	(449	)	 	(272	)	
 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	 	3		 	(42	)	
NET DECREASE IN CASH AND CASH EQUIVALENTS	 	(59	)	 	(25	)	
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	 	477		 	291		
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	418		 	$	266		
 	 	 	 	 	
Supplemental disclosures:	 	 		 	 		
Interest paid	 	$	82		 	$	121		
Income taxes paid, net of refunds	 	$	204		 	$	237		
 
See accompanying Notes to the Condensed Consolidated Financial Statements (Unaudited).

6

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
1.  Basis of Presentation
 
The accompanying unaudited Condensed Consolidated Financial Statements and Notes thereto have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").  The Condensed Consolidated Financial Statements include the accounts of Aon plc and all 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 footnote disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.  These 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, 2013 .  The results for the three and six months ended June 30, 2014 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2014 .
 
Use of Estimates
 
The preparation of the accompanying unaudited 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, disclosures of contingent assets and liabilities at the date of the 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, which management believes to be reasonable under the circumstances.  Aon adjusts such estimates and assumptions when facts and circumstances dictate.  Illiquid credit markets, volatile equity markets, and foreign currency 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 will be reflected in the financial statements in future periods.

2.  Accounting Principles and Practices
 
Changes in Accounting Principles

Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued new accounting guidance on revenue from contracts with customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP.  The core principal of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The guidance is effective for Aon in the first quarter of 2017 and early adoption is not permitted. The guidance permits two methods of transition upon adoption; full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing a comparable view across all periods presented. Under the modified retrospective method, prior periods would not be restated. Rather, revenues and other disclosures for pre-2017 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The impact from the adoption of this guidance on the Company's Condensed Consolidated Financial Statements cannot be determined at this time. The Company is also working to determine the appropriate method of transition to the guidance.

Discontinued Operations

In April 2014, the FASB issued new accounting guidance that increased the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The guidance is effective for Aon in the first quarter of 2015. The adoption of this guidance is not expected to have a material impact on the Company's Condensed Consolidated Financial Statements.

7

Presentation of Unrecognized Tax Benefits

In July 2013, the FASB issued guidance on the presentation of certain unrecognized tax benefits on financial statements. The guidance requires, unless certain conditions exist, an unrecognized tax benefit to be presented as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The guidance was effective for Aon in the first quarter of 2014. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Foreign Currency

In March 2013, the FASB issued new accounting guidance clarifying the accounting for the release of cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The guidance was effective for Aon in the first quarter of 2014. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements.

3.  Cash and Cash Equivalents and Short-term Investments
 
Cash and cash equivalents include cash balances and all highly liquid investments with initial maturities of three months or less.  Short-term investments include certificates of deposit, money market funds and highly liquid debt instruments purchased with initial maturities in excess of three months but less than one year and are carried at amortized cost, which approximates fair value.
 
At June 30, 2014 , Cash and cash equivalents and Short-term investments were $726 million compared to $1.0 billion at December 31, 2013 . Of the total balance, $161 million and $214 million was restricted as to its use at June 30, 2014 and December 31, 2013 , respectively. Included within that amount, at June 30, 2014 , the Company is required to hold £40.5 million of operating funds in the U.K. by the Financial Conduct Authority, a U.K.-based regulator, which were included in Short-term investments.  At December 31, 2013, the Company was required to hold £77 million of operating funds in Short-term investments. These operating funds, when translated to U.S. dollars, were equal to $69 million and $126 million at June 30, 2014 and December 31, 2013 , respectively. In addition, Cash and cash equivalents included additional restricted balances of $92 million and $88 million at June 30, 2014 and December 31, 2013 , respectively. The restricted balances primarily relate to cash required to be held as collateral.

4.  Other Financial Data
 
Condensed Consolidated Statements of Income Information

Other (Expense) Income

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

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Equity earnings	$	1		 	$	4		 	$	6		 	$	6		
Loss on investments	(1	)	 	(2	)	 	(2	)	 	(1	)	
Foreign currency remeasurement (loss) gain	(15	)	 	(5	)	 	4		 	19		
Derivative gain (loss)	10		 	9		 	(13	)	 	(9	)	
Other	3		 	—		 	4		 	—		
 	$	(2	)	 	$	6		 	$	(1	)	 	$	15		

8

Condensed Consolidated Statements of Financial Position Information

Allowance for Doubtful Accounts

An analysis of the allowance for doubtful accounts is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Balance at beginning of period	$	89		 	$	122		 	$	90		 	$	118		
Provision charged to operations	4		 	1		 	8		 	11		
Accounts written off, net of recoveries	(4	)	 	(9	)	 	(9	)	 	(18	)	
Effect of exchange rate changes and other	(1	)	 	—		 	(1	)	 	3		
Balance at end of period	$	88		 	$	114		 	$	88		 	$	114		

Other Current Assets

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

								
 	June 30, 2014	 	Dec 31, 2013	
Deposit with trustee (1)	$	723		 	$	—		
Prepaid expenses	237		 	229		
Taxes receivable	213		 	111		
Deferred project costs	99		 	98		
Deferred tax assets	81		 	93		
Other	43		 	32		
 	$	1,396		 	$	563		
  ______________________________________________
		
(1)	Deposit with trustee relates to the 6.25% €500 million debt securities due July 2014 and the related accrued interest, which is described further in Note 9 "Debt." The principal amount included in this balance is $681 million and the accrued interest amount is $42 million .	

Other Non-Current Assets

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

								
 	June 30, 2014	 	Dec 31, 2013	
Prepaid pension (1)	$	746		 	$	567		
Deferred project costs	262		 	273		
Deferred tax assets	188		 	193		
Taxes receivable	99		 	108		
Other	278		 	282		
 	$	1,573		 	$	1,423		
  ______________________________________________
		
(1)	Increase in prepaid pensions is primarily due to cash funding of the U.K. pension plans.	

9

Other Current Liabilities

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

								
 	June 30, 2014	 	Dec 31, 2013	
Deferred revenue	$	482		 	$	475		
Taxes payable	115		 	136		
Deferred tax liabilities	53		 	48		
Other	307		 	247		
 	$	957		 	$	906		

Other Non-Current Liabilities

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

								
 	June 30, 2014	 	Dec 31, 2013	
Deferred tax liabilities	$	392		 	$	420		
Taxes payable	194		 	184		
Leases	191		 	204		
Deferred revenue	159		 	134		
Compensation and benefits	60		 	105		
Other	293		 	305		
 	$	1,289		 	$	1,352		

5.  Acquisitions and Dispositions
 
Acquisitions
 
During the three months ended June 30, 2014 , the Company completed the acquisition of two businesses in the Risk Solutions segment. During the six months ended June 30, 2014 , the Company completed the acquisition of three businesses in the Risk Solutions segment and one business in the HR Solutions segment. During the three months ended June 30, 2013 , the Company completed the acquisition of four businesses in the Risk Solutions segment. During the six months ended June 30, 2013 , the Company completed the acquisition of four businesses in the Risk Solutions segment and one business in the HR Solutions segment.

The following table includes the aggregate consideration transferred and the preliminary value of intangible assets recorded as a result of the Company’s acquisitions (in millions):

									
 	 	Six months ended June 30,	
 	 	2014	 	2013	
Consideration	 	$	83		 	$	23		
Intangible assets:	 	 		 	 		
Goodwill	 	$	52		 	$	16		
Other intangible assets	 	48		 	11		
     Total	 	$	100		 	$	27		
 
The results of operations of these acquisitions are included in the Condensed Consolidated Financial Statements as of the acquisition date.  The results of operations of the Company would not have been materially different if these acquisitions had been reported from the beginning of the period in which they were acquired.

Subsequent Event
 
On July 15, 2014, the Company acquired StoneRiver National Flood Services, Inc. and related entities ("National Flood Services") from StoneRiver Group, L.P.

10

National Flood Services is a leader in U.S. flood insurance processing and technology, and has more than 800 employees and offices in Kalispell, Montana, Overland Park, Kansas and Lakeland and Coral Springs, Florida. National Flood Services administers policies issued in all fifty states and every U.S. territory.

Dispositions
 
During the three months ended June 30, 2014 , the Company had no dispositions of businesses. During the six months ended June 30, 2014 , the Company completed the disposition of one business in the Risk Solutions segment. Total pretax gain of $1 million was recognized on this sale, which is included in Other (expense) income in the Condensed Consolidated Statements of Income. During the three months ended June 30, 2013 , the Company completed the disposition of one business in the Risk Solutions segment. During the six months ended June 30, 2013 , the Company completed the disposition of four businesses in the Risk Solutions segment.  No gain or loss was recognized on these dispositions.

6.  Goodwill and Other Intangible Assets
 
The changes in the net carrying amount of goodwill by reportable segment for the six months ended June 30, 2014 are as follows (in millions):

												
 	Risk
Solutions	 	HR
Solutions	 	Total	
Balance as of December 31, 2013	$	6,020		 	$	2,977		 	$	8,997		
Goodwill related to current year acquisitions	48		 	4		 	52		
Goodwill related to prior year acquisitions	(2	)	 	—		 	(2	)	
Transfer	(2	)	 	2		 	—		
Foreign currency translation	43		 	9		 	52		
Balance as of June 30, 2014	$	6,107		 	$	2,992		 	$	9,099		

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

																								
 	June 30, 2014	 	December 31, 2013	
 	Gross Carrying Amount	 	Accumulated
Amortization	 	Net Carrying Amount	 	Gross Carrying Amount	 	Accumulated
Amortization	 	Net Carrying Amount	
Intangible assets with indefinite lives:	 		 	 		 	 		 	 		 	 		 	 		
Tradenames	$	1,019		 	$	—		 	$	1,019		 	$	1,019		 	$	—		 	$	1,019		
 	 	 	 	 	 	 	 	 	 	 	 	
Intangible assets with finite lives:	 		 	 		 	 		 	 		 	 		 	 		
Customer related and contract based	2,788		 	1,469		 	1,319		 	2,720		 	1,310		 	1,410		
Marketing, technology and other	593		 	463		 	130		 	584		 	435		 	149		
 	$	4,400		 	$	1,932		 	$	2,468		 	$	4,323		 	$	1,745		 	$	2,578		

Amortization expense from finite lived intangible assets was $87 million and $173 million for the three and six months ended June 30, 2014 , respectively. Amortization expense from finite lived intangibles assets was $99 million and $198 million for the three and six months ended June 30, 2013 , respectively.
 
The estimated future amortization for finite lived intangible assets as of June 30, 2014 is as follows (in millions):

												
 	Risk Solutions	 	HR Solutions	 	Total	
Remainder of 2014	$	54		 	$	124		 	$	178		
2015	94		 	213		 	307		
2016	77		 	178		 	255		
2017	64		 	141		 	205		
2018	53		 	94		 	147		
Thereafter	104		 	253		 	357		
 	$	446		 	$	1,003		 	$	1,449		

11

7.  Restructuring
 
Aon Hewitt Restructuring Plan

On October 14, 2010, the Company announced a global restructuring plan ("Aon Hewitt Plan") in connection with the acquisition of Hewitt Associates, Inc. The Aon Hewitt Plan was intended to streamline operations across the combined Aon Hewitt organization. The Company incurred all remaining costs for the Aon Hewitt Plan and the plan was closed in the fourth quarter of 2013. For the three and six months ended June 30, 2014 , no charges were taken under the Aon Hewitt Plan. For the three months ended June 30, 2013 , $53 million of restructuring expenses were charged, of which $17 million and $36 million were in the Risk Solutions segment and HR Solutions segment, respectively. For the six months ended June 30, 2013 , $79 million of restructuring expenses were charged, of which $28 million and $51 million were in the Risk Solutions segment and HR Solutions segment, respectively.
  
As of December 31, 2013, the remaining liabilities for the Company's restructuring plans were $166 million . During the six months ended June 30, 2014 , the Company made cash payments of $58 million , resulting in remaining restructuring liabilities of $108 million as of June 30, 2014 .

8.  Investments
 
The Company earns income on cash balances and investments, as well as on premium trust balances that the Company maintains for premiums collected from insureds but not yet remitted to insurance companies, and funds held under the terms of certain outsourcing agreements to pay certain obligations on behalf of clients.  Premium trust balances and receivables, as well as a corresponding liability, are included in Fiduciary assets and Fiduciary liabilities in the accompanying Condensed Consolidated Statements of Financial Position.
 
The Company’s interest-bearing assets and other investments are included in the following categories in the Condensed Consolidated Statements of Financial Position (in millions):

								
 	June 30,
2014	 	December 31,
2013	
Cash and cash equivalents	$	418		 	$	477		
Short-term investments	308		 	523		
Fiduciary assets (1)	4,032		 	3,778		
Investments	138		 	132		
 	$	4,896		 	$	4,910		
  ______________________________________________
		
(1)	Fiduciary assets include funds held on behalf of clients but does not include fiduciary receivables.	
 
The Company’s investments are as follows (in millions):

								
 	June 30,
2014	 	December 31,
2013	
Equity method investments	$	117		 	$	113		
Other investments	13		 	10		
Fixed-maturity securities	8		 	9		
 	$	138		 	$	132		

9.  Debt
 
The Company uses proceeds from the commercial paper market from time to time in order to meet short-term working capital needs and to retire other debt obligations.  At June 30, 2014 , the Company had $107 million in commercial paper outstanding compared to no commercial paper outstanding at December 31, 2013 . The weighted average commercial paper outstanding for the three and six months ended June 30, 2014 was $447 million and $326 million , respectively. The weighted average interest rate of the commercial paper outstanding for the three and six months ended June 30, 2014 was 0.38% and 0.36% , respectively.

On June 30, 2014, the Company transferred €531 million to a trustee pursuant to an agreement related to the repayment of the 6.25% €500 million debt securities due July 2014 and accrued interest. The trustee subsequently disbursed €531 million to the bondholders on July 1, 2014 in payment of principal and accrued interest. The Company remained the primary obligor of the 6.25% €500 million debt securities due July 2014 until the funds were disbursed from the trustee to the bondholders on July 1,

12

2014. Therefore, the Company did not extinguish the liability related to this obligation at June 30, 2014. As of June 30, 2014, the Company had $681 million of debt related to this obligation recorded in Short-term debt and current portion of long-term debt, $42 million of interest accrued in Accounts payable and accrued liabilities, and a $723 million deposit to trustee recorded within Other current assets on the Condensed Consolidated Statements of Financial Position. The Company reflected the cash payment to the trustee for the principal amount as a financing activity and the accrued interest amount as an operating activity on the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2014.

On May 20, 2014, the Company issued $250 million in aggregate principal amount of 3.50% Notes Due 2024 and $550 million in aggregate principal amount of 4.60% Notes Due 2044. The  3.50%  Notes Due 2024 and 4.60% Notes Due 2044 were issued by Aon plc and fully and unconditionally guaranteed by Aon Corporation. The Company used the proceeds of the issuance to repay commercial paper borrowings and for general corporate purposes.

On May 7, 2014, the Company issued €500 million in aggregate principal amount of 2.875% Notes Due 2026. The  2.875%  Notes Due 2026 were issued by Aon plc and fully and unconditionally guaranteed by Aon Corporation. The Company used the proceeds of the issuance for general corporate purposes, including the repayment at maturity of the Company's outstanding 6.25% €500 million debt securities due July 2014.

10.  Income Taxes
 
The effective tax rate on net income was 17.5% and 18.3% for the three and six months ended June 30, 2014 , respectively. The effective tax rate on net income was 26.4% and 26.2% for the three and six months ended June 30, 2013 , respectively. The effective tax rate in the second quarter and first six months of 2014 was favorably impacted by a change in the geographical distribution of income and certain discrete items.

11.  Shareholders’ Equity
 
Ordinary Shares
 
In April 2012, the Company’s Board of Directors authorized a share repurchase program under which up to $5.0 billion of Class A Ordinary Shares may be repurchased ("2012 Share Repurchase Program"). Under this program, 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.
 
In the three months ended June 30, 2014 , the Company repurchased 7.4 million shares at an average price per share of $87.67 for a total cost of $650 million under the 2012 Share Repurchase Program. During the six months ended June 30, 2014 , the Company repurchased 14.6 million shares at an average price per share of $85.59 for a total cost of $1.3 billion under the 2012 Share Repurchase Program. In the second quarter of 2013 , the Company repurchased 3.5 million shares at an average price per share of $64.53 for a total cost of $225 million under the 2012 Share Repurchase Program. During the six months ended June 30, 2013 , the Company repurchased 8.5 million shares at an average price per share of $61.75 for a total cost of $525 million under the 2012 Share Repurchase Program. The remaining authorized amount for share repurchase under the 2012 Share Repurchase Program is $1.6 billion . Since the inception of the 2012 Share Repurchase Program, the Company repurchased a total of 50.9 million shares for an aggregate cost of $3.4 billion .
 
Participating Securities
 
Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities, as defined, and therefore, should be included in computing basic and diluted earnings per share using the two class method.  Certain of the Company’s restricted share awards allow the holder to receive a non-forfeitable dividend equivalent.
 
Net income attributable to participating securities was $2 million and $5 million in the three and six months ended June 30, 2014 , respectively. Net income attributable to participating securities was $2 million and $5 million in the three and six months ended June 30, 2013 , respectively.

13

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

												
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Shares for basic earnings per share (1) 	298.5		 	313.7		 	301.0		 	315.0		
Common stock equivalents	3.1		 	3.4		 	3.4		 	3.6		
Shares for diluted earnings per share	301.6		 	317.1		 	304.4		 	318.6		
   ______________________________________________
(1) Includes 3.0 million and 4.0 million of participating securities for the three months ended June 30, 2014 and 2013 , respectively, and 3.2 million and 4.1 million of participating securities for the six months ended June 30, 2014 and 2013 , respectively.
 
Certain ordinary share equivalents may not be included in the computation of diluted net income per share because their inclusion would have been antidilutive. There were no shares excluded from the calculation for the three months ended June 30, 2014 and June 30, 2013. There were no shares and 0.4 million shares excluded from the calculation for the six months ended June 30, 2014 and June 30, 2013, respectively.
 
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 Investments (1)	 	Change in Fair Value of Derivatives (1)	 	Foreign Currency Translation Adjustments	 	Post-Retirement Benefit Obligation (2)	 	Total	
Balance at December 31, 2013	$	1		 	$	(22	)	 	$	169		 	$	(2,522	)	 	$	(2,374	)	
Other comprehensive (loss) income before reclassifications, net	(1	)	 	12		 	92		 	2		 	105		
Amounts reclassified from accumulated other comprehensive loss:	 	 			 			 			 			
Amounts reclassified from accumulated other comprehensive loss	—		 	13		 	—		 	60		 	73		
Tax benefit	—		 	(4	)	 	—		 	(18	)	 	(22	)	
Amounts reclassified from accumulated other comprehensive loss, net	—		 	9		 	—		 	42		 	51		
Net current period other comprehensive (loss) income	(1	)	 	21		 	92		 	44		 	156		
Balance at June 30, 2014	$	—		 	$	(1	)	 	$	261		 	$	(2,478	)	 	$	(2,218	)	
______________________________________________
(1) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other (expense) income.
(2) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Compensation and benefits.

14

12.  Employee Benefits
 
The following table provides the components of the net periodic benefit cost for Aon’s material U.K., U.S., and other significant international pension plans, which are located in the Netherlands and Canada (in millions):

																								
 	Three months ended June 30,	
 	U.K.	 	U.S.	 	Other	
 	2014	 	2013	 	2014	 	2013	 	2014	 	2013	
Service cost	$	—		 	$	—		 	$	—		 	$	—		 	$	—		 	$	4		
Interest cost	58		 	51		 	32		 	28		 	12		 	11		
Expected return on plan assets	(83	)	 	(74	)	 	(39	)	 	(35	)	 	(15	)	 	(14	)	
Amortization of net actuarial loss	14		 	12		 	11		 	13		 	2		 	7		
Total net periodic (benefit) cost	$	(11	)		$	(11	)		$	4			$	6			$	(1	)		$	8		

	
																								
 	Six months ended June 30,	
 	U.K.	 	U.S.	 	Other	
 	2014	 	2013	 	2014	 	2013	 	2014	 	2013	
Service cost	$	—		 	$	—		 	$	—		 	$	—		 	$	—		 	$	9		
Interest cost	116		 	104		 	64		 	56		 	24		 	22		
Expected return on plan assets	(165	)	 	(149	)	 	(78	)	 	(69	)	 	(30	)	 	(29	)	
Amortization of net actuarial loss	27		 	24		 	21		 	26		 	4		 	13		
Net periodic (benefit) cost	(22	)	 	(21	)	 	7		 	13		 	(2	)	 	15		
Curtailment loss (gain) and other	—		 	—		 	1		 	—		 	(3	)	 	—		
Total net periodic (benefit) cost	$	(22	)	 	$	(21	)	 	$	8		 	$	13		 	$	(5	)	 	$	15		

Based on current assumptions, in 2014 , Aon plans to contribute $183 million , $173 million , and $29 million to its U.K., U.S. and other significant international pension plans, respectively. During the three months ended June 30, 2014 , contributions of $56 million , $33 million , and $4 million were made to the Company's U.K., U.S. and other significant international pension plans, respectively. During the six months ended June 30, 2014 , contributions of $121 million , $73 million , and $16 million were made to the Company's U.K., U.S. and other significant international pension plans, respectively.

During the three months ended June 30, 2013 , contributions of  $57 million , $35 million , and $7 million  were made to the Company's U.K., U.S. and other significant international pension plans, respectively. During the  six  months ended  June 30, 2013 , contributions of  $187 million , $68 million , and $44 million  were made to the Company’s U.K., U.S. and other significant international pension plans, respectively.
 
13.  Share-Based Compensation Plans
 
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 June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Restricted share units ("RSUs")	$	43		 	$	40		 	$	103		 	$	95		
Performance share awards ("PSAs")	28		 	27		 	67		 	38		
Share options	—		 	—		 	—		 	1		
Employee share purchase plans	2		 	1		 	5		 	3		
Total share-based compensation expense	$	73		 	$	68		 	$	175		 	$	137		

15

Restricted Share Units
 
A summary of the status of the Company’s RSUs is as follows (shares in thousands):

														
 	Six months ended June 30,	
 	2014	 	2013	
 	Shares	 	Fair Value (1)	 	Shares	 	Fair Value (1)	
Non-vested at beginning of period	9,759		 	$	51		 	10,432		 	$	44		
Granted	2,498		 	84		 	3,505		 	62		
Vested	(3,320	)	 	49		 	(3,345	)	 	44		
Forfeited	(221	)	 	54		 	(229	)	 	45		
Non-vested at end of period	8,716		 	61		 	10,363		 	50		
 ______________________________________________
		
(1)	Represents per share weighted average fair value of award at date of grant.	

Performance Share Awards

The vesting of PSAs is contingent upon meeting a level of earnings per share performance over a three -year period. The performance conditions are not considered in the determination of the grant date fair value for these awards. The fair value of PSAs is based upon the market price of an Aon ordinary share at the date of grant. Compensation expense is recognized over the performance period based on management's estimate of the number of units expected to vest. Compensation expense is adjusted to reflect the actual number of shares issued at the end of the programs. The actual issue 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. Dividend equivalents are not paid on PSAs.

Information as of June 30, 2014 regarding the Company’s target PSAs granted and shares that would be issued at current performance levels for PSAs granted during the six months ended June 30, 2014 and the years ended December 31, 2013 and 2012 , respectively, is as follows (shares in thousands, dollars in millions, except fair value):

												
 	As of June 30, 2014	 	As of December 31, 2013	 	As of December 31, 2012	
Target PSAs granted	816		 	1,135		 	1,369		
Fair value (1)	$	81		 	$	58		 	$	47		
Number of shares that would be issued based on current performance levels	812		 	2,230		 	2,657		
Unamortized expense, based on current performance levels	$	59		 	$	70		 	$	22		
 ______________________________________________
		
(1)	Represents per share weighted average fair value of award at date of grant.	
 
Share Options
 
The Company did not grant any share options during either the six months ended June 30, 2014 or 2013 .
 
A summary of the status of the Company’s share options and related information is as follows (shares in thousands):

														
 	Six months ended June 30,	
 	2014	 	2013	
 	Shares	 	Weighted- Average
Exercise Price	 	Shares	 	Weighted- Average
Exercise Price	
Beginning outstanding	3,462		 	$	32		 	5,611		 	$	32		
Granted	—		 	—		 	—		 	—		
Exercised	(839	)	 	32		 	(1,318	)	 	31		
Forfeited and expired	(3	)	 	37		 	(2	)	 	33		
Outstanding at end of period	2,620		 	32		 	4,291		 	33		
Exercisable at end of period	2,572		 	32		 	4,063		 	32		
 
The weighted average remaining contractual life, in years, of outstanding options was 1.9 years and 2.4 years at June 30, 2014 and 2013 , respectively.

16

 
The aggregate intrinsic value represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing share price of $90.09 as of June 30, 2014 , which would have been received by the option holders had those option holders exercised their options as of that date.  At June 30, 2014 , the aggregate intrinsic value of options outstanding was $151 million , of which $149 million was exercisable.
 
Other information related to the Company’s share options is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Aggregate intrinsic value of stock options exercised	$	24		 	$	22		 	$	45		 	$	39		
Cash received from the exercise of stock options	13		 	21		 	27		 	41		
Tax benefit realized from the exercise of stock options	6		 	4		 	12		 	7		
 
Unamortized deferred compensation expense, which includes both options and awards, amounted to $430 million as of June 30, 2014 , with a remaining weighted-average amortization period of approximately 2.2 years.

14.  Derivatives and Hedging
 
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 receives revenues, pays expenses, or enters into intercompany loans denominated in a currency that differs from its functional currency, or other transactions that are denominated in a currency other than 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; however, in limited instances, the Company has hedged certain exposures up to five years in the future.
 
The Company also uses foreign exchange derivatives, typically forward contracts and options, to hedge its net investments in foreign operations for up to two years in the future.
 
The Company also uses foreign exchange derivatives, typically forward contracts and options, to manage 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, 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 in the Condensed Consolidated Statements of Income.
 
Interest Rate Risk Management
 
The Company holds variable-rate short-term brokerage and other operating deposits. The Company uses interest rate derivatives, typically swaps, to reduce its exposure to the effects of interest rate fluctuations on the forecasted interest receipts from these deposits for up to two years in the future.
 
Certain derivatives also give rise to credit risks from the possible non-performance by counterparties.  The credit risk at the balance sheet date is generally limited to the fair value of those contracts that are favorable to the Company.  The Company has reduced its credit risk by (1) using International Swaps and Derivatives Association master agreements, collateral and credit support arrangements, (2) entering into non-exchange-traded derivatives with highly-rated major financial institutions and (3) using exchange-traded instruments.  The Company monitors the creditworthiness of, and exposure to, its counterparties.  As of June 30, 2014 , all net derivative positions were free of credit risk contingent features.  The Company has not received or pledged any collateral related to derivative arrangements as of June 30, 2014 .

17

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

																								
 	Notional Amount	 	Derivative Assets (1)	 	Derivative Liabilities (2)	
 	June 30,
2014	 	December 31,
2013	 	June 30,
2014	 	December 31,
2013	 	June 30,
2014	 	December 31,
2013	
Derivatives accounted for as hedges:	 		 	 		 	 		 	 		 	 		 	 		
Interest rate contracts	$	170		 	$	171		 	$	9		 	$	9		 	$	—		 	$	—		
Foreign exchange contracts	1,193		 	1,191		 	82		 	71		 	90		 	93		
   Total	1,363		 	1,362		 	91		 	80		 	90		 	93		
Derivatives not accounted for as hedges:	 		 	 		 	 		 	 		 	 		 	 		
Foreign exchange contracts	171		 	215		 	—		 	—		 	—		 	—		
   Total	$	1,534		 	$	1,577		 	$	91		 	$	80		 	$	90		 	$	93		
______________________________________________
		
(1)	Included within Other current assets ( $48 million and $46 million  at June 30, 2014 and December 31, 2013 , respectively) or Other non-current assets ( $43 million and $34 million  at June 30, 2014 and December 31, 2013 , respectively).	
		
(2)	Included within Other current liabilities ( $35 million and $51 million  at June 30, 2014 and December 31, 2013 , respectively) or Other non-current liabilities ( $55 million and $42 million  at June 30, 2014 and December 31, 2013 , respectively).	

Offsetting of financial assets and derivatives assets are as follows (in millions):

																								
 	Gross Amounts of Recognized Assets	 	Gross Amounts Offset in the Statement of Financial Position	 	Net Amounts of Assets Presented in the Statement of Financial Position (1)	
 	June 30,
2014	 	December 31,
2013	 	June 30,
2014	 	December 31,
2013	 	June 30,
2014	 	December 31,
2013	
Derivatives accounted for as hedges:	 		 	 		 	 		 	 		 	 		 	 		
Interest rate contracts	$	9		 	$	9		 	$	(1	)	 	$	—		 	$	8		 	$	9		
Foreign exchange contracts	82		 	71		 	(24	)	 	(30	)	 	58		 	41		
   Total	91		 	80		 	(25	)	 	(30	)	 	66		 	50		
Derivatives not accounted for as hedges:	 		 	 		 	 		 	 		 	 		 	 		
Foreign exchange contracts	—		 	—		 	—		 	—		 	—		 	—		
   Total	$	91		 	$	80		 	$	(25	)	 	$	(30	)	 	$	66		 	$	50		
______________________________________________
(1) Included within Other current assets ( $26 million and $18 million  at June 30, 2014 and December 31, 2013 , respectively) or Other non-current assets ( $40 million and $32 million  at June 30, 2014 and December 31, 2013 , respectively).

18

Offsetting of financial liabilities and derivative liabilities are as follows (in millions):

																								
 	Gross Amounts of Recognized Liabilities	 	Gross Amounts Offset in the Statement of Financial Position	 	Net Amounts of Liabilities Presented in the Statement of Financial Position (2)	
 	June 30,
2014	 	December 31,
2013	 	June 30,
2014	 	December 31,
2013	 	June 30,
2014	 	December 31,
2013	
Derivatives accounted for as hedges:	 		 	 		 	 		 	 		 	 		 	 		
Interest rate contracts	$	—		 	$	—		 	$	—		 	$	—		 	$	—		 	$	—		
Foreign exchange contracts	90		 	93		 	(24	)	 	(30	)	 	66		 	63		
   Total	90		 	93		 	(24	)	 	(30	)	 	66		 	63		
Derivatives not accounted for as hedges:	 		 	 		 	 		 	 		 	 		 	 		
Foreign exchange contracts	—		 	—		 	—		 	—		 	—		 	—		
   Total	$	90		 	$	93		 	$	(24	)	 	$	(30	)	 	$	66		 	$	63		
______________________________________________
(2) Included within Other current liabilities ( $14 million and $23 million  at June 30, 2014 and December 31, 2013 , respectively) or Other non-current liabilities ( $52 million and $40 million  at June 30, 2014 and December 31, 2013 , respectively).

The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2014 and 2013 are as follows (in millions):

																
Gain (Loss) recognized in Accumulated Other Comprehensive Loss:	Three months ended June 30,	 	Six months ended June 30,	
	2014	 	2013	 	2014	 	2013	
Cash flow hedges:	 		 	 		 	 	 	 	
Interest rate contracts (1)	$	—		 	$	—		 	$	—		 	$	—		
Foreign exchange contracts (2)	15		 	—		 	7		 	(29	)	
Total	$	15		 	$	—		 	$	7		 	$	(29	)	
 ______________________________________________
(1) Location of future reclassification from Accumulated Other Comprehensive Loss will be included within Interest Expense.
(2) Location of future reclassification from Accumulated Other Comprehensive Loss will be included within Compensation and benefits ( $5 million  gain and $18 million  loss for the three months ended June 30, 2014 and 2013 , respectively, and $16 million gain and $14 million loss for the six months ended June 30, 2014 and 2013 , respectively), and Other (expense) income ( $10 million and $19 million  gain for the three months ended June 30, 2014 and 2013 , respectively, and $9 million and $14 million loss for the six months ended June 30, 2014 and 2013 , respectively).

	
																
Gain (Loss) reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion):	Three months ended June 30,	 	Six months ended June 30,	
	2014	 	2013	 	2014	 	2013	
Cash flow hedges:	 		 	 		 	 	 	 	
Interest rate contracts (1)	$	—		 	$	—		 	$	(1	)	 	$	(1	)	
Foreign exchange contracts (2)	2		 	14		 	(19	)	 	3		
Total	2		 	14		 	(20	)	 	2		
 ______________________________________________
(1) Included within Interest Expense ( $1 million loss for the six months ended June 30, 2014 and 2013 respectively).
(2) Included within Compensation and benefits ( no loss and $3 million  loss for the three months ended June 30, 2014 and 2013 , respectively, and $2 million and $4 million loss for the six months ended June 30, 2014 and 2013 , respectively), Other general expenses ( no loss and $1 million  loss for the three months ended June 30, 2014 and 2013 , respectively, and no loss and $1 million loss for the six months ended June 30, 2014 and 2013 , respectively), and Other (expense) income ( $5 million and $18 million  gain for the three months ended June 30, 2014 and 2013 , respectively, and $12 million  loss and $8 million gain for the six months ended June 30, 2014 and 2013 , respectively), Interest expenses ( $3 million and $5 million loss for the three months and six months ended June 30, 2014 respectively).

19

The amount of gain (loss) recognized in the Condensed Consolidated Financial Statements is as follows (in millions):

																																
 	Three months ended June 30,	 	Six months ended June 30,	
 	Amount of Gain (Loss) Recognized in Income on Derivative (2)	 	Amount of Gain (Loss) Recognized in Income on Related Hedged Item	 	Amount of Gain (Loss) Recognized in Income on Derivative (1) (2)	 	Amount of Gain (Loss) Recognized in Income on Related Hedge Item (1) (2)	
 	2014	 	2013	 	2014	 	2013	 	2014	 	2013	 	2014	 	2013	
Fair value hedges:	 		 	 		 	 		 	 		 	 	 	 	 	 	 	 	
  Foreign exchange contracts (1)	$	—		 	$	—		 	$	—		 	$	—		 	$	—		 	$	(1	)	 	$	—		 	$	1		
  ______________________________________________
(1) Relates to fixed rate debt.
(2) Included in Interest expense.
 
The Company estimates that approximately $7 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified into earnings in the next twelve months.
 
The amount of gain (loss) recognized in income on the ineffective portion of derivatives for the three and six months ended June 30, 2014 and 2013 was not material.
 
During the three and six months ended June 30, 2014 , the Company recorded a gain of $4 million and a loss of $1 million , respectively, in Other (expense) income , for foreign exchange derivatives not designated or qualifying as hedges. During the three and six months ended June 30, 2013 , the Company recorded a loss of $9 million and $18 million , respectively, in Other (expense) income , for foreign exchange derivatives not designated or qualifying as hedges.
 
15.  Fair Value Measurements and Financial Instruments
 
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 and highly liquid debt securities are carried at cost and amortized cost, respectively, as an approximation of fair value. Based on market convention, the Company considers cost a practical and expedient measure of fair value.
 
Cash, cash equivalents, and highly liquid debt instruments consist of cash and institutional short-term investment funds. The Company independently reviews the short-term investment funds to obtain reasonable assurance the fund net asset value is $1 per share.
 
Equity investments consist of domestic and international equity securities and exchange traded 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 equity security and volatility. The Company independently reviews the listing of Level 1 equity securities in the portfolio and agrees the closing stock prices to a national securities exchange, and on a sample basis, 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 discounted cash flow 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 a detailed understanding of the models, inputs, and assumptions used in developing prices provided by its vendors. This understanding includes discussions with valuation resources at the vendor.

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During these discussions, the Company uses a fair value measurement questionnaire, which is part of the Company’s internal controls over financial reporting, to obtain the information necessary to assert the model, inputs and assumptions used comply with U.S. GAAP, including disclosure requirements. The Company also obtains observable inputs from the pricing vendor and 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 the Company’s guidelines, it is then reviewed by a member of management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and have not historically been material to the fair value estimates used in the Condensed Consolidated Financial Statements.
 
Pooled funds consist of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles. Pooled investment funds fair value is estimated based on the proportionate share ownership in the underlying net assets of the investment, which is based on the fair value of the underlying securities that trade on a national securities exchange. Where possible, the Company independently reviews the listing of securities in the portfolio and agrees the closing stock prices to the price quoted on a national securities exchange. The Company gains an understanding of the investment guidelines and valuation policies of the fund and discusses fund performance with pooled fund managers. The Company obtains audited fund manager financial statements, when available. If the pooled fund is designed to replicate a publicly traded index, the Company compares the performance of the fund to the index to assess the reasonableness of the fair value measurement.
 
Alternative investments consist of limited partnerships, private equity and hedge funds. Alternative investment fair value is generally estimated based on the proportionate share ownership in the underlying net assets of the investment as determined by the general partner or investment manager. The valuations are based on various factors depending on investment strategy, proprietary models, and specific financial data or projections. The Company obtains audited fund manager financial statements, when available. The Company obtains a detailed understanding of the models, inputs and assumptions used in developing prices provided by the investment managers (or appropriate party) through regular discussions. During these discussions with the investment managers, the Company uses a fair value measurement questionnaire, which is part of the Company’s internal controls over financial reporting, to obtain the information necessary to assert the model, inputs and assumptions used comply with U.S. GAAP, including disclosure requirements. The Company also obtains observable inputs from the investment manager and 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 the Company’s guidelines, it is then reviewed by a member of management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and have not historically been material to the fair value estimates 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 volatilities.
 
Annuity contracts consist of insurance group annuity contracts purchased to match the pension benefit payment stream owed to certain selected plan participant demographics within a few major U.K. defined benefit plans. Annuity contracts are valued using a discounted cash flow model utilizing assumptions such as discount rate, mortality, and inflation. The Company independently verifies the observable inputs.
 
Real estate and REITs consist of publicly traded real estate investment trusts ("REITs") and direct real estate investments. Level 1 REITs are valued using the closing stock price on a national securities exchange. The Level 3 values are based on the proportionate share of ownership in the underlying net asset value as determined by the investment manager. The Company independently reviews the listing of Level 1 REIT securities in the portfolio and agrees the closing stock prices to a national securities exchange. The Company gains an understanding of the investment guidelines and valuation policies of the Level 3 real estate funds and discusses performance with the fund managers. The Company obtains audited fund manager financial statements, when available. See the description of "Alternative investments" for further detail on valuation procedures surrounding Level 3 REITs.
 
Guarantees are carried at fair value, which is based on discounted estimated cash flows using published historical cumulative default rates and discount rates commensurate with the underlying exposure.
 
Debt is carried at outstanding principal balance, less any unamortized discount or premium. Fair value is based on quoted market prices or estimates using discounted cash flow analyses based on current borrowing rates for similar types of borrowing arrangements.

21

The following tables present the categorization of the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2014 and December 31, 2013 (in millions):

																
 	 	 	Fair Value Measurements Using	
 	Balance at June 30, 2014	 	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 and highly liquid debt securities (1)	$	2,129		 	$	2,104		 	$	25		 	$	—		
Other investments:	 		 	 		 	 		 	 		
Fixed maturity securities:	 		 	 		 	 		 	 		
Corporate bonds	1		 	—		 	—		 	1		
Government bonds	7		 	—		 	7		 	—		
Equity securities	11		 	6		 	5		 	—		
Derivatives:	 		 	 		 	 		 	 		
Interest rate contracts	9		 	—		 	9		 	—		
Foreign exchange contracts	82		 	—		 	82		 	—		
Liabilities:	 		 	 		 	 		 	 		
Derivatives:	 		 	 		 	 		 	 		
Foreign exchange contracts	90		 	—		 	90		 	—		
  ______________________________________________
(1) Includes $ 2,104 million of money market funds and $25 million of highly liquid debt securities that are classified as Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity.  See Note 8 "Investments" for additional information regarding the Company’s investments.

																
 	 	 	Fair Value Measurements Using	
 	Balance at December 31, 2013	 	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 and highly liquid debt securities (1)	$	2,079		 	$	2,054		 	$	25		 	$	—		
Other investments:	 		 	 		 	 		 	 		
Fixed maturity securities:	 		 	 		 	 		 	 		
Corporate bonds	2		 	—		 	—		 	2		
Government bonds	7		 	—		 	7		 	—		
Equity securities	13		 	6		 	7		 	—		
Derivatives:	 		 	 		 	 		 	 		
Interest rate contracts	9		 	—		 	9		 	—		
Foreign exchange contracts	71		 	—		 	71		 	—		
Liabilities:	 		 	 		 	 		 	 		
Derivatives:	 		 	 		 	 		 	 		
Foreign exchange contracts	93		 	—		 	93		 	—		
  ______________________________________________
(1)  Includes $2,054 million of money market funds and $25 million of highly liquid debt securities that are classified as Fiduciary assets, Short-term investments or Cash and cash equivalents in the Condensed Consolidated Statements of Financial Position, depending on their nature and initial maturity.  See Note 8 "Investments" for additional information regarding the Company’s investments.
 
There were no transfers of assets or liabilities between fair value hierarchy levels in the three and six months ended June 30, 2014 and 2013 , respectively. There were no realized or unrealized gains or losses recognized in the Condensed Consolidated Statements of Income during either the  three and six months ended June 30, 2014 and 2013 , related to assets and liabilities measured at fair value using unobservable inputs.

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The fair value of Long-term debt is classified as Level 2 of the fair value hierarchy. The following table discloses the Company’s financial instruments where the carrying amounts and fair values differ (in millions):

																
 	June 30, 2014	 	December 31, 2013	
 	Carrying Value	 	Fair Value	 	Carrying Value	 	Fair Value	
Long-term debt	$	5,155		 	$	5,533		 	$	3,686		 	$	3,894		

16.  Commitments and Contingencies
 
Legal
 
Aon and its subsidiaries are subject to numerous claims, tax assessments, lawsuits and proceedings that arise in the ordinary course of business, which frequently include errors and omissions ("E&O") claims. The damages claimed in these matters are or may be substantial, including, in many instances, claims for punitive, treble or extraordinary damages. Aon has historically purchased E&O insurance and other insurance to provide protection against certain losses that arise in such matters. Aon has exhausted or materially depleted its coverage under some of the policies that protect the Company and, consequently, is self-insured or materially self-insured for some claims. Accruals for these exposures, and related insurance receivables, when applicable, are included in the Condensed Consolidated Statements of Financial Position and have been recognized in Other general expenses 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 estimable are not accrued for in the financial statements. The Company includes below matters in which (1) loss is reasonably possible but not probable or (2) there exists the reasonable possibility of loss greater than the accrued amount. The reasonably possible range of loss for the matters set forth below, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.7 billion , exclusive of any insurance coverage. These estimates are based on currently available information. As available information changes, the matters for which Aon is able to estimate will change, and the estimates themselves will 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 referred to 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.
 
A predecessor of a retail insurance brokerage subsidiary of Aon provided insurance brokerage services to Northrop Grumman Corporation ("Northrop"). This subsidiary placed Northrop’s property insurance program for the period covering 2005. Northrop suffered a substantial loss in August 2005 when Hurricane Katrina damaged Northrop’s shipbuilding facilities in the Gulf States. Northrop’s excess insurance carrier, Factory Mutual Insurance Company ("Factory Mutual"), denied coverage for storm surge damage pursuant to a flood exclusion in the excess policy. Northrop sued Factory Mutual in the United States District Court for the Central District of California. The district court granted summary judgment in Northrop’s favor in August 2007. In August 2008, the United State Court of Appeals for the Ninth Circuit reversed the district court’s ruling and held that the flood exclusion applied to storm surge damage. Northrop thereafter sought to join Aon's subsidiary as a defendant in the action against Factory Mutual, asserting that if Northrop’s policy with Factory Mutual does not cover the Northrop storm surge losses, then the Aon subsidiary will be responsible for Northrop’s losses. In August 2010, the court granted in large part Factory Mutual’s motion for partial summary judgment regarding the applicability of the flood exclusion and denied Northrop’s motion to add the Aon subsidiary as a defendant in the federal lawsuit. On January 27, 2011, Northrop filed suit against the Aon subsidiary in the Superior Court of the State of California, County of Los Angeles, asserting claims for negligence, breach of contract and negligent misrepresentation. Northrop later settled its claims with Factory Mutual. In January 2014, Northrop filed an amended complaint, adding additional claims against the Aon subsidiary for intentional misrepresentation and concealment. Northrop seeks compensatory damages of approximately $340 million , which includes prejudgment interest and attorneys’ fees, and punitive damages that are a multiple of the compensatory damages sought. Aon asserts several defenses, including, but not limited to, that it committed no error or omission in placing the Factory Mutual excess policy for Northrop and that Northrop did not suffer any damages as a result of Aon’s conduct.

Another retail insurance brokerage subsidiary of Aon was sued on September 14, 2010 in the Chancery Court for Davidson County, Tennessee Twentieth Judicial District, at Nashville by a client, Opry Mills Mall Limited Partnership ("Opry Mills") that sustained flood damage to its property in May 2010. The lawsuit seeks $200 million from numerous insurers with whom this Aon subsidiary placed the client’s property insurance coverage. The insurers contend that only $50 million in coverage is

23

available for the loss because the flood event occurred on property in a high hazard flood zone. Opry Mills is seeking full coverage from the insurers for the loss and has sued this Aon subsidiary in the alternative for the same $150 million difference on various theories of professional liability if the court determines there is not full coverage. In addition, Opry Mills seeks prejudgment interest, attorneys' fees and enhanced damages which could substantially increase Aon's exposure. Aon believes it has meritorious defenses and intends to vigorously defend itself against these claims.
 
A pensions consulting and administration subsidiary of Hewitt before its acquisition by Aon provided advisory services to the Trustees of the Philips UK pension fund and the relevant employer of fund beneficiaries. On January 2, 2014, Philips Pension Trustees Limited and Philips Electronics UK Limited (together, "Philips") sued Aon in the High Court, Chancery Division, London alleging negligence and breach of duty. The proceedings assert Philips' right to claim damages related to Philips' use of a credit default swap hedging strategy pursuant to the supply of the advisory services, which is said to have resulted in substantial damages to Philips. Philips is seeking approximately £189 million ( $322 million at June 30, 2014 exchange rates), plus interest and costs. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these allegations.

On December 21, 2012, Mazeikiu Nafta ("MN"), which operates an oil refinery in Lithuania, sued an insurance brokerage subsidiary of Aon in the High Court of Justice in England & Wales, Queen's Bench Division, Commercial Court. Aon placed property damage and business interruption coverage for MN. There was a fire at the refinery in 2006. MN settled with insurers in November 2011. The claim is for $125 million , which is the shortfall alleged by MN to have been caused by Aon's failure to obtain appropriate business interruption coverage. Aon believes that it has meritorious defenses and intends to vigorously defend itself against these allegations.

On June 1, 2007, the International Road Transport Union ("IRU") sued Aon in the Geneva Tribunal of First Instance in Switzerland. IRU alleges, among other things, that, between 1995 and 2004, a predecessor of Aon and, later, an Aon subsidiary (1) accepted commissions for certain insurance placements that violated a fee agreement entered between the parties and (2) negligently failed to ask certain insurance carriers to contribute to the IRU's risk management costs.  IRU seeks damages of approximately CHF 46 million ( $51 million at June 30, 2014 exchange rates) and $3 million , plus legal fees and interest of approximately $30 million . Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims. 

On December 27, 2012, AXA Versicherung Aktiengesellschaft ("AXA") started arbitral proceedings in Hamburg, Germany against an insurance and reinsurance brokerage subsidiary of Aon in Germany.  Predecessors of AXA granted predecessors of the Aon subsidiary a mandate to underwrite non-proportional reinsurance business from 1975 through 1999. AXA alleges, among other things, that the Aon-related entities intentionally exceeded their mandate and that, if AXA had known of this intention, it would not have granted a mandate.  AXA seeks damages of approximately €183 million ( $250 million at June 30, 2014 exchange rates). Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims. 

A pensions consulting and administration subsidiary of Aon provided advisory services to the Trustees of the Gleeds pension fund in the United Kingdom and, on occasion, to the relevant employer of the fund.  In April 2014, the High Court, Chancery Division, London found that certain governing documents of the fund that sought to alter the fund's benefit structure and that had been drafted by Aon were procedurally defective and therefore invalid.  No lawsuit naming Aon as a party has been filed, although a tolling agreement has been entered.  The High Court decision says that the additional liabilities in the pension fund resulting from the alleged defect in governing documents amount to approximately £45 million ( $77 million at June 30, 2014 exchange rates). Aon believes that it has meritorious defenses and intends to vigorously defend itself against this potential claim.

From time to time, Aon’s clients may bring claims and take legal action pertaining to the performance of fiduciary responsibilities. Whether client claims and legal action related to the Company’s performance of fiduciary responsibilities are founded or unfounded, if such claims and legal actions are resolved in a manner unfavorable to the Company, they may adversely affect Aon’s financial results and materially impair the market perception of the Company and that of its products and services.
 
Guarantees and Indemnifications
 
In connection with the redomicile of Aon's headquarters (the "Redomestication"), the Company on April 2, 2012 entered various agreements pursuant to which it agreed to guarantee the obligations of its subsidiaries arising under issued and outstanding debt securities. Those agreements included the (1) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc, and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee")

24

(amending and restating the Indenture, dated as of September 10, 2010, between Aon Corporation and the Trustee), (2) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of December 16, 2002, between Aon Corporation and the Trustee), (3) Amended and Restated Indenture, dated as of April 2, 2012, among Aon Corporation, Aon plc and the Trustee (amending and restating the Indenture, dated as of January 13, 1997, as supplemented by the First Supplemental Indenture, dated as of January 13, 1997) (4) First Supplemental Indenture, dated as of April 2, 2012, among Aon Finance N.S. 1, ULC, as issuer, Aon Corporation, as guarantor, Aon plc, as guarantor, and Computershare Trust Company of Canada, as trustee, and (5) Amended and Restated Trust Deed, among Aon Corporation, Aon plc, Aon Services Luxembourg & Co S.C.A. (formerly known as Aon Financial Services Luxembourg S.A.) ("Aon Luxembourg") and BNY Mellon Corporate Trustee Services Limited, as trustee (the "Luxembourg Trustee") (amending and restating the Trust Deed, dated as of July 1, 2009, as amended and restated on January 12, 2011, among Aon Delaware, Aon Luxembourg and the Luxembourg Trustee).
 
Effective as of the same date, the Company also entered into agreements pursuant to which it agreed to guarantee the obligations of its subsidiaries arising under the (1) $ 450,000,000 Term Credit Agreement dated June 15, 2011, among Aon Corporation, as borrower, Bank of America, N.A., as administrative agent and the other agents and lenders party thereto, (2) $ 400,000,000 Five -Year Agreement dated March 20, 2012, among Aon Corporation, as borrower, Citibank, N.A., as administrative agent and the other agents and lenders party thereto and (3) € 650,000,000 Facility Agreement, dated October 15, 2010, among Aon Corporation, the subsidiaries of Aon Corporation party thereto as borrowers, Citibank International plc, as agent, and the other agents and lenders party thereto, as amended on July 18, 2011.
 
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 Company’s Condensed Consolidated 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.

Letters of Credit
 
The Company had total letters of credit ("LOCs") outstanding for approximately $98 million at June 30, 2014 , compared to $71 million at December 31, 2013 . These letters of credit 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 issued LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at its international subsidiaries. Amounts are accrued in the Condensed Consolidated Financial Statements, and are recorded at fair value.
 
Commitments

The Company has provided commitments to fund certain limited partnerships in which it has an interest in the event that the general partners request funding. Some of these commitments have specific expiration dates and the maximum potential funding under these commitments was $20 million at June 30, 2014 compared to $34 million at December 31, 2013 . During the three and six months ended June 30, 2014 , the Company funded $4 million and $14 million of these commitments.
 
Premium Payments

The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. Costs associated with these guarantees, to the extent estimable and probable, are provided in Aon’s allowance for doubtful accounts. The maximum exposure with respect to such contractual contingent guarantees was approximately $92 million at June 30, 2014 compared to $98 million at December 31, 2013 .
 
17. Segment Information
 
The Company has two reportable segments:  Risk Solutions and HR Solutions.  Unallocated income and expenses, when combined with the operating segments and after the elimination of intersegment revenues and expenses, equal the amounts in the Condensed Consolidated Financial Statements.

25

Reportable operating segments have been determined using a management approach, which is consistent with the basis and manner in which Aon’s chief operating decision-maker ("CODM") uses financial information for the purposes of allocating resources and evaluating performance.  The CODM assesses performance based on operating income and generally accounts for inter-segment revenue as if the revenue were from third parties and at what management believes are current market prices.  The Company does not present net assets by segment as this information is not reviewed by the CODM.
 
Risk Solutions acts as an advisor and insurance and reinsurance broker, helping clients manage their risks, via consultation, as well as negotiation and placement of insurance risk with insurance carriers through Aon’s global distribution network.
 
HR Solutions partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance by designing, implementing, communicating and administering a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.
  
Aon’s total revenue is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014		2013	 	2014	 	2013	
Risk Solutions	$	1,948			$	1,944		 	$	3,942		 	$	3,915		
HR Solutions	982			956		 	1,947		 	1,910		
Intersegment eliminations	(11	)		(3	)	 	(23	)	 	(13	)	
Total revenue	$	2,919			$	2,897		 	$	5,866		 	$	5,812		

Commissions, fees and other revenues by product are as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Retail brokerage	$	1,582		 	$	1,562		 	$	3,161		 	$	3,124		
Reinsurance brokerage	360		 	376		 	769		 	778		
Total Risk Solutions Segment	1,942		 	1,938		 	3,930		 	3,902		
Consulting services	395		 	388		 	779		 	770		
Outsourcing	595		 	578		 	1,184		 	1,159		
Intrasegment	(8	)	 	(10	)	 	(16	)	 	(19	)	
Total HR Solutions Segment	982		 	956		 	1,947		 	1,910		
Intersegment	(11	)	 	(3	)	 	(23	)	 	(13	)	
Total commissions, fees and other revenue	$	2,913		 	$	2,891		 	$	5,854		 	$	5,799		
 
Fiduciary investment income by segment is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Risk Solutions	$	6		 	$	6		 	$	12		 	$	13		
HR Solutions	—		 	—		 	—		 	—		
Total fiduciary investment income	$	6		 	$	6		 	$	12		 	$	13		

26

A reconciliation of segment operating income before tax to income before income taxes is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Risk Solutions	$	417		 	$	391		 	$	862		 	$	794		
HR Solutions	69		 	36		 	136		 	87		
Segment income before income taxes	486		 	427		 	998		 	881		
Unallocated expenses	(41	)	 	(45	)	 	(84	)	 	(89	)	
Interest income	2		 	2		 	4		 	3		
Interest expense	(65	)	 	(48	)	 	(123	)	 	(100	)	
Other (expense) income	(2	)	 	6		 	(1	)	 	15		
Income before income taxes	$	380		 	$	342		 	$	794		 	$	710		
 
Unallocated expenses include administrative or other costs not attributable to the operating segments, such as corporate governance costs. Interest income represents income earned primarily on operating cash balances and certain income producing securities. Interest expense represents the cost of debt obligations.
 
Other (expense) income consists of equity earnings, realized gains or losses on the sale of investments, gains or losses on the disposal of businesses, gains or losses on derivatives, and gains or losses on foreign currency transactions.
 
18.  Guarantee of Registered Securities
 
As described in Note 16, in connection with the Redomestication, Aon plc entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities. Aon Corporation is a 100% directly owned subsidiary of Aon plc. The debt securities that are subject to Rule 3-10 of Regulation S-X are the 3.50% senior notes due September 2015, the 3.125% senior notes due May 2016, the 5.00% senior notes due September 2020, the 8.205% junior subordinated deferrable interest debentures due January 2027 and the 6.25% senior notes due September 2040. All guarantees of Aon plc are full and unconditional. There are no other subsidiaries of Aon plc that are guarantors of the debt.

Aon Corporation entered into an agreement pursuant to which it agreed to guarantee the obligations of Aon plc arising under the 4.250% Notes Due 2042 exchanged for Aon Corporation's outstanding 8.205% junior subordinated deferrable interest debentures due January 2027 in both Original Notes and Exchange Notes form. Those notes are subject to Rule 3-10 of Regulation S-X. Aon Corporation also agreed to guarantee the obligations of Aon plc arising under the 4.45% Notes Due 2043 issued on May 21, 2013, the 4.00% Notes Due November 2023 issued on November 21, 2013, the 2.875% Notes Due May 2026 issued on May 7, 2014, the 3.50% Notes Due May 2024 issued on May 20, 2014, and the 4.60% Notes Due May 2044 issued on May 20, 2014. In each case, the guarantee of Aon Corporation is full and unconditional. There are no subsidiaries of Aon plc, other than Aon Corporation, that are guarantors of the 4.250% Notes Due 2042, the 4.45% Notes Due 2043, the 4.00% Notes Due 2023, the 2.875% Notes Due 2026, the 3.50% Notes Due 2024 or the 4.60% Notes Due 2044.
 
The following tables set forth condensed consolidating statements of income for the three and six months ended June 30, 2014 and 2013 , condensed consolidating statements of comprehensive income for the three and six months ended June 30, 2014 and 2013 , condensed consolidating statements of financial position as of June 30, 2014 and December 31, 2013 , and condensed consolidating statements of cash flows for the six months ended June 30, 2014 and 2013 in accordance with Rule 3-10 of Regulation S-X. The condensed consolidating financial information includes the accounts of Aon plc, the accounts of Aon Corporation, and the combined accounts of the non-guarantor subsidiaries. The condensed consolidating financial statements are presented in all periods as a merger under common control, with Aon plc presented as the parent company in all periods prior and subsequent to the Redomestication. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions.

In July 2013, Aon Holdings LLC, an intermediate holding company and the then-direct parent of Aon Corporation, transferred its ownership of Aon Corporation to Aon plc via distribution. The financial results of Aon Holdings LLC were included in the Other Non-Guarantor Subsidiaries column of the Condensed Consolidating Financial Statements. The Company has reflected the transfer of Aon Corporation from Aon Holdings LLC to Aon plc below for all periods presented.

27

Condensed Consolidating Statement of Income

																					
 	 	Three months ended June 30, 2014	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	—		 	$	—		 	$	2,913		 	$	—		 	$	2,913		
Fiduciary investment income	 	—		 	—		 	6		 	—		 	6		
Total revenue	 	—		 	—		 	2,919		 	—		 	2,919		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	34		 	6		 	1,668		 	—		 	1,708		
Other general expenses	 	5		 	7		 	754		 	—		 	766		
Total operating expenses	 	39		 	13		 	2,422		 	—		 	2,474		
Operating (loss) income	 	(39	)	 	(13	)	 	497		 	—		 	445		
Interest income	 	(2	)	 	—		 	4		 	—		 	2		
Interest expense	 	(15	)	 	(32	)	 	(18	)	 	—		 	(65	)	
Intercompany interest income (expense)	 	111		 	(73	)	 	(38	)	 	—		 	—		
Other (expense) income	 	(1	)	 	8		 	(9	)	 	—		 	(2	)	
Income (loss) before taxes	 	54		 	(110	)	 	436		 	—		 	380		
Income tax expense (benefit)	 	7		 	(42	)	 	102		 	—		 	67		
Income (loss) before equity in earnings of subsidiaries	 	47		 	(68	)	 	334		 	—		 	313		
Equity in earnings of subsidiaries, net of tax	 	257		 	267		 	—		 	(524	)	 	—		
Net income	 	304		 	199		 	334		 	(524	)	 	313		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	9		 	—		 	9		
Net income attributable to Aon shareholders	 	$	304		 	$	199		 	$	325		 	$	(524	)	 	$	304		

28

Condensed Consolidating Statement of Income  

																					
 	 	Three months ended June 30, 2013	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	1		 	$	—		 	$	2,890		 	$	—		 	$	2,891		
Fiduciary investment income	 	—		 	—		 	6		 	—		 	6		
Total revenue	 	1		 	—		 	2,896		 	—		 	2,897		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	4		 	6		 	1,702		 	—		 	1,712		
Other general expenses	 	9		 	16		 	778		 	—		 	803		
Total operating expenses	 	13		 	22		 	2,480		 	—		 	2,515		
Operating (loss) income	 	(12	)	 	(22	)	 	416		 	—		 	382		
Interest income	 	—		 	1		 	1		 	—		 	2		
Interest expense	 	(4	)	 	(33	)	 	(11	)	 	—		 	(48	)	
Intercompany interest (expense) income	 	(7	)	 	43		 	(36	)	 	—		 	—		
Other (expense) income	 	—		 	(2	)	 	8		 	—		 	6		
(Loss) income before taxes	 	(23	)	 	(13	)	 	378		 	—		 	342		
Income tax (benefit) expense	 	(3	)	 	(6	)	 	99		 	—		 	90		
(Loss) income before equity in earnings of subsidiaries	 	(20	)	 	(7	)	 	279		 	—		 	252		
Equity in earnings of subsidiaries, net of tax	 	261		 	234		 	—		 	(495	)	 	—		
Net income	 	241		 	227		 	279		 	(495	)	 	252		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	11		 	—		 	11		
Net income attributable to Aon shareholders	 	$	241		 	$	227		 	$	268		 	$	(495	)	 	$	241		

29

Condensed Consolidating Statement of Income  

																					
 	 	Six months ended June 30, 2014	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	—		 	$	—		 	$	5,854		 	$	—		 	$	5,854		
Fiduciary investment income	 	—		 	—		 	12		 	—		 	12		
Total revenue	 	—		 	—		 	5,866		 	—		 	5,866		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	45		 	15		 	3,399		 	—		 	3,459		
Other general expenses	 	13		 	22		 	1,458		 	—		 	1,493		
Total operating expenses	 	58		 	37		 	4,857		 	—		 	4,952		
Operating (loss) income	 	(58	)	 	(37	)	 	1,009		 	—		 	914		
Interest income	 	(4	)	 	1		 	7		 	—		 	4		
Interest expense	 	(25	)	 	(63	)	 	(35	)	 	—		 	(123	)	
Intercompany interest income (expense)	 	222		 	(147	)	 	(75	)	 	—		 	—		
Other (expense) income	 	(1	)	 	8		 	(8	)	 	—		 	(1	)	
Income (loss) before taxes	 	134		 	(238	)	 	898		 	—		 	794		
Income tax expense (benefit)	 	28		 	(92	)	 	209		 	—		 	145		
Income (loss) before equity in earnings of subsidiaries	 	106		 	(146	)	 	689		 	—		 	649		
Equity in earnings of subsidiaries, net of tax	 	523		 	549		 	—		 	(1,072	)	 	—		
Net income	 	629		 	403		 	689		 	(1,072	)	 	649		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	20		 	—		 	20		
Net income attributable to Aon shareholders	 	$	629		 	$	403		 	$	669		 	$	(1,072	)	 	$	629		

30

Condensed Consolidating Statement of Income  

																					
 	 	Six months ended June 30, 2013	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	2		 	$	—		 	$	5,797		 	$	—		 	$	5,799		
Fiduciary investment income	 	—		 	—		 	13		 	—		 	13		
Total revenue	 	2		 	—		 	5,810		 	—		 	5,812		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	15		 	21		 	3,401		 	—		 	3,437		
Other general expenses	 	16		 	23		 	1,544		 	—		 	1,583		
Total operating expenses	 	31		 	44		 	4,945		 	—		 	5,020		
Operating (loss) income	 	(29	)	 	(44	)	 	865		 	—		 	792		
Interest income	 	—		 	1		 	2		 	—		 	3		
Interest expense	 	(6	)	 	(67	)	 	(27	)	 	—		 	(100	)	
Intercompany interest (expense) income	 	(14	)	 	86		 	(72	)	 	—		 	—		
Other (expense) income	 	—		 	(3	)	 	18		 	—		 	15		
(Loss) income before taxes	 	(49	)	 	(27	)	 	786		 	—		 	710		
Income tax (benefit) expense	 	(9	)	 	(11	)	 	206		 	—		 	186		
(Loss) income before equity in earnings of subsidiaries	 	(40	)	 	(16	)	 	580		 	—		 	524		
Equity in earnings of subsidiaries, net of tax	 	542		 	489		 	—		 	(1,031	)	 	—		
Net income	 	502		 	473		 	580		 	(1,031	)	 	524		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	22		 	—		 	22		
Net income attributable to Aon shareholders	 	$	502		 	$	473		 	$	558		 	$	(1,031	)	 	$	502		

31

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Three months ended June 30, 2014	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	304		 	$	199		 	$	334		 	$	(524	)	 	$	313		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	9		 	—		 	9		
Net income attributable to Aon shareholders	 	$	304		 	$	199		 	$	325		 	$	(524	)	 	$	304		
Other comprehensive (loss) income, net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of investments	 	—		 	—		 	(2	)	 	—		 	(2	)	
Change in fair value of derivatives	 	—		 	(1	)	 	13		 	—		 	12		
Foreign currency translation adjustments	 	—		 	15		 	59		 	—		 	74		
Post-retirement benefit obligation	 	—		 	5		 	13		 	—		 	18		
Total other comprehensive income	 	—		 	19		 	83		 	—		 	102		
Equity in other comprehensive loss of subsidiaries, net of tax	 	102		 	73		 	—		 	(175	)	 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	—		 	—		 	—		
Total other comprehensive income attributable to Aon shareholders	 	102		 	92		 	83		 	(175	)	 	102		
Comprehensive income attributable to Aon shareholders	 	$	406		 	$	291		 	$	408		 	$	(699	)	 	$	406		

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Three months ended June 30, 2013	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	241		 	$	227		 	$	279		 	$	(495	)	 	$	252		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	11		 	—		 	11		
Net income attributable to Aon shareholders	 	$	241		 	$	227		 	$	268		 	$	(495	)	 	$	241		
Other comprehensive income (loss), net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of investments	 	—		 	4		 	9		 	—		 	13		
Change in fair value of derivatives	 	—		 	2		 	(9	)	 	—		 	(7	)	
Foreign currency translation adjustments	 	—		 	(11	)	 	(47	)	 	—		 	(58	)	
Post-retirement benefit obligation	 	—		 	7		 	11		 	—		 	18		
Total other comprehensive income	 	—		 	2		 	(36	)	 	—		 	(34	)	
Equity in other comprehensive income of subsidiaries, net of tax	 	(32	)	 	(34	)	 	—		 	66		 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	(2	)	 	—		 	(2	)	
Total other comprehensive income attributable to Aon shareholders	 	(32	)	 	(32	)	 	(34	)	 	66		 	(32	)	
Comprehensive income attributable to Aon Shareholders	 	$	209		 	$	195		 	$	234		 	$	(429	)	 	$	209		

32

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Six months ended June 30, 2014	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	629		 	$	403		 	$	689		 	$	(1,072	)	 	$	649		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	20		 	—		 	20		
Net income attributable to Aon shareholders	 	$	629		 	$	403		 	$	669		 	$	(1,072	)	 	$	629		
Other comprehensive (loss) income, net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of investments	 	—		 	—		 	(1	)	 	—		 	(1	)	
Change in fair value of derivatives	 	—		 	—		 	21		 	—		 	21		
Foreign currency translation adjustments	 	—		 	(2	)	 	92		 	—		 	90		
Post-retirement benefit obligation	 	—		 	11		 	33		 	—		 	44		
Total other comprehensive income	 	—		 	9		 	145		 	—		 	154		
Equity in other comprehensive loss of subsidiaries, net of tax	 	156		 	142		 	—		 	(298	)	 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	(2	)	 	—		 	(2	)	
Total other comprehensive income attributable to Aon shareholders	 	156		 	151		 	147		 	(298	)	 	156		
Comprehensive income attributable to Aon shareholders	 	$	785		 	$	554		 	$	816		 	$	(1,370	)	 	$	785		

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Six months ended June 30, 2013	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	502		 	$	473		 	$	580		 	$	(1,031	)	 	$	524		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	22		 	—		 	22		
Net income attributable to Aon shareholders	 	$	502		 	$	473		 	$	558		 	$	(1,031	)	 	$	502		
Other comprehensive income (loss), net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of investments	 	—		 	4		 	9		 	—		 	13		
Change in fair value of derivatives	 	—		 	3		 	(24	)	 	—		 	(21	)	
Foreign currency translation adjustments	 	—		 	(19	)	 	(213	)	 	—		 	(232	)	
Post-retirement benefit obligation	 	—		 	15		 	26		 	—		 	41		
Total other comprehensive income	 	—		 	3		 	(202	)	 	—		 	(199	)	
Equity in other comprehensive income of subsidiaries, net of tax	 	(197	)	 	(195	)	 	—		 	392		 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	(2	)	 	—		 	(2	)	
Total other comprehensive income attributable to Aon shareholders	 	(197	)	 	(192	)	 	(200	)	 	392		 	(197	)	
Comprehensive income attributable to Aon Shareholders	 	$	305		 	$	281		 	$	358		 	$	(639	)	 	$	305		

33

Condensed Consolidating Statement of Financial Position  

																					
 	 	As of June 30, 2014	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
ASSETS	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	—		 	$	181		 	$	1,416		 	$	(1,179	)	 	$	418		
Short-term investments	 	—		 	136		 	172		 	—		 	308		
Receivables, net	 	—		 	1		 	2,802		 	—		 	2,803		
Fiduciary assets	 	—		 	—		 	12,786		 	—		 	12,786		
Intercompany receivables	 	224		 	4,261		 	6,668		 	(11,153	)	 	—		
Other current assets	 	1		 	165		 	1,342		 	(112	)	 	1,396		
Total Current Assets	 	225		 	4,744		 	25,186		 	(12,444	)	 	17,711		
Goodwill	 	—		 	—		 	9,099		 	—		 	9,099		
Intangible assets, net	 	—		 	—		 	2,468		 	—		 	2,468		
Fixed assets, net	 	—		 	—		 	787		 	—		 	787		
Investments	 	—		 	73		 	65		 	—		 	138		
Intercompany receivables	 	7,426		 	2,177		 	2,211		 	(11,814	)	 	—		
Other non-current assets	 	151		 	501		 	1,607		 	(686	)	 	1,573		
Investment in subsidiary	 	5,634		 	12,673		 	—		 	(18,307	)	 	—		
TOTAL ASSETS	 	$	13,436		 	$	20,168		 	$	41,423		 	$	(43,251	)	 	$	31,776		
 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Fiduciary liabilities	 	$	—		 	$	—		 	$	12,786		 	$	—		 	$	12,786		
Short-term debt and current portion of long-term debt	 	107		 	—		 	701		 	(9	)	 	799		
Accounts payable and accrued liabilities	 	1,214		 	54		 	1,409		 	(1,179	)	 	1,498		
Intercompany payables	 	2		 	6,586		 	4,565		 	(11,153	)	 	—		
Other current liabilities	 	42		 	52		 	975		 	(112	)	 	957		
Total Current Liabilities	 	1,365		 	6,692		 	20,436		 	(12,453	)	 	16,040		
Long-term debt	 	2,267		 	2,508		 	371		 	9		 	5,155		
Pension, other post-retirement and other post-employment liabilities	 	—		 	895		 	638		 	—		 	1,533		
Intercompany payables	 	2,100		 	7,277		 	2,437		 	(11,814	)	 	—		
Other non-current liabilities	 	4		 	108		 	1,863		 	(686	)	 	1,289		
TOTAL LIABILITIES	 	5,736		 	17,480		 	25,745		 	(24,944	)	 	24,017		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL AON SHAREHOLDERS’ EQUITY	 	7,700		 	2,688		 	15,619		 	(18,307	)	 	7,700		
Noncontrolling interests	 	—		 	—		 	59		 	—		 	59		
TOTAL EQUITY	 	7,700		 	2,688		 	15,678		 	(18,307	)	 	7,759		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL LIABILITIES AND EQUITY	 	$	13,436		 	$	20,168		 	$	41,423		 	$	(43,251	)	 	$	31,776		

34

Condensed Consolidating Statement of Financial Position

																					
 	 	As of December 31, 2013	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
ASSETS	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	—		 	$	247		 	$	1,246		 	$	(1,016	)	 	$	477		
Short-term investments	 	—		 	163		 	360		 	—		 	523		
Receivables, net	 	—		 	4		 	2,892		 	—		 	2,896		
Fiduciary assets	 	—		 	—		 	11,871		 	—		 	11,871		
Intercompany receivables	 	186		 	3,503		 	5,452		 	(9,141	)	 	—		
Other current assets	 	—		 	69		 	513		 	(19	)	 	563		
Total Current Assets	 	186		 	3,986		 	22,334		 	(10,176	)	 	16,330		
Goodwill	 	—		 	—		 	8,997		 	—		 	8,997		
Intangible assets, net	 	—		 	—		 	2,578		 	—		 	2,578		
Fixed assets, net	 	—		 	—		 	791		 	—		 	791		
Investments	 	—		 	57		 	75		 	—		 	132		
Intercompany receivables	 	7,166		 	2,178		 	2,201		 	(11,545	)	 	—		
Other non-current assets	 	146		 	560		 	1,421		 	(704	)	 	1,423		
Investment in subsidiary	 	4,607		 	11,694		 	—		 	(16,301	)	 	—		
TOTAL ASSETS	 	$	12,105		 	$	18,475		 	$	38,397		 	$	(38,726	)	 	$	30,251		
 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Fiduciary liabilities	 	$	—		 	$	—		 	$	11,871		 	$	—		 	$	11,871		
Short-term debt and current portion of long-term debt	 	—		 	—		 	707		 	(4	)	 	703		
Accounts payable and accrued liabilities	 	1,036		 	62		 	1,849		 	(1,016	)	 	1,931		
Intercompany payables	 	15		 	5,449		 	3,677		 	(9,141	)	 	—		
Other current liabilities	 	12		 	47		 	866		 	(19	)	 	906		
Total Current Liabilities	 	1,063		 	5,558		 	18,970		 	(10,180	)	 	15,411		
Long-term debt	 	792		 	2,512		 	378		 	4		 	3,686		
Pension, other post-retirement and other post-employment liabilities	 	—		 	925		 	682		 	—		 	1,607		
Intercompany payables	 	2,100		 	7,267		 	2,178		 	(11,545	)	 	—		
Other non-current liabilities	 	5		 	159		 	1,892		 	(704	)	 	1,352		
TOTAL LIABILITIES	 	3,960		 	16,421		 	24,100		 	(22,425	)	 	22,056		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL AON SHAREHOLDERS’ EQUITY	 	8,145		 	2,054		 	14,247		 	(16,301	)	 	8,145		
Noncontrolling interests	 	—		 	—		 	50		 	—		 	50		
TOTAL EQUITY	 	8,145		 	2,054		 	14,297		 	(16,301	)	 	8,195		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL LIABILITIES AND EQUITY	 	$	12,105		 	$	18,475		 	$	38,397		 	$	(38,726	)	 	$	30,251		

35

Condensed Consolidating Statement of Cash Flows

																					
 	 	Six months ended June 30, 2014	
 	 	Aon	 	Aon	 	Other
Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 		 	 		 	 		 	 		 	 		
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	 	$	265		 	$	(215	)	 	$	283		 	$	—		 	$	333		
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Sales of long-term investments	 	—		 	37		 	11		 	—		 	48		
Purchase of long-term investments	 	—		 	(14	)	 	—		 	—		 	(14	)	
Net sales of short-term investments - non-fiduciary	 	—		 	27		 	190		 	—		 	217		
Acquisition of businesses, net of cash acquired	 	—		 	—		 	(83	)	 	—		 	(83	)	
Proceeds from sale of businesses	 	—		 	—		 	1		 	—		 	1		
Capital expenditures	 	—		 	—		 	(115	)	 	—		 	(115	)	
CASH PROVIDED BY INVESTING ACTIVITIES	 	—		 	50		 	4		 	—		 	54		
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Share repurchase	 	(1,250	)	 	—		 	—		 	—		 	(1,250	)	
Advances (to) from affiliates	 	(522	)	 	99		 	586		 	(163	)	 	—		
Issuance of shares for employee benefit plans	 	40		 	—		 	—		 	—		 	40		
Issuance of debt	 	2,169		 	1,161		 	(6	)	 	—		 	3,324		
Repayment of debt	 	(574	)	 	(1,161	)	 	(10	)	 	—		 	(1,745	)	
Deposit with trustee	 	—		 	—		 	(681	)	 	—		 	(681	)	
Cash dividends to shareholders	 	(128	)	 	—		 	—		 	—		 	(128	)	
Purchase of shares from noncontrolling interests	 	—		 	—		 	1		 	—		 	1		
Dividends paid to noncontrolling interests	 	—		 	—		 	(10	)	 	—		 	(10	)	
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	 	(265	)	 	99		 	(120	)	 	(163	)	 	(449	)	
 	 	 	 	 	 	 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	 	—		 	—		 	3		 	—		 	3		
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	 	—		 	(66	)	 	170		 	(163	)	 	(59	)	
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	 	—		 	247		 	1,246		 	(1,016	)	 	477		
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	—		 	$	181		 	$	1,416		 	$	(1,179	)	 	$	418		

36

Condensed Consolidating Statement of Cash Flows

																					
 	 	Six months ended June 30, 2013	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions) 	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 		 	 		 	 		 	 		 	 		
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	 	$	(23	)	 	$	(89	)	 	$	499		 	$	—		 	$	387		
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Sales of long-term investments	 	—		 	2		 	21		 	—		 	23		
Purchase of long-term investments	 	—		 	(6	)	 	—		 	—		 	(6	)	
Net sales of short-term investments - non-fiduciary	 	—		 	26		 	3		 	—		 	29		
Acquisition of businesses, net of cash acquired	 	—		 	—		 	(23	)	 	—		 	(23	)	
Proceeds from sale of businesses	 	—		 	—		 	1		 	—		 	1		
Capital expenditures	 	—		 	—		 	(122	)	 	—		 	(122	)	
CASH USED PROVIDED BY (USED FOR) INVESTING ACTIVITIES	 	—		 	22		 	(120	)	 	—		 	(98	)	
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Share repurchase	 	(525	)	 	—		 	—		 	—		 	(525	)	
Advances from (to) affiliates	 	126		 	444		 	(323	)	 	(247	)	 	—		
Issuance of shares for employee benefit plans	 	57		 	—		 	—		 	—		 	57		
Issuance of debt	 	639		 	2,044		 	231		 	—		 	2,914		
Repayment of debt	 	(6	)	 	(2,362	)	 	(239	)	 	—		 	(2,607	)	
Cash dividends to shareholders	 	(105	)	 	—		 	—		 	—		 	(105	)	
Purchase of shares from noncontrolling interests	 	—		 	—		 	—		 	—		 	—		
Dividends paid to noncontrolling interests	 	—		 	—		 	(6	)	 	—		 	(6	)	
CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES	 	186		 	126		 	(337	)	 	(247	)	 	(272	)	
 	 	 	 	 	 	 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	 	—		 	—		 	(42	)	 	—		 	(42	)	
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	 	163		 	59		 	—		 	(247	)	 	(25	)	
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	 	131		 	199		 	—		 	(39	)	 	291		
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	294		 	$	258		 	$	—		 	$	(286	)	 	$	266		

37

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
EXECUTIVE SUMMARY OF SECOND QUARTER 2014 FINANCIAL RESULTS
 
During the second quarter and first six months of 2014 , we continued to face certain headwinds impacting our business. In our Risk Solutions segment, these headwinds included an unfavorable impact from foreign currency translation, economic weakness in continental Europe and a negative market impact in our Reinsurance business. In our HR Solutions segment, these headwinds included price compression in our benefits administration business and macro-economic pressures across continental Europe.
 
The following is a summary of our second quarter and first six months of 2014 financial results:

•	For the quarter, revenue increased $ 22 million , or 1% , to $2.9 billion compared to the prior year quarter due primarily to organic revenue growth of 2% , partially offset by a 1% decrease in revenue attributable to acquisitions, net of divestitures. In Risk Solutions, revenue was driven by solid growth in Retail brokerage across both the Americas and International businesses, partially offset by a decline in Reinsurance. The HR Solutions segment had strong growth in investment consulting and modest growth in benefits administration. During the first six months of 2014 , revenue increased $54 million , or 1% , to $5.9 billion due primarily to 2% organic revenue growth, partially offset by a 1% unfavorable impact from revenue attributable to acquisitions. Organic revenue growth was 2% in the Risk Solutions segment and 2% in the HR Solutions segment during the first six months of 2014 .	

•	Operating expenses for the quarter were $2.5 billion , a decrease of $41 million , or 2% , compared to the prior year quarter. Operating expenses for the first six months of 2014 were $5.0 billion , a decrease of $68 million , or 1% , over the prior year. The decrease in both periods is due primarily to a $79 million decrease in formal restructuring costs, a $53 million increase in savings related to restructuring programs, a $31 million decrease in costs relating to acquisitions, net of divestitures, and a $25 million decrease in intangible asset amortization, partially offset by an increase in expense to support future growth in our health care exchange business and an increase in expense associated with organic revenue growth of 2% .	

•	Operating margin increased to 15.2% in the second quarter 2014 from 13.2% in the second quarter 2013 . Operating margin for the first six months of 2014 was 15.6% as compared to 13.6% for the 2013 period. The increase in operating margin from the prior year quarter is primarily related to organic revenue growth of 2% , decreased intangible asset amortization costs, savings related to the restructuring programs, and expense discipline. Operating margin for Risk Solutions increased 130 basis points from 20.1% in the second quarter 2013 to 21.4% in the second quarter 2014 , due primarily to return on investments in the business, expense discipline, and savings related to the restructuring programs. Operating margin for HR Solutions increased 320 basis points from 3.8% in the second quarter 2013 to 7.0% in the second quarter 2014 , due primarily to modest revenue growth, a reduction in intangible asset amortization, and savings from the restructuring plans, partially offset by an increase in expense to support future growth in our healthcare exchange business.	

•	Net income attributable to Aon shareholders increased $63 million , or 26% , to $304 million for the second quarter 2014 compared to the second quarter 2013 . During the first six months of 2014 , Net income attributable to Aon shareholders increased $127 million , or 25% , to $629 million compared to the first six months of 2013 .	

•	Cash flow provided by operating activities was $333 million for the first six months of 2014 , a decrease of $54 million , or 14% , from cash flow provided by operating activities of $387 million in the first six months of 2013 , driven by expenses associated with organic growth, higher cash tax payments in the quarter and the unfavorable timing of certain incentive compensation and interest expense payments, partially offset by a solid underlying working capital performance and a decrease in pension contributions.	

We focus on four key non-GAAP metrics each quarter that we communicate to shareholders: grow organically, expand adjusted margins, increase adjusted diluted earnings per share, and increase free cash flow.  The following is our measure of performance against these four metrics for the second quarter and first six months of 2014 :

•	Organic revenue growth, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Organic Revenue," was 2% in both the second quarter and first six months of 2014 compared to organic revenue growth of 3% in both the prior year second quarter and first six months. In Risk Solutions, revenue growth was driven by solid growth in Retail brokerage across both the Americas and International businesses, partially offset by a decline	

38

in Reinsurance. The HR Solutions segment had growth in investment consulting and modest growth in benefits administration.

•	Adjusted operating margin, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Adjusted Operating Margin," for the second quarter 2014 was 18.2% for Aon overall, 22.7% for the Risk Solutions segment, and 13.2% for the HR Solutions segment.  Adjusted operating margin was 18.5% for Aon overall, 22.5% for the Risk Solutions segment, and 14.9% for the HR Solutions segment for the second quarter 2013 . For the first six months of 2014 , adjusted operating margin was 18.5% for Aon overall, 23.2% for the Risk Solutions segment, and 13.3% for the HR solutions segment. For the first six months of 2013 , adjusted operating margin was 18.5% for Aon overall, 22.5% for the Risk Solutions segment, and 14.6% for the HR Solutions segment. The year-to-date increase in adjusted operating margin for the Risk Solutions segment reflects return on investments in the business, expense discipline, and savings related to the restructuring programs, partially offset by an unfavorable impact from foreign currency translation. The year-to-date decrease in adjusted operating margin for the HR Solutions segment reflects an increase in expense to support future growth in our health care exchange business, partially offset by modest organic revenue growth and savings related to the Aon Hewitt restructuring program.	

•	Adjusted diluted earnings per share from net income attributable to Aon’s shareholders, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Adjusted Diluted Earnings per Share," was $1.25 per share in the second quarter of 2014 and $2.53 per share for the first six months of 2014 , compared to $1.11 and $2.23 per share in the second quarter and first six months of 2013 , respectively.	

•	Free cash flow, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Free Cash Flow," decreased $47 million from the prior year period to $218 million for the six months ended June 30, 2014 driven by a decrease in cash flow from operations, partially offset by a decrease of $7 million in capital expenditures from the prior year period.	

REVIEW OF CONSOLIDATED RESULTS
 
General
 
In our discussion of operating 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, free cash flow, and the impact of foreign exchange rate fluctuations on operating results.
 
Organic Revenue
 
We use supplemental information related to organic revenue to help us and our investors evaluate business growth from existing operations.  Organic revenue is a non-GAAP measure and excludes the impact of foreign exchange rate changes, acquisitions, divestitures, transfers between business units, fiduciary investment income, reimbursable expenses, and certain unusual items.  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 Condensed Consolidated Financial Statements and Notes thereto.  Industry peers provide similar supplemental information about their revenue performance, although they may not make identical adjustments.  Reconciliations of this non-GAAP measure, organic revenue growth percentages, to the reported Commissions, fees and other revenue growth percentages, have been provided under the "Review by Segment" caption below.
 
Adjusted Operating Margin
 
We use adjusted operating margin as a non-GAAP measure of core operating performance of our Risk Solutions and HR Solutions segments.  Adjusted operating margin excludes the impact of certain items, including restructuring charges, intangible asset amortization and headquarters relocation costs. This supplemental information related to adjusted operating margin represents a measure not in accordance with U.S. GAAP, and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto.

39

 A reconciliation of this non-GAAP measure to the reported operating margin is as follows (in millions):

												
 	Three months ended June 30, 2014	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	2,919		 	$	1,948		 	$	982		
Operating income — U.S. GAAP	$	445		 	$	417		 	$	69		
Intangible asset amortization	87		 	26		 	61		
Operating income — as adjusted	$	532		 	$	443		 	$	130		
Operating margins — U.S. GAAP	15.2	%	 	21.4	%	 	7.0	%	
Operating margins — as adjusted	18.2	%	 	22.7	%	 	13.2	%	

												
 	Six months ended June 30, 2014	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	5,866		 	$	3,942		 	$	1,947		
Operating income — U.S. GAAP	$	914		 	$	862		 	$	136		
Intangible asset amortization	173		 	51		 	122		
Operating income — as adjusted	$	1,087		 	$	913		 	$	258		
Operating margins — U.S. GAAP	15.6	%	 	21.9	%	 	7.0	%	
Operating margins — as adjusted	18.5	%	 	23.2	%	 	13.3	%	

												
 	Three months ended June 30, 2013	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	2,897		 	$	1,944		 	$	956		
Operating income — U.S. GAAP	$	382		 	$	391		 	$	36		
Restructuring charges	53		 	17		 	36		
Intangible asset amortization	99		 	29		 	70		
Headquarters relocation costs	1		 	—		 	—		
Operating income — as adjusted	$	535		 	$	437		 	$	142		
Operating margins — U.S. GAAP	13.2	%	 	20.1	%	 	3.8	%	
Operating margins — as adjusted	18.5	%	 	22.5	%	 	14.9	%	

												
 	Six months ended June 30, 2013	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	5,812		 	$	3,915		 	$	1,910		
Operating income — U.S. GAAP	$	792		 	$	794		 	$	87		
Restructuring charges	79		 	28		 	51		
Intangible asset amortization	198		 	58		 	140		
Headquarters relocation costs	4		 	—		 	—		
Operating income — as adjusted	$	1,073		 	$	880		 	$	278		
Operating margins — U.S. GAAP	13.6	%	 	20.3	%	 	4.6	%	
Operating margins — as adjusted	18.5	%	 	22.5	%	 	14.6	%	
 ______________________________________________
(1) Includes unallocated expenses and the elimination of inter-segment revenue.

40

Adjusted Diluted Earnings per Share
 
We also use adjusted diluted earnings per share as a non-GAAP measure of our core operating performance. Adjusted diluted earnings per share excludes the impact of restructuring charges, intangible asset amortization and headquarters relocation costs, along with related income taxes. This supplemental information related to adjusted diluted earnings per share represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto.

Reconciliations of this non-GAAP measure to the reported diluted earnings per share are as follows (in millions, except per share data): 

												
 	Three months ended June 30, 2014	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	445		 	$	87		 	$	532		
Interest income	2		 	—		 	2		
Interest expense	(65	)	 	—		 	(65	)	
Other income	(2	)	 	—		 	(2	)	
Income before income taxes	380		 	87		 	467		
Income taxes	67		 	15		 	82		
Net income	313		 	72		 	385		
Less: Net income attributable to noncontrolling interests	9		 	—		 	9		
Net income attributable to Aon shareholders	$	304		 	$	72		 	$	376		
Diluted earnings per share	$	1.01		 	$	0.24		 	$	1.25		
Weighted average ordinary shares outstanding — diluted	301.6		 	301.6		 	301.6		

												
 	Six months ended June 30, 2014	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	914		 	$	173		 	$	1,087		
Interest income	4		 	—		 	4		
Interest expense	(123	)	 	—		 	(123	)	
Other income	(1	)	 	—		 	(1	)	
Income before income taxes	794		 	173		 	967		
Income taxes	145		 	32		 	177		
Net income	649		 	141		 	790		
Less: Net income attributable to noncontrolling interests	20		 	—		 	20		
Net income attributable to Aon shareholders	$	629		 	$	141		 	$	770		
Diluted earnings per share	$	2.07		 	$	0.46		 	$	2.53		
Weighted average ordinary shares outstanding — diluted	304.4		 	304.4		 	304.4		

												
 	Three months ended June 30, 2013	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	382		 	$	153		 	$	535		
Interest income	2		 	—		 	2		
Interest expense	(48	)	 	—		 	(48	)	
Other income	6		 	—		 	6		
Income before income taxes	342		 	153		 	495		
Income taxes	90		 	41		 	131		
Net income	252		 	112		 	364		
Less: Net income attributable to noncontrolling interests	11		 	—		 	11		
Net income attributable to Aon shareholders	$	241		 	$	112		 	$	353		
Diluted earnings per share	$	0.76		 	$	0.35		 	$	1.11		
Weighted average ordinary shares outstanding — diluted	317.1		 	317.1		 	317.1		

41

	
												
 	Six months ended June 30, 2013	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	792		 	$	281		 	$	1,073		
Interest income	3		 	—		 	3		
Interest expense	(100	)	 	—		 	(100	)	
Other income	15		 	—		 	15		
Income before income taxes	710		 	281		 	991		
Income taxes	186		 	74		 	260		
Net income	524		 	207		 	731		
Less: Net income attributable to noncontrolling interests	22		 	—		 	22		
Net income attributable to Aon shareholders	$	502		 	$	207		 	$	709		
Diluted earnings per share	$	1.58		 	$	0.65		 	$	2.23		
Weighted average ordinary shares outstanding — diluted	318.6		 	318.6		 	318.6		

Free Cash Flow

We use free cash flow, defined as cash flow provided by operations minus capital expenditures, as a non-GAAP measure of our core operating performance. This supplemental information related to free cash flow represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements and Notes thereto. The use of this non-GAAP measure does not imply or represent the residual cash flow for discretionary expenditures.

A reconciliation of this non-GAAP measure to cash flow provided by operations is as follows (in millions):

								
 	Six months ended June 30,	
 	2014	 	2013	
Cash flow provided by operations - U.S. GAAP	$	333		 	$	387		
Less: Capital expenditures	(115	)	 	(122	)	
Free cash flow	$	218		 	$	265		

Impact of Foreign Exchange Rate Fluctuations
 
Because we conduct business in more than 120 countries, foreign exchange rate fluctuations have a significant impact on our business.  In comparison to the U.S. dollar, foreign exchange rate movements may be significant and may distort true period-to-period comparisons of changes in revenue or pretax income.  Therefore, to give financial statement users meaningful information about our operations, we have provided an illustration of the impact of foreign currency exchange rates on our financial results.  The methodology used to calculate this impact isolates the impact of the change in currencies between periods by translating last year’s revenue, expenses and net income, using current year's foreign exchange rates.  Using this illustrative methodology, currency fluctuations had an unfavorable impact of $0.04 during both the three and six months ended June 30, 2014 , and an unfavorable impact of $0.01 and a favorable impact of $0.01 during the three and six months ended June 30, 2013 , respectively, on adjusted net income per diluted share, when we translate prior year quarter results at current quarter foreign exchange rates. These translations are performed for comparative and illustrative purposes only and do not impact the accounting policies or practices for amounts included in the Condensed Consolidated Financial Statements.

42

Summary of Results
 
Our consolidated results of operations follow (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Revenue:	 		 	 		 	 	 	 	
Commissions, fees and other	$	2,913		 	$	2,891		 	$	5,854		 	$	5,799		
Fiduciary investment income	6		 	6		 	12		 	13		
Total revenue	2,919		 	2,897		 	5,866		 	5,812		
Expenses:	 		 	 		 	 	 	 	
Compensation and benefits	1,708		 	1,712		 	3,459		 	3,437		
Other general expenses	766		 	803		 	1,493		 	1,583		
Total operating expenses	2,474		 	2,515		 	4,952		 	5,020		
Operating income	445		 	382		 	914		 	792		
Interest income	2		 	2		 	4		 	3		
Interest expense	(65	)	 	(48	)	 	(123	)	 	(100	)	
Other (expense) income	(2	)	 	6		 	(1	)	 	15		
Income before income taxes	380		 	342		 	794		 	710		
Income taxes	67		 	90		 	145		 	186		
Net income	313		 	252		 	649		 	524		
Less: Net income attributable to noncontrolling interests	9		 	11		 	20		 	22		
Net income attributable to Aon shareholders	$	304		 	$	241		 	$	629		 	$	502		
 
Revenue
 
Revenue increased by $22 million , or 1% , in the second quarter 2014 compared to the second quarter 2013 , and increased $54 million , or 1% , on a year-to-date basis.  The second quarter increase consists of a $4 million increase in the Risk Solutions segment and a $26 million , or 3% , increase in the HR Solutions segment. The results of the Risk Solutions segment reflect 1% organic revenue growth, primarily driven by solid growth in Retail brokerage across both the Americas and International businesses, partially offset by a decline in Reinsurance. Organic revenue growth in the HR Solutions segment for the quarter was 2% , primarily driven by strong growth in investment consulting and modest growth in benefits administration.

Revenue for the six months ended June 30, 2014 increased $54 million , or 1% , from the comparable period due to a $37 million , or 2% , increase in HR Solutions and a $27 million , or 1% , increase in Risk Solutions partially offset by a $1 million decrease in Fiduciary investment income. Organic revenue growth in HR Solutions was 2% compared to the first six months of 2013 . The 1% increase in the Risk Solutions segment reflects 2% organic revenue growth, partially offset by an unfavorable impact of 1% from foreign exchange rates.

Compensation and Benefits
 
Compensation and benefits was flat compared to the second quarter 2013 . For the first six months of 2014 , Compensation and benefits increased $22 million , or 1% , from the comparable prior year period. For the quarter ended June 30, 2014 , Compensation and benefits was primarily driven by an increase in expense to support future growth in our health care exchange business and an increase in expense associated with 2% organic revenue growth, partially offset by a $15 million decrease in formal restructuring costs, a $10 million decrease in costs related to acquisitions, net of divestitures, and restructuring savings. For the six months ended June 30, 2014 , the increase in Compensation and benefits was primarily driven by an increase in expense to support future growth in our health care exchange business and an increase in expenses associated with 2% organic revenue growth, partially offset by a $39 million decrease in formal restructuring costs and a $22 million decrease in costs related to acquisitions, net of divestitures.

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Other General Expenses
 
Other general expenses for the three and six month periods ended June 30, 2014 decreased $37 million , or 5% , and decreased $90 million , or 6% , respectively, compared to the prior year. The decrease for the three month period ended June 30, 2014 was due to expense discipline, a $39 million decrease in formal restructuring costs, intangible amortization expense decrease of $12 million, and restructuring savings. The decrease for the six months ended June 30, 2014 also included a $42 million decrease in formal restructuring costs, a decrease of $25 million in intangible amortization expense, and restructuring savings.

Interest Income
 
Interest income represents income earned on operating cash balances and other income-producing investments.  It does not include interest earned on funds held on behalf of clients.  During the second quarter 2014 , Interest income remained flat at $2 million compared to the second quarter 2013 . During the first six months of 2014 , Interest income increased $1 million to $4 million from the comparable period in 2013 .

Interest Expense
 
Interest expense, which represents the cost of our worldwide debt obligations, increased $17 million and $23 million compared to the second quarter and first six months of 2013 , respectively. The increase in interest expense primarily reflects an increase in the total debt outstanding.
 
Other (Expense) Income
 
Other (expense) income was $2 million expense and $1 million expense for the second quarter and first six months of 2014 , respectively, compared to $6 million income and $15 million income for the second quarter and first six months of 2013 .  The second quarter 2014 includes a $15 million loss on foreign currency remeasurement, partially offset by a $10 million gain from derivatives. The first six months of 2014 include a $13 million loss from derivatives, partially offset by equity earnings of $6 million and a $4 million gain on foreign currency remeasurement. The second quarter 2013 includes a $9 million gain from derivatives, partially offset by a $5 million loss on foreign currency remeasurement. The first six months of 2013  include a  $19 million  gain on foreign currency remeasurement and equity earnings of  $6 million , partially offset by a $9 million  loss from derivatives.
 
Income before Income Taxes
 
Income before income taxes for the second quarter was $380 million , an 11% increase from $342 million in 2013 .  For the first six months of 2014 , Income before income taxes was $794 million , a 12% increase from $710 million in 2013 . For both periods, the increase in income was driven by the 2% increase in organic growth, expense discipline, and increased benefits from restructuring initiatives.
 
Income Taxes
 
The effective tax rate on net income was 17.5% and 26.4% for the quarters ended June 30, 2014 and 2013 , respectively and 18.3% and 26.2% for the six months ended June 30, 2014 and 2013 , respectively. The effective tax rates in the second quarter and first six months of 2014 were favorably impacted by changes in the geographic distribution of income and certain discrete items. Potential unfavorable discrete tax adjustments in the second half of 2014 could cause the effective tax rate for the full year 2014 to be higher than the effective tax rate reported in the first half of 2014.
  
Net Income Attributable to Aon Shareholders
 
Net income attributable to Aon shareholders for the second quarter increased to $304 million , or $1.01 diluted net income per share, from $241 million , or $0.76 diluted net income per share, in 2013 . During the first six months of 2014 , Net income attributable to Aon shareholders increased to $629 million , or $2.07 diluted net income per share, from $502 million , or $1.58 diluted net income per share, in 2013 .

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LIQUIDITY AND FINANCIAL CONDITION

Liquidity

Executive Summary

We believe that our balance sheet and strong cash flow provide us with the financial flexibility to create long-term value for our shareholders.  Our primary sources of liquidity are cash flow from operations, available cash reserves and debt capacity available under various credit facilities.  Our primary uses of liquidity are operating expenses, capital expenditures, acquisitions, share repurchases, restructuring initiatives, funding pension obligations and shareholder dividends.

Cash on our balance sheet includes funds available for general corporate purposes, as well as amounts restricted as to their use.  Funds held on behalf of clients in a fiduciary capacity are segregated and shown together with uncollected insurance premiums in Fiduciary assets in the Condensed Consolidated Statement of Financial Position, with a corresponding amount in Fiduciary liabilities. Fiduciary funds cannot be used for general corporate purposes, and are not a source of liquidity for us.

Operating Activities
 
Net cash provided by operating activities during the six months ended June 30, 2014 was $333 million compared to net cash provided by operating activities during the six months ended June 30, 2013 of $387 million , a decrease of $54 million . The decrease from the prior year period was primarily driven by a smaller decrease in accounts receivable of $76 million due to revenue growth and strong working capital management during 2013, a larger decrease in accounts payable and accrued liabilities of $61 million due primarily to the timing of certain incentive payments, and a $57 million increase in payments for restructuring reserves, partially offset by higher net income, adjusted for non-cash items, of $128 million and a reduction in pension contributions of $65 million from the prior year period.

The primary uses of cash from operating activities during the six months ended June 30, 2014 were a decrease in accounts payable and accrued liabilities of $492 million , pension contributions of $226 million and a decrease in restructuring reserves of $62 million , partially offset by net income, adjusted for non-cash items, of $1,129 million and a decrease in accounts receivable of $115 million . Pension contributions were $226 million and $291 million for the six months ended June 30, 2014 and 2013 , respectively. For the remainder of 2014 , we expect to contribute approximately $159 million to our pension plans, with the majority attributable to non-U.S. pension plans, which are subject to changes in foreign exchange rates.
 
We expect cash generated by operations for 2014 to be sufficient to service our debt and contractual obligations, fund the cash requirements of our restructuring programs, finance capital expenditures, continue purchases of shares under our share repurchase program, and continue to pay dividends to our shareholders.  Although cash from operations is expected to be sufficient to service these activities, we have the ability to borrow under our credit facilities to accommodate any timing differences in cash flows.  We have committed credit facilities of approximately $1.3 billion , of which all was available at June 30, 2014 and can access these facilities on a same day or next day basis.  Additionally, under current market conditions, we believe that we could access capital markets to obtain debt financing for longer-term funding, if needed.
 
Investing Activities
 
Cash flow provided by investing activities was $54 million during the six months ended June 30, 2014 . The primary drivers of the cash flow provided by investing activities were net sales of short-term investments of $217 million and $34 million for net sales of long-term investments, partially offset by $115 million for capital expenditures and $83 million for acquisitions of businesses, net of cash acquired. The cash flows provided by the net sales of long-term investments represent the cash proceeds generated from net sales of long-term investments where the corresponding gains and losses are recognized in Other (expense) income in the Condensed Consolidated Statements of Income.
 
Cash flow used for investing activities was $98 million during the six months ended June 30, 2013 . The primary drivers of the cash flow used for investing activities were $122 million for capital expenditures, partially offset by $29 million for net sales of short-term investments.

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Financing Activities
 
Cash flow used for financing activities during the six months ended June 30, 2014 was $449 million . The primary drivers of the cash flow used for financing activities were share repurchases of $1.3 billion , deposits with trustee of $681 million , and dividends paid to shareholders of $128 million , partially offset by issuances of debt, net of repayments , of $1.6 billion , and proceeds from the exercise of share options and issuance of shares purchased through the employee stock purchase plan of $40 million .
 
Cash flow used for financing activities during the six months ended June 30, 2013 was $272 million . The primary drivers of cash flow used for financing activities were share repurchases of $525 million and dividends paid to shareholders of $105 million , partially offset by issuances of debt, net of repayments , of $307 million and proceeds from the exercise of share options and issuance of shares purchased through the employee stock purchase plan of $57 million .
 
As a U.K. incorporated company, we must have "distributable reserves" to make share repurchases or pay dividends to shareholders. Distributable reserves may be created through the earnings of the U.K. parent company and, amongst other methods, through a reduction in share capital approved by the English Companies Court. Distributable reserves are not linked to a U.S. GAAP reported amount (e.g., retained earnings). As of June 30, 2014 and 2013 , we had distributable reserves in excess of $4.5 billion and $6.2 billion , respectively. We believe that we will have sufficient distributable reserves to fund shareholder dividends for the foreseeable future.
 
Cash and Investments
 
At June 30, 2014 , our cash and cash equivalents and short-term investments were $726 million , a decrease of $274 million from December 31, 2013 , primarily related to share repurchases of $1.3 billion and dividends of $128 million , partially offset by the net issuances of debt of $1.6 billion .  Of the total balance as of June 30, 2014 , $161 million was restricted as to its use, which was comprised of $69 million of operating funds in the U.K., as required by the Financial Conduct Authority, and $92 million held as collateral for various business purposes.  At June 30, 2014 , $1.1 billion of cash and cash equivalents and short-term investments were held in the U.S. and overdrawn cash and cash equivalents and short-term investments of $383 million were held in other countries. We maintain a multicurrency cash pool with a third party bank in which various Aon entities participate. Individual Aon entities are permitted to overdraw on their individual accounts provided the overall balance does not fall below zero. At June 30, 2014 , non-U.S. cash balances of one or more entities were negative; however, the overall balance was positive.

Of the total balance of cash and cash equivalents and short-term investments as of December 31, 2014, $214 million was restricted as to its use, which was comprised of $126 million of operating funds in the U.K., as required by the Financial Conduct Authority, and $88 million held as collateral for various business purposes. At December 31, 2013 , $516 million of cash and cash equivalents and short-term investments were held in the U.S. and $484 million was held in other countries.
 
In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission, remit the premiums to the respective insurance underwriter.  We also collect claims or refunds from underwriters on behalf of insureds, which are then returned to the insureds.  Unremitted insurance premiums and claims are held by us in a fiduciary capacity.  In addition, some of our outsourcing agreements require us to hold funds on behalf of clients to pay obligations on their behalf.  The levels of fiduciary assets and liabilities can fluctuate significantly, depending on when we collect the premiums, claims and refunds, make payments to underwriters and insureds, collect funds from clients and make payments on their behalf, and foreign currency movements.  Fiduciary assets, because of their nature, are required to be invested in very liquid securities with highly-rated, credit-worthy financial institutions.  In our Condensed Consolidated Statements of Financial Position, the amount we report for Fiduciary assets and Fiduciary liabilities are equal.  Our Fiduciary assets included cash and investments of $4.0 billion and $3.8 billion and fiduciary receivables of $8.8 billion and $8.1 billion at June 30, 2014 and December 31, 2013 , respectively.  While we earn investment income on the fiduciary assets held in cash and investments, the cash and investments are not owned by us, and cannot be used for general corporate purposes.

As disclosed in Note 15 "Fair Value Measurements and Financial Instruments" of the Notes to the Condensed Consolidated Financial Statements, the majority of our investments carried at fair value are money market funds.  Money market funds are carried at cost as an approximation of fair value.  Consistent with market convention, we consider cost a practical and expedient measure of fair value.  These money market funds are held throughout the world with various financial institutions.  We do not believe that there are any market liquidity issues that would materially impact the fair value of these investments.

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At June 30, 2014 , our investments in money market funds and highly liquid debt instruments had a fair value of $2.1 billion and are reported as Short-term investments or Fiduciary assets in the Condensed Consolidated Statements of Financial Position depending on their nature and initial maturity.

The following table summarizes our Fiduciary assets and non-fiduciary Cash and cash equivalents, and Short-term investments at June 30, 2014 (in millions):

																	
 	 	Statement of Financial Position Classification	 	 	
Asset Type	 	Cash and Cash
Equivalents	 	Short-term
Investments	 	Fiduciary
Assets	 	Total	
Certificates of deposit, bank deposits or time deposits	 	$	418		 	$	—		 	$	2,211		 	$	2,629		
Money market funds	 	—		 	308		 	1,796		 	2,104		
Highly liquid debt instruments	 	—		 	—		 	25		 	25		
Other investments due within one year	 	—		 	—		 	—		 	—		
Cash and investments	 	418		 	308		 	4,032		 	4,758		
Fiduciary receivables	 	—		 	—		 	8,754		 	8,754		
Total	 	$	418		 	$	308		 	$	12,786		 	$	13,512		
 
Share Repurchase Program
 
In April 2012, our Board of Directors authorized the 2012 Share Repurchase Program. Under this program, 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.

In the second quarter of 2014 , we repurchased 7.4 million shares at an average price per share of $87.67 for a total cost of $650 million . During the six months ended June 30, 2014 , we repurchased 14.6 million shares at an average price per share of $85.59 for a total cost of $1.3 billion . In the second quarter of 2013 , we repurchased 3.5 million shares at an average price per share of $64.53 for a total cost of $225 million . During the six months ended June 30, 2013 , we repurchased 8.5 million shares at an average price per share of $61.75 for a total cost of $525 million . Since the inception of the 2012 Share Repurchase Program, we repurchased a total of 50.9 million shares for an aggregate cost of $3.4 billion . The remaining authorized amount for share repurchase under the 2012 Share Repurchase Program is approximately $1.6 billion .
 
For information regarding share repurchases made during the second quarter of 2014 , see Part II, Item 2 — "Unregistered Sales of Equity Securities and Use of Proceeds" below.

Borrowings
 
Total debt at June 30, 2014 was $6.0 billion , which represents an increase of $1.6 billion compared to December 31, 2013 . This increase is primarily due to debt issuances of $1.5 billion and an increase in commercial paper outstanding of $107 million compared to December 31, 2013 . Commercial paper activity during the three and six months ended June 30, 2014 included total issuances of $646 million and $1.8 billion , respectively, compared to $1.5 billion and $2.4 billion for the three and six months ended June 30, 2013 , respectively. The proceeds of the commercial paper issuances were used primarily for short-term working capital needs. As of July 24, 2014, we had $484 million of commercial paper outstanding, which was used for acquisitions and short-term working capital needs.

On June 30, 2014, we transferred €531 million to a trustee pursuant to an agreement related to the repayment of the 6.25% €500 million debt securities due July 2014 and accrued interest. The trustee subsequently disbursed €531 million to the bondholders on July 1, 2014 in payment of principal and accrued interest. We remained the primary obligor of the 6.25% €500 million debt securities due July 2014 until the funds were disbursed from the trustee to the bondholders on July 1, 2014. Therefore, Aon did not extinguish the liability related to this obligation at June 30, 2014. As of June 30, 2014, we had $681 million of debt recorded related to this obligation in Short-term debt and current portion of long-term debt, $42 million of interest accrued in Accounts payable and accrued liabilities, and a $723 million deposit to trustee recorded within Other current assets on the Condensed Consolidated Statements of Financial Position. We reflected the cash payment to the trustee for the principal amount as a financing activity and the accrued interest amount as an operating activity on the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2014.

On May 20, 2014, we issued $250 million in aggregate principal amount of 3.50% Notes Due 2024 and $550 million in aggregate principal amount of 4.60% Notes Due 2044. The 3.50% Notes Due 2024 and 4.60% Notes Due 2044 were issued by

47

Aon plc and fully and unconditionally guaranteed by Aon Corporation. We used the proceeds of the issuance to repay commercial paper borrowings and for general corporate purposes.

On May 7, 2014, we issued €500 million ( $681 million at June 30, 2014 exchange rates) in aggregate principal amount of 2.875% Notes Due 2026. The 2.875% Notes Due 2026 were issued by Aon plc and fully and unconditionally guaranteed by Aon Corporation. We used the proceeds of the issuance for general corporate purposes, including the repayment at maturity of our outstanding 6.25% €500 million debt securities due July 2014.

Our total debt as a percentage of total capital attributable to Aon shareholders was 43.6% and 35.0% at June 30, 2014 and December 31, 2013 , respectively.
 
Credit Facilities
 
At June 30, 2014 , we have a five-year $400 million unsecured revolving credit facility in the U.S. ("U.S. Facility") that expires in 2017. The U.S. Facility is for general corporate purposes, including commercial paper support.  Additionally, we have a five-year € 650 million ( $885 million at June 30, 2014 exchange rates) credit facility ("Euro Facility") available, which expires in October 2015.  At June 30, 2014 , we had no borrowings under either of these credit facilities.

For both our U.S. Facility and Euro Facility, the two most significant covenants require us to maintain a certain ratio of consolidated EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted for Hewitt related transaction costs and up to $50 million in non-recurring cash charges ("Adjusted EBITDA"), to consolidated interest expense and a ratio of consolidated debt to Adjusted EBITDA. For both facilities, the ratio of Adjusted EBITDA to consolidated interest expense must be at least 4 to 1.  For the Euro Facility, the ratio of consolidated debt to Adjusted EBITDA must not exceed 3 to 1.  For the U.S. Facility, the ratio of consolidated debt to Adjusted EBITDA must not exceed the lower of (a) 3.25 to 1.00 or (b) the greater of (i) 3.00 to 1.00 or (ii) the lowest ratio of consolidated debt to Adjusted EBITDA then set forth in the Euro Facility. We were in compliance with these and all other covenants during the three and six months ended June 30, 2014 . 

Shelf Registration Statement

On August 31, 2012, we filed a shelf registration statement with the SEC, registering the offer and sale from time to time of an indeterminate amount of, among other securities, debt securities, preference shares, Class A Ordinary Shares and convertible securities. 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 July 25, 2014 appear in the table below. 

						
 	Ratings	 	 	
 	Senior Long-term Debt	 	Commercial Paper	 	Outlook	
Standard & Poor’s	A-	 	A-2	 	Stable	
Moody’s Investor Services	Baa2	 	P-2	 	Stable	
Fitch, Inc.	BBB+	 	F-2	 	Stable	
 
In April 2014, Moody's Investor Services changed their outlook from positive to stable.

A downgrade in the credit ratings of our senior debt and commercial paper would increase our borrowing costs, reduce or eliminate our access to capital, reduce our financial flexibility, increase our commercial paper interest rates or possibly restrict our access to the commercial paper market altogether, or may impact future pension contribution requirements.
 
Letters of Credit and Other Guarantees
 
We had total letters of credit ("LOCs") outstanding for approximately $98 million at June 30, 2014 , compared to $71 million at December 31, 2013 . These letters of credit cover the beneficiaries related to certain of our U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for our own workers compensation program. We also have issued LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at our international subsidiaries.

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We have certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies.  Costs associated with these guarantees, to the extent estimable and probable, are provided in our allowance for doubtful accounts.  The maximum exposure with respect to such contractual contingent guarantees was approximately $92 million at June 30, 2014 compared to $98 million at December 31, 2013 .
 
We have provided commitments to fund certain limited partnerships in which we have an interest in the event that the general partners request funding.  Some of these commitments have specific expiration dates and the maximum potential funding under these commitments was $20 million and $34 million at June 30, 2014 and December 31, 2013 , respectively.  During the three and six months ended June 30, 2014 , we funded $4 million and $14 million of these commitments.

Adequacy of Liquidity Sources

We believe that cash flows from operations and available credit facilities will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, pension contributions, cash restructuring costs, and anticipated working capital requirements, for the foreseeable future. We do not have exposure related to off balance sheet arrangements. Our cash flows from operations, borrowing availability and overall liquidity are subject to risks and uncertainties. See "Information Concerning Forward-Looking Statements" below.
 
Financial Condition
 
At June 30, 2014 , our net assets of $7.8 billion , representing total assets minus total liabilities, decreased from $8.2 billion at December 31, 2013 . The decrease was due primarily to share repurchases of $1.3 billion , dividends of $128 million , and a decrease in Accumulated other comprehensive loss of $156 million related primarily to foreign currency translation adjustment and post-retirement benefit obligation, partially offset by Net income of $649 million for the six months ended June 30, 2014 .  Working capital increased by $752 million to $1.7 billion from December 31, 2013 .
 
Equity
 
Equity at June 30, 2014 was $7.8 billion , a decrease of $436 million from December 31, 2013 .  The decrease resulted primarily from share repurchases of $1.3 billion , $128 million of dividends to shareholders, and a decrease in Accumulated other comprehensive loss of $156 million , partially offset by Net income of $649 million .
  
The $156 million decrease in Accumulated other comprehensive loss from December 31, 2013 primarily reflects the following:

•	positive net foreign currency translation adjustments of $92 million , which are attributable to the weakening of the U.S. dollar against certain foreign currencies,	
		
•	a decrease of $44 million in net post-retirement benefit obligations,	
		
•	net derivative gains of $21 million , and	
		
•	net investment losses of $1 million .	

REVIEW BY SEGMENT
 
General
 
We serve clients through the following segments:

•	Risk Solutions acts as an advisor and insurance and reinsurance broker, helping clients manage their risks, via consultation, as well as negotiation and placement of insurance risk with insurance carriers through our global distribution network.	

•	HR Solutions partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance by designing, implementing, communicating and administering a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.	

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Risk Solutions

																
 	Three months ended June 30,	 	Six months ended June 30,	
(millions, except percentage data)	2014	 	2013	 	2014	 	2013	
Revenue	$	1,948		 	$	1,944		 	$	3,942		 	$	3,915		
Operating income	417		 	391		 	862		 	794		
Operating margin	21.4	%	 	20.1	%	 	21.9	%	 	20.3	%	
 
The demand for property and casualty insurance generally rises as the overall level of economic activity increases and generally falls as such activity decreases, affecting both the commissions and fees generated by our brokerage business. The economic activity that impacts property and casualty insurance is described as exposure units, and is most closely correlated with employment levels, corporate revenue and asset values.  During the first six months of 2014 , pricing was flat on average globally, and we would still consider this to be a "soft market."  In a soft market, premium rates flatten or decrease, along with commission revenues, due to increased competition for market share among insurance carriers or increased underwriting capacity.  Changes in premiums have a direct and potentially material impact on the insurance brokerage industry, as commission revenues are generally based on a percentage of the premiums paid by insureds.
 
Additionally, continuing into the second quarter of 2014 , we faced difficult conditions as a result of unprecedented disruptions in the global economy, the repricing of credit risk and the deterioration of the financial markets.  Weak economic conditions in many markets around the globe have reduced our customers’ demand for our retail brokerage and reinsurance brokerage products, which have had a negative impact on our operational results.
 
Risk Solutions generated approximately 67% of our consolidated total revenues in both the second quarter and first six months of 2014 .  Revenues are generated primarily through fees paid by clients, commissions and fees paid by insurance and reinsurance companies, and investment income on funds held on behalf of clients.  Our revenues vary from quarter to quarter throughout the year as a result of the timing of our clients’ policy renewals, the net effect of new and lost business, the timing of services provided to our clients, and the income we earn on investments, which is heavily influenced by short-term interest rates.
 
We operate in a highly competitive industry and compete with many retail insurance brokerage and agency firms, as well as with individual brokers, agents, and direct writers of insurance coverage.  Specifically, we address the highly specialized product development and risk management needs of commercial enterprises, professional groups, insurance companies, governments, health care providers, and non-profit groups, among others; provide affinity products for professional liability, life, disability income, and personal lines for individuals, associations, and businesses; provide products and services via GRIP Solutions; provide reinsurance services to insurance and reinsurance companies and other risk assumption entities by acting as brokers or intermediaries on all classes of reinsurance; provide capital management transaction and advisory products and services, including mergers and acquisitions and other financial advisory services, capital raising, contingent capital financing, insurance-linked securitizations and derivative applications; provide managing underwriting to independent agents and brokers as well as corporate clients; provide risk consulting, actuarial, loss prevention, and administrative services to businesses and consumers; and manage captive insurance companies.

Revenue
 
Commissions, fees and other revenue for Risk Solutions were as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Retail brokerage:	 		 	 		 	 	 	 	
Americas	$	832		 	$	826		 	$	1,530		 	$	1,512		
International (1)	750		 	736		 	1,631		 	1,612		
Total retail brokerage	1,582		 	1,562		 	3,161		 	3,124		
Reinsurance brokerage	360		 	376		 	769		 	778		
Total	$	1,942		 	$	1,938		 	$	3,930		 	$	3,902		
  ______________________________________________
(1) Includes the U.K., Europe, Middle East, Africa and Asia Pacific.

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During the second quarter 2014 , commissions, fees and other revenue increased $4 million compared to the second quarter 2013 , due to 1% organic revenue growth, partially offset by a 1% decrease related to acquisitions, net of dispositions. During the first six months of 2014 , Commissions, fees and other revenue increased $28 million , or 1% , as compared to the first six months of 2013 due to 2% organic revenue growth, partially offset by 1% unfavorable impact from foreign exchange rates and a modest decline in investment income.
 
Reconciliation of organic revenue growth to reported commissions, fees and other revenue growth for 2014 versus 2013 is as follows:

													
Three months ended June 30, 2014	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Retail brokerage:	 	 		 	 		 	 		 	 		
Americas	 	1	 %	 	(2	)%	 	1	 %	 	2	 %	
International (1)	 	2		 	2		 	(3	)	 	3		
Total retail brokerage	 	1		 	—		 	(1	)	 	2		
Reinsurance brokerage	 	(4	)	 	—		 	—		 	(4	)	
Total	 	—	 %	 	—	 %	 	(1	)%	 	1	 %	

													
Six months ended June 30, 2014	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Retail brokerage:	 	 		 	 		 	 		 	 		
Americas	 	1	 %	 	(2	)%	 	—	 %	 	3	 %	
International (1)	 	1		 	1		 	(3	)	 	3		
Total retail brokerage	 	1		 	(1	)	 	(1	)	 	3		
Reinsurance brokerage	 	(1	)	 	—		 	—		 	(1	)	
Total	 	1	 %	 	(1	)%	 	—	 %	 	2	 %	
  ______________________________________________
(1) Includes the U.K., Europe, Middle East, Africa and Asia Pacific.

Retail brokerage Commissions, fees and other revenue increased 1% in the second quarter driven by 2% and 3% organic revenue growth in the Americas and International operations, respectively, partially offset by a 1% decrease related to acquisitions, net of dispositions. During the first six months of 2014 , revenue growth was 1% , driven by a 3% growth in organic revenue in both the Americas and International operations, partially offset by a decline in investment income, a 1% decrease related to acquisitions, net of dispositions, and a 1% unfavorable impact from foreign exchange rates.
 
Americas Commissions, fees and other revenue increased 1% in the second quarter reflecting 2% growth in organic revenue reflecting growth across all regions driven by strong new business generation, and a 1% increase related to acquisitions, net of dispositions, partially offset by a 2% unfavorable impact from foreign exchange rates. During the first six months of 2014 , revenue increased 1% as a result of 3% growth in organic revenue, partially offset by a 2% unfavorable impact from foreign exchange rates.
 
International Commissions, fees and other revenue increased 2% in the second quarter driven by a 3% increase in organic revenue growth and a 2% favorable impact from foreign exchange rates, partially offset by a 3% unfavorable impact from acquisitions, net of divestitures. Organic growth of 3% was driven by solid growth across Asia, New Zealand and strong management of the renewal book portfolio in continental Europe. During the first six months of 2014 , revenue increased 1% as a result of 3% growth in organic revenue and a 1% favorable impact from foreign exchange rates, partially offset by 3% decline related to acquisitions.
 
Reinsurance brokerage Commissions, fees and other revenue decreased 4% compared to the prior year quarter due primarily to an unfavorable market impact in treaty and a decline in facultative placements, partially offset by growth in capital markets transactions and advisory business and net new business growth in treaty placements globally. During the first six months of 2014 , revenue decreased 1% as compared to the first six months of 2013.

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Operating Income
 
Operating income for the second quarter 2014 increased $26 million , or 7% , from 2013 to $417 million in 2014 , and operating income margins increased to 21.4% from 20.1% in 2013 .  For the first six months of 2014 , Operating income increased $68 million , or 9% , from 2013 to $862 million in 2014 , and operating income margins increased to 21.9% from 20.3% in 2013 . Operating margin improvement was driven by return on investments, expense discipline and savings related to the restructuring programs, partially offset by a $15 million unfavorable impact from foreign currency translation.
 
HR Solutions

																
 	Three months ended June 30,	 	Six months ended June 30,	
(millions, except percentage data)	2014	 	2013	 	2014	 	2013	
Revenue	$	982		 	$	956		 	$	1,947		 	$	1,910		
Operating income	69		 	36		 	136		 	87		
Operating margin	7.0	%	 	3.8	%	 	7.0	%	 	4.6	%	
 
Our HR Solutions segment generated approximately 33% of our consolidated total revenues in both the second quarter and first six months of 2014 , and provides a broad range of human capital services, as follows:

·	Retirement specializes in global actuarial services, defined contribution consulting, tax and ERISA consulting, and pension administration.	
		
·	Compensation focuses on compensatory advisory/counsel including: compensation planning design, executive reward strategies, salary survey and benchmarking, market share studies and sales force effectiveness, with special expertise in the financial services and technology industries.	
		
·	Strategic Human Capital delivers advice to complex global organizations on talent, change and organizational effectiveness issues, including talent strategy and acquisition, executive on-boarding, performance management, leadership assessment and development, communication strategy, workforce training and change management.	
		
·	Investment consulting advises public and private companies, other institutions and trustees on developing and maintaining investment programs across a broad range of plan types, including defined benefit plans, defined contribution plans, endowments and foundations.	
		
·	Benefits Administration applies our human resource expertise primarily through defined benefit (pension), defined contribution (401(k)), and health and welfare administrative services. Our model replaces the resource-intensive processes once required to administer benefit plans with more efficient, effective, and less costly solutions.	
		
·	Exchanges is building and operating healthcare exchanges that provide employers with a cost effective alternative to traditional employee and retiree healthcare, while helping individuals select the insurance that best meets their needs.	
		
·	Human Resource Business Processing Outsourcing provides market-leading solutions to manage employee data; administer benefits, payroll and other human resources processes; and record and manage talent, workforce and other core human resource process transactions as well as other complementary services such as flexible spending, dependent audit and participant advocacy.	
 
Disruption in the global credit markets and the deterioration of the financial markets created significant uncertainty in the marketplace.  Weak economic conditions in many markets around the globe continued into the second quarter of 2014 and have adversely impacted our clients’ financial condition and therefore the levels of business activities in the industries and geographies where we operate.  While we believe that the majority of our practices are well positioned to manage through this time, these challenges are reducing demand for some of our services and putting continued pressure on the pricing of those services, which is having an adverse effect on our new business and results of operations.
 
Revenue
 
Commissions, fees and other revenue for HR Solutions increased $26 million , or 3% , in the second quarter 2014 compared to the second quarter 2013 . The increase in revenue was driven by 2% organic growth in commissions and fees and 1% favorable impact from foreign exchange rates. During the first six months of 2014 , Commissions, fees and other revenue increased $37 million , or 2% , as compared to the first six months of 2013 due to 2% organic revenue growth.

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Commissions, fees and other revenue were as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Consulting services	$	395		 	$	388		 	$	779		 	$	770		
Outsourcing	595		 	578		 	1,184		 	1,159		
Intersegment	(8	)	 	(10	)	 	(16	)	 	(19	)	
Total	$	982		 	$	956		 	$	1,947		 	$	1,910		
 
Reconciliation of organic revenue growth to reported commissions, fees and other revenue growth for 2014 versus 2013 is as follows:

													
Three months ended June 30, 2014	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Consulting services	 	2	%	 	2	%	 	(1	)%	 	1	%	
Outsourcing	 	3		 	—		 	—		 	3		
Intersegment	 	N/A		 	N/A		 	N/A		 	N/A		
Total	 	3	%	 	1	%	 	—	 %	 	2	%	

	
													
Six months ended June 30, 2014	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Consulting services	 	1	%	 	1	%	 	(1	)%	 	1	%	
Outsourcing	 	2		 	—		 	—		 	2		
Intersegment	 	N/A		 	N/A		 	N/A		 	N/A		
Total	 	2	%	 	—	%	 	—	 %	 	2	%	

Consulting services revenue increased $7 million , or 2% , for the second quarter due primarily to 1% organic revenue growth and a 2% favorable impact from foreign exchange rates, partially offset by a decrease of 1% from acquisitions, net of divestitures. Organic revenue growth was driven by strong growth in investment consulting, partially offset by a modest decline in retirement in continental Europe and an anticipated unfavorable impact from timing in compensation consulting. For the first six months of 2014 , revenue increased $9 million , or 1% , as a result of 1% organic revenue growth and 1% favorable impact from foreign exchange rates, partially offset by an unfavorable impact of 1% from acquisitions, net of divestitures.
 
Outsourcing revenue increased $17 million , or 3% , for the second quarter due to 3% organic revenue growth driven by new client wins and project related revenue in benefits administration. For the first six months of 2014 , revenue increased $25 million , or 2% , as a result of 2% organic revenue growth.

Operating Income
 
Operating income was $69 million , an increase of $33 million , or 92% , from the second quarter of 2013 . For the first six months of 2014, operating income was $136 million , an increase of $49 million , or 56% , from the prior year. The year-to-date increase was primarily due to modest organic revenue growth and savings related to the Aon Hewitt restructuring program, partially offset by an increase in expense to support future growth in our health care exchange business and an anticipated unfavorable impact from the timing of certain consulting revenue. Operating margin for this segment was 7.0% in the second quarter, an increase from 3.8% in 2013 . For the first six months of 2014 , operating margin was 7.0% , an increase from 4.6% in 2013 .

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Unallocated Income and Expense
 
A reconciliation of our operating income to income before income taxes is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2014	 	2013	 	2014	 	2013	
Operating income (loss):	 		 	 		 	 	 	 	
Risk Solutions	$	417		 	$	391		 	$	862		 	$	794		
HR Solutions	69		 	36		 	136		 	87		
Unallocated	(41	)	 	(45	)	 	(84	)	 	(89	)	
Operating income	445		 	382		 	914		 	792		
Interest income	2		 	2		 	4		 	3		
Interest expense	(65	)	 	(48	)	 	(123	)	 	(100	)	
Other (expense) income	(2	)	 	6		 	(1	)	 	15		
Income before income taxes	$	380		 	$	342		 	$	794		 	$	710		
 
Unallocated operating expense
 
Unallocated operating expense includes corporate governance costs not allocated to the operating segments.  Net unallocated expenses decreased $4 million to $41 million in the second quarter 2014 and decreased $5 million to $84 million for the first six months of 2014 . The decrease in unallocated expenses during the three and six months ended June 30, 2014 is due primarily to decrease in expenses related to the Company's redomicile to the U.K. compared to such expenses in 2013.
 
Interest income
 
Interest income represents income earned on operating cash balances and other income-producing investments.  It does not include interest earned on funds held on behalf of clients.  During the second quarter 2014 , Interest income remained flat at $2 million compared to the second quarter 2013 . During the first six months of 2014 , Interest income increased $1 million to $4 million from the comparable period in 2013 .
 
Interest expense
 
Interest expense, which represents the cost of our worldwide debt obligations, increased $17 million and $23 million compared to the second quarter and first six months of 2013 , respectively. The increase in interest expense primarily reflects an increase in the total debt outstanding.
  
Other (expense) income

Other (expense) income was $2 million expense and $1 million expense for the second quarter and first six months of 2014 , respectively, compared to $6 million income and $15 million income for the second quarter and first six months of 2013 .  The second quarter 2014 includes a $15 million loss on foreign currency remeasurement, partially offset by a $10 million gain from derivatives. The first six months of 2014 include a $13 million loss from derivatives, partially offset by equity earnings of $6 million and a $4 million gain on foreign currency remeasurement. The second quarter 2013 includes a $9 million gain from derivatives, partially offset by a $5 million loss on foreign currency remeasurement. The first six months of 2013  include a  $19 million  gain on foreign currency remeasurement and equity earnings of  $6 million , partially offset by  $9 million  loss from derivatives.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
There have been no changes in our critical accounting policies, which include revenue recognition, restructuring, pensions, goodwill and other intangible assets, contingencies, share-based payments, and income taxes, as discussed in our 2013 Annual Report on Form 10-K.

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NEW ACCOUNTING PRONOUNCEMENTS
 
Note 2 "Accounting Principles and Practices" of the Notes to the Condensed Consolidated Financial Statements contains a discussion of recently issued accounting pronouncements and their impact or future potential impact on our financial results, if determinable.
 
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
 
This report and in reports we subsequently file or furnish and have previously filed for furnished with the SEC contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements relate to expectations or forecasts of future events.  They use words such as "anticipate," "believe," "estimate," "expect," "forecast," "project," "intend," "plan," "potential," and other similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would."  You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts.  For example, we may use forward-looking statements when addressing topics such as:  market and industry conditions, including competitive and pricing trends; changes in our business strategies and methods of generating revenue; the development and performance of our services and products; changes in the composition or level of our revenues; our cost structure and the outcome of cost-saving or restructuring initiatives; the outcome of contingencies; dividend policy; the expected impact of acquisitions and dispositions; pension obligations; cash flow and liquidity; expected effective tax rate; future actions by regulators; and the impact of changes in accounting rules.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors, which may be revised or supplemented in subsequent reports filed or furnished with the SEC, that could impact results include:

·	general economic conditions in different countries in which Aon does business around the world, including conditions in emerging markets and in the European Union relating to sovereign debt and the continued viability of the Euro;	
		
·	changes in the competitive environment;	
		
·	changes in global equity and fixed income markets that could influence the return on invested assets;	
		
·	changes in the funding status of our various defined benefit pension plans and the impact of any increased pension funding resulting from those changes;	
		
·	rating agency actions that could affect our ability to borrow funds;	
		
·	fluctuations in exchange and interest rates that could impact revenue and expense;	
		
·	the impact of class actions, individual lawsuits, and other contingent liabilities and loss contingencies arising from errors and omissions and other claims against us including client class actions, securities class actions, derivative actions and ERISA class actions;	
		
·	the impact of any investigations brought by regulatory authorities in the U.S., U.K. and other countries;	
		
·	failure to retain and attract qualified personnel;	
		
·	the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which we operate, particularly given the global scope of our business and the possibility of conflicting regulatory requirements across jurisdictions in which we do business;	
		
·	the effect of the Redomestication on our operations and financial results, including the reaction of our clients, employees and other constituents, the effect of compliance with applicable U.K. regulatory regimes or the failure to realize some or all of the anticipated benefits;	
		
·	the extent to which we retain existing clients and attract new businesses and our ability to incentivize and retain key employees;	
		
·	the extent to which we manage certain risks created in connection with the various services, including fiduciary and advisory services, among others, that we currently provide, or will provide in the future, to clients;	
		
·	our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, and the ability to achieve those cost savings;	
		
·	the potential of a system or network breach or disruption resulting in operational interruption or improper disclosure of client information or personal data;	
		
·	changes in commercial property and casualty markets and commercial premium rates that could impact revenues;	
		
·	any inquiries relating to compliance with the U.S. Foreign Corrupt Practices Act and non-U.S. anti-corruption laws and with U.S. and non-U.S. trade sanctions regimes;	
		
·	failure to protect intellectual property rights or allegations that we infringe on the intellectual property rights of others;	
		
·	the damage to our reputation among clients, markets or other third parties;	
		
·	the actions taken by third parties that perform aspects of our business operations and client services;	

55

		
·	changes in costs or assumptions associated with our HR Solutions segment's outsourcing and consulting arrangements that affect the profitability of these arrangements; and	
		
·	our ability to grow and develop companies that we acquire or new lines of business.	

Any or all of our forward-looking statements may turn out to be inaccurate, and there are no guarantees about our performance.  The factors identified above are not exhaustive.  Aon and its subsidiaries operate in a dynamic business environment in which new risks may emerge frequently.  Accordingly, readers should not place undue reliance on forward-looking statements, which speak only as of the dates on which they are made.  We are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statement that we may make from time to time, whether as a result of new information, future events or otherwise.  Further information about factors that could materially affect Aon, including our results of operations and financial condition, is contained in the "Risk Factors" sections in each of Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013 .
 
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
We are exposed to potential fluctuations in earnings, cash flows and the fair value of certain of our assets and liabilities due to changes in interest rates and foreign exchange rates.  To manage the risk from these exposures, we enter into a variety of derivative instruments.  We do not enter into derivatives or financial instruments for trading or speculative purposes.
 
The following discussion describes our specific exposures and the strategies we use to manage these risks. There have been no changes in our critical accounting policies for financial instruments and derivatives as discussed in our 2013 Annual Report on Form 10-K.

Foreign Exchange Risk

We are subject to foreign exchange rate risk. Our primary exposures include exchange rates between the U.S. Dollar and the Euro, the British Pound, the Canadian Dollar, the Australian Dollar, and the Indian Rupee.  We use over-the-counter options and forward contracts to reduce the impact of foreign currency risk to our financial statements.
 
Additionally, some of our non-U.S. brokerage subsidiaries receive revenues in currencies that differ from their functional currencies.  Our U.K. subsidiaries earn a portion of their revenue in U.S. Dollars and Euros, but most of their expenses are incurred in Pounds Sterling.  At June 30, 2014 , we have hedged approximately 45% and 81% of our U.K. subsidiaries’ expected U.S. Dollar transaction exposure for the years ending December 31, 2014 and 2015, respectively. In addition, we have hedged 81% of our U.K. subsidiaries' expected Euro transaction exposures for the same time periods. We generally do not hedge exposures beyond three years.

We also use forward contracts to economically hedge foreign exchange risk associated with monetary balance sheet exposures, such as inter-company notes and short-term assets and liabilities that are denominated in a non-functional currency and are subject to remeasurement.
 
The translated value of revenue and expense from our international brokerage operations are subject to fluctuations in foreign exchange rates. If the Company were to translate prior year results at current quarter exchange rates, diluted earnings per share would be unfavorably impacted by approximately $0.03 during both the three and six months ended June 30, 2014 .  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 be unfavorably impacted by approximately $0.04 during both the three and six months ended June 30, 2014 , if the Company were to translate prior year results at current quarter exchange rates.
 
Interest Rate Risk

Our fiduciary investment income is affected by changes in international and domestic short-term interest rates.  We monitor our net exposure to short-term interest rates and, as appropriate, hedge our exposure with various derivative financial instruments.  This activity primarily relates to brokerage funds held on behalf of clients in the U.S. and on the continent of Europe. A decrease in global short-term interest rates adversely affects our fiduciary investment income.
 
ITEM 4.   CONTROLS AND PROCEDURES
 
Evaluation of disclosure controls and procedures.  We have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this quarterly report of June 30, 2014 . 

56

Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective such that the information relating to Aon, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission ("SEC") reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to Aon’s management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
Changes in internal control over financial reporting.  No changes in Aon's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the quarter ended  June 30, 2014  that have materially affected, or that are reasonably likely to materially affect, Aon's internal control over financial reporting.

57

PART II
 
OTHER INFORMATION
 
ITEM 1.                              LEGAL PROCEEDINGS
 
See Note 16 "Commitments and Contingencies — Legal" to the Condensed Consolidated Financial Statements contained in Part I, Item 1, which is incorporated by reference herein.
 
ITEM 1A.                     RISK FACTORS.
 
The risk factors set forth in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013 reflect certain risks associated with existing and potential lines of business and contain "forward-looking statements" as discussed in Part I, Item 2 of this report.  Readers should consider them in addition to the other information contained in this report as our business, financial condition or results of operations could be adversely affected if any of these risks actually occur.

ITEM 2.                              UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
(a)  None.
(b)  None.
(c)  Issuer Purchases of Equity Securities.
 
The following information relates to the purchase of equity securities by Aon or any affiliated purchaser during each month within the second quarter of 2014 :

	
															
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)	
4/1/14 — 4/30/14	 	471,008		 	$	84.92		 	471,008		 	$	2,233,679,249		
5/1/14 — 5/31/14	 	4,721,760		 	86.81		 	4,721,760		 	1,823,782,454		
6/1/14 — 6/31/14	 	2,219,726		 	90.08		 	2,219,726		 	1,623,826,744		
Total	 	7,412,494		 	$	87.67		 	7,412,494		 	$	1,623,826,744		
  ______________________________________________

(1)          Does not include commissions paid to repurchase shares.
 
(2)   In April 2012, our Board of Directors authorized the 2012 Share Repurchase Program. During the second quarter of 2014 , we repurchased 7.4 million shares at an average price per share of $87.67 for a total cost of $650 million . The remaining authorized amount for share repurchase under the 2012 Share Repurchase Program is $1.6 billion .

We did not make any unregistered sales of equity in the second quarter.
 
ITEM 5.                              OTHER INFORMATION

At the Company’s annual general meeting of shareholders held on June 24, 2014, the Company’s shareholders approved an amendment and restatement of the Aon plc 2011 Incentive Compensation Plan to increase the number of shares available for issuance under the plan by 9 million shares as described in the Company’s definitive proxy statement for the 2014 annual general meeting filed with the Securities and Exchange Commission on April 28, 2014. The Aon plc 2011 Incentive Compensation Plan is filed as Exhibit 10.1 hereto.

ITEM 6.                              EXHIBITS
 
Exhibits — The exhibits filed with this report are listed on the attached Exhibit Index.

58

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	
			
 	Aon plc	
 	(Registrant)	
 	 	
July 25, 2014	By:	/s/ Laurel Meissner	
 	LAUREL MEISSNER	
 	SENIOR VICE PRESIDENT AND	
 	GLOBAL CONTROLLER	
 	(Principal Accounting Officer and duly authorized officer of Registrant)	

59

Exhibit Index

	
			
Exhibit Number	 	Description of Exhibit	
4.1	 	Form of 2.875% Senior Note due 2026 (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed by the Company on May 13, 2014).	
4.2	 	Form of 3.500% Senior Note due 2024 (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed by the Company on May 27, 2014).	
4.3	 	Form of 4.600% Senior Note due 2044 (incorporated by reference to Exhibit 4.3 of the Current Report on Form 8-K filed by the Company on May 27, 2014).	
10.1	 	Aon plc 2011 Incentive Compensation Plan	
10.2	 	Amended International Assignment Letter with Gregory C. Case dated July 1, 2014.	
10.3	 	Amended International Assignment Letter with Christa Davies dated July 1, 2014.	
10.4	 	Amended International Assignment Letter with Stephen P. McGill dated July 1, 2014.	
12.1	 	Statement regarding Computation of Ratio of Earnings to Fixed Charges.	
31.1	 	Certification of CEO.	
31.2	 	Certification of CFO.	
32.1	 	Certification of CEO Pursuant to section 1350 of Title 18 of the United States Code.	
32.2	 	Certification of CFO Pursuant to section 1350 of Title 18 of the United States Code.	
101	 	Interactive Data Files. The following materials are filed electronically with this Quarterly Report on Form 10-Q:	
 	 	101.INS XBRL Report Instance Document	
 	 	101.SCH XBRL Taxonomy Extension Schema Document	
 	 	101.CAL XBRL Taxonomy Calculation Linkbase Document	
 	 	101.DEF XBRL Taxonomy Definition Linkbase Document	
 	 	101.PRE XBRL Taxonomy Presentation Linkbase Document	
 	 	101.LAB XBRL Taxonomy Calculation Linkbase Document	

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Exhibit 10.1

AON PLC 2011 INCENTIVE PLAN
(As Amended and Restated Effective June 24, 2014 and
As Assumed by Aon plc as of April 2, 2012)
SECTION 1
General
1.1  Purpose.  Aon Corporation, a Delaware corporation (“Aon”), established the Plan to advance the interests of Aon and the Subsidiaries by providing a variety of equity-based and cash incentives designed to motivate, retain and attract employees, directors, consultants, independent contractors, agents, and other persons providing services to Aon or a Subsidiary through the acquisition of a larger personal financial interest in Aon.
1.2  Amendment, Restatement and Assumption of Plan.  The Plan was adopted by Aon’s Board of Directors on March 18, 2011 and approved by Aon’s stockholders on May 20, 2011. At that time, 25 million shares of common stock of Aon were reserved for issuance. Aon was reorganized (the “Reorganization”) effective April 2, 2012 pursuant to an Agreement and Plan of Merger and Reorganization approved by Aon’s stockholders on March 16, 2012. As a result of the Reorganization, Aon became a subsidiary of Aon plc, a public limited company incorporated under English law (the “Company”) and each share of common stock of Aon was converted into one Class A Ordinary Share, par value $0.01, of the Company. The Plan was adopted and assumed by the Company, and Aon’s rights and obligations under the Plan and the outstanding Agreements were assigned to the Company, effective as of April 2, 2012. The Plan was amended and restated to reflect the Reorganization and the assumption of the Plan by the Company effective as of April 2, 2012.
SECTION 2
Defined Terms
The meaning of capitalized terms used in the Plan are set forth below if not otherwise defined in the text of the Plan.
(a)    “Affiliate” will have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.
(b)    “Agreement” will have the meaning set forth in subsection 9.9.
(c)    “Approval Date” means May 20, 2011, the date on which the Plan was approved by Aon’s stockholders.
(d)    “Award” means any award described in Sections 6 through 8 of the Plan.
(e)    “Beneficiary” means the legal representative of the Participant’s estate entitled by will or the laws of descent and distribution to receive the benefits under a Participant’s Award in the event the Participant’s Termination Date occurs on account of death, regardless whether the Participant designated a person or person to receive the balance of his or her benefits under the Aon Stock Incentive Plan, as amended from time to time (the “2001 Plan”), the Amended and Restated Global Stock and Incentive Compensation Plan of Hewitt Associates, Inc., as amended from time to time (the “Hewitt Plan”) or any other plan or program of the Company or a Subsidiary.
(f)    “Board” means the Board of Directors of the Company.
(g)    “Cash Incentive Award” has the meaning set forth in subsection 8.1.
(h)    “Change in Control” means:
(1)    the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the then outstanding ordinary shares of the Company (the “Outstanding Ordinary Shares”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) including by way of a court approved compromise or arrangement between the Company and its members pursuant to section 895 of the UK Companies Act 2006; excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition

by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 1(c); provided further, that for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 30% or more of the Outstanding Ordinary Shares or 30% or more of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Ordinary Shares or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;
(2)    individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;
(3)    the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Ordinary Shares and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Ordinary Shares and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 30% or more of the Outstanding Ordinary Shares or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 30% or more of, respectively, the outstanding shares of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or
(4)    the consummation of a plan of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, the Reorganization effective April 2, 2012 and the related transactions on such date, as a result of which the Company became a public company and the parent corporation of Aon, shall not constitute a Change in Control.
(i)    “Code” means the United States Internal Revenue Code of 1986, as amended, and references to any provision of the Code will be deemed to include successor provisions and regulations.
(j)    “Committee” has the meaning set forth in subsection 4.1.
(k)    “Effective Date” has the meaning set forth in subsection 9.1.

(l)    “Eligible Individual” means any officer, director, or other employee of the Company or a Subsidiary, consultants, independent contractors or agents of the Company or a Subsidiary, and persons who are expected to become officers, employees, directors, consultants, independent contractors or agents of the Company or a Subsidiary, including in each case, directors who are not employees of the Company or a Subsidiary.
(m)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(n)    “Expiration Date” has the meaning set forth in subsection 6.9.
(o)    “Fair Market Value” of a Share means, for purposes of Sections 6.1(b), 6.4, 6.6, 8.1, 9.2(a)(iii) as of any date and except as otherwise provided by the Committee, the closing sale price of a Share as reported on the New York Stock Exchange Composite Tape (or if the Shares are not traded on the New York Stock Exchange, the closing sale price on the exchange on which they are traded or as reported by an applicable automated quotation system) (“Composite Tape”) on the applicable date or, if no sales of Shares are reported on such date, the closing sale price of a Share on the date a sale was last reported on the Composite Tape (or such other exchange or automated quotation system, if applicable). For purposes of determining the Fair Market Value of Shares that are sold pursuant to a cashless exercise program, Fair Market Value will be the price at which such Shares are sold.
(p)    “Full Value Award” has the meaning set forth in subsection 7.1(a).
(q)    “Incentive Stock Option” means an Option that is intended to satisfy the requirements applicable to an “incentive stock option” described in section 422 of the Code.
(r)    “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option.
(s)    “Option” has the meaning set forth in subsection 6.1(a).
(t)    “Outside Director” means a director of the Company who is not an officer or employee of the Company or a Subsidiary.
(u)    “Participant” will have the meaning set forth in Section 3.
(v)    “Performance-Based Compensation” will have the meaning set forth in subsection 7.3.
(w)    “Performance Criteria” means performance targets based on one or more of the following criteria: (i) revenues or net revenues; (ii) operating profit or margin; (iii) expenses, operating expenses, marketing and administrative expense, restructuring expenses, interest expense, tax expense, or other measures of savings; (iv) operating earnings, earnings before interest, taxes, depreciation, or amortization, net earnings, earnings per share (basic or diluted) or other measure of earnings; (v) cash flow, including cash flow from operations, investing, or financing activities, before or after dividends, investments, or capital expenditures; (vi) balance sheet performance, including debt, long or short term, inventory, accounts payable or receivable, working capital, or shareholders’ equity; (vii)  return on invested capital, sales, assets, or equity; (viii) share price performance or shareholder return; (ix) economic value created or added; (x) strategic performance objectives relating to acquisitions, divestitures, market penetration, geographic expansion, product development, regulatory or quality performance, or innovation or research goals. In each case, performance may be measured (A) on an aggregate or net basis; (B) before or after tax or cumulative effect of accounting changes; (C) relative to other approved measures, on an aggregate or percentage basis, over time, or as compared to performance by other companies or groups of other companies; or (D) by product, product line, business unit or segment, or geographic unit. The performance targets may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Where applicable, each of the foregoing performance targets will be determined in accordance with generally accepted accounting principles and will be subject to certification by the Committee; provided that the Committee will have the authority to exclude the impact of charges or benefits for restructuring plans, discontinued operations, amortization of intangible assets, extraordinary items, the cumulative effects of tax or accounting principles and other unusual, non-recurring

adjustments included in as adjusted pre-tax income as disclosed in the financial results filed with or furnished to the Securities and Exchange Commission.
(x)    “Person” will have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term will not include (i) the Company or any Subsidiary, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.
(y)    “Plan” means this Aon plc 2011 Incentive Plan, as it may be duly amended from time to time.
(z)    “SAR” or “Stock Appreciation Right” has the meaning set forth in subsection 6.1(b).
(aa)    “Share” means a Class A Ordinary Share, $0.01 par value, of the Company.
(bb)    “Subsidiary” means any corporation, partnership, joint venture or other entity during any period in which a controlling interest in such entity is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or any entity that is a successor to the Company) has, directly or indirectly, a significant interest (whether through the ownership of securities or otherwise), as determined in the discretion of the Committee. Notwithstanding the foregoing, in the case of an Incentive Stock Option or any determination relating to an Incentive Stock Option, “Subsidiary” means a corporation that is a subsidiary of the Company within the meaning of section 424(f) of the Code.
(cc)    “Substitute Award” means an Award granted or Shares issued by the Company in assumption of, or in substitution or exchange for, an award previously granted, or the right or obligation to make a future award, in all cases by a company acquired by the Company or any Subsidiary or with which the Company or a Subsidiary combines.
(dd)    “Termination Date” means the date on which a Participant both ceases to be an employee of the Company or a Subsidiary and ceases to perform material services for the Company or a Subsidiary (whether as a director or otherwise), regardless of the reason for the cessation; provided that a “Termination Date” will not be considered to have occurred during the period in which the reason for the cessation of services is a leave of absence approved by the Company or the Subsidiary which was the recipient of the Participant’s services; and provided, further that, with respect to an Outside Director, “Termination Date” means date on which the Outside Director’s service as an Outside Director terminates for any reason.
SECTION 3
Participation
Subject to the terms and conditions of the Plan, a “Participant” in the Plan is any Eligible Individual to whom an Award is granted under the Plan. Subject to the terms and conditions of the Plan, the Committee will determine and designate, from time to time, from among the Eligible Individuals those persons who will be granted one or more Awards under the Plan. Subject to the terms and conditions of the Plan, a Participant may be granted any Award permitted under the provisions of the Plan and more than one Award may be granted to a Participant. Except as otherwise agreed by the Company and the Participant, or except as otherwise provided in the Plan, an Award under the Plan will not affect any previous Award under the Plan or an award under any other plan maintained by the Company or any Subsidiary.
SECTION 4
Committee
4.1  Administration By Committee.  The authority to control and manage the operation and administration of the Plan will be vested in the committee described in subsection 4.2 (the “Committee”) in accordance with this Section 4. If the Committee does not exist, or for any other reason determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.

4.2  Selection of Committee.  So long as the Company is subject to Section 16 of the Exchange Act, the Committee will be selected by the Board and will consist of not fewer than two members of the Board or such greater number as may be required for compliance with Rule 16b-3 issued under the Exchange Act and will be comprised of persons who are independent for purposes of applicable stock exchange listing requirements. Any Award granted under the Plan that is intended to constitute Performance-Based Compensation (including Options and SARs) will be granted by a Committee consisting solely of two or more “outside directors” within the meaning of section 162(m) of the Code and applicable regulations; provided, however, that as of the Effective Date and continuing thereafter unless and until otherwise specified by the Board, the Committee will be the Organization & Compensation Committee of the Board.
Notwithstanding any other provision of the Plan to the contrary, with respect to any Awards to Outside Directors, the Committee for purposes of this Section 4 will be the Board.
4.3  Powers of Committee.  The authority to manage and control the operation and administration of the Plan will be vested in the Committee, subject to the following:
(a)    Subject to the provisions of the Plan (including subsection 4.3(e)), the Committee will have the authority and discretion to (i) select Eligible Individuals who will receive Awards under the Plan, (ii) determine the time or times of receipt of Awards, (iii) determine the types of Awards and the number of Shares covered by the Awards, (iv) establish the terms, conditions, performance targets, restrictions, and other provisions of such Awards, (v) modify the terms of, cancel, or suspend Awards; (vi) reissue or repurchase Awards, and (vii) accelerate the exercisability or vesting of any Award. In making such Award determinations, the Committee may take into account the nature of services rendered by the respective individual, the individual’s present and potential contribution to the Company’s or a Subsidiary’s success and such other factors as the Committee deems relevant.
(b)    Subject to the provisions of the Plan, the Committee will have the authority and discretion to determine the extent to which Awards under the Plan will be structured to conform to the requirements applicable to Performance-Based Compensation, and to take such action, establish such procedures, and impose such restrictions at the time such Awards are granted as the Committee determines to be necessary or appropriate to conform to such requirements.
(c)    Subject to the provisions of the Plan, the Committee will have the authority and discretion to conclusively interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, to remedy any defect or omission and reconcile any inconsistency in the Plan or any Award, and to make all other determinations that may be necessary or advisable for the administration of the Plan including the termination thereof.
(d)    Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.
(e)    Except as otherwise expressly provided in the Plan, where the Committee is authorized to make a determination with respect to any Award, such determination will be made at the time the Award is made, except that the Committee may reserve the authority to have such determination made by the Committee in the future (but only if such reservation is made at the time the Award is granted is expressly stated in the Agreement reflecting the Award).
4.4  Delegation by Committee.  Except to the extent prohibited by the rules of any stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, except that Awards to individuals who are designated as “officers” under Rule 16a-1(f) of the Exchange Act may be made solely by the Committee. Any such allocation or delegation may be revoked by the Committee at any time.
4.5  Information to be Furnished to Committee.  The Company will furnish the Committee such data and information as may be required for it to discharge its duties. The records of the Company as to an individual’s employment or provision of services, termination of employment or cessation of the provision of services, leave of absence, reemployment and compensation will be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan.

4.6  Liability and Indemnification of Committee.  No member or authorized delegate of the Committee will be liable to any person for any action taken or omitted in connection with the administration of the Plan unless attributable to his own fraud or willful misconduct; nor will the Company or any Subsidiary be liable to any person for any such action unless attributable to fraud or willful misconduct on the part of a director or employee of the Company or a Subsidiary. The Committee, the individual members thereof, and persons acting as the authorized delegates of the Committee under the Plan, will be indemnified by the Company against any and all liabilities, losses, costs and expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Committee or its members or authorized delegates by reason of the performance of a Committee function if the Committee or its members or authorized delegates did not act dishonestly or in willful violation of the law or regulation under which such liability, loss, cost or expense arises. This indemnification will not duplicate but may supplement any coverage available under any applicable insurance.
SECTION 5
Shares Reserved and Limitations
5.1  Shares and Other Amounts Subject to the Plan.  The Shares for which Awards may be granted under the Plan will be subject to the following:
(a)    The Shares with respect to which Awards may be made under the Plan will be shares currently authorized but unissued or currently held or subsequently acquired by the Company as treasury shares, including shares purchased in the open market or in private transactions.
(b)    Subject to the provisions of subsection 5.2, the number of Shares which may be issued with respect to Awards under the Plan will be equal to 34 million Shares (the “Share Pool”). Except as otherwise provided herein, any Shares subject to an Award under this Plan which for any reason expires or is forfeited, cancelled, surrendered, or terminated without issuance of Shares will again be available under the Plan. Shares subject to an Award under the Plan may not again be made available for issuance under the Plan if such Shares are: (i) Shares that were subject to a share-settled SAR and were not issued or delivered upon the net settlement of such SAR; (ii) Shares delivered to or withheld by the Company to pay the exercise price or the withholding taxes related to an outstanding Award; and (iii) Shares repurchased on the open market with the proceeds of an Option exercise.
(c)    Substitute Awards will not reduce the Shares that may be issued under the Plan or that may be covered by Awards granted to any one Participant during any calendar year pursuant to subsection 5.1(e) or subsection 5.1(f).
(d)    Except as expressly provided by the terms of this Plan, the issuance by the Company of shares of any class, or securities convertible into shares of any class, for cash or property or for labor or services, either upon direct sale, upon the exercise of rights or warrants to subscribe therefor or upon conversion of shares or obligations of the Company or any Subsidiary convertible into such shares or other securities, will not affect, and no adjustment by reason thereof, will be made with respect to Awards then outstanding hereunder.
(e)    Subject to the following provisions of this subsection 5.1, the maximum number of Shares that may be delivered to Participants and their Beneficiaries with respect to Incentive Stock Options under the Plan will be 15 million; provided, however, that to the extent that shares not delivered must be counted against this limit as a condition of satisfying the rules applicable to Incentives Stock Options, such rules will apply to the limit on Incentive Stock Options granted under the Plan.
(f)    The maximum number of Shares that may be covered by Awards granted to any one Participant during any one calendar-year period pursuant to this Plan will be 1,500,000. For purposes of this subsection 5.1(g), if an Option is in tandem with an SAR, such that the exercise of the Option or SAR with respect to a Share cancels the tandem SAR or Option right, respectively, with respect to such share, the tandem Option and SAR rights with respect to each Share will be counted as covering but one Share for purposes of applying the limitations of this subsection 5.1(f).
5.2  Adjustments to Shares.  In the event there is a change in the capital structure of the Company as a result of any dividend in specie or sub-division of shares, recapitalization, issuance of a new class of shares, merger, consolidation, spin-off or other similar corporate change, or any distribution to holders of Shares other than regular cash dividends, the

Committee shall make an equitable adjustment (in the manner and form determined in the Committee’s sole discretion) in the number of Shares and forms of the Awards authorized to be granted under the Plan, including any limitation imposed on the number of Ordinary Shares with respect to which an Award may be granted in the aggregate under the Plan or to any Participant, and make appropriate adjustments (including exercise price) to any outstanding Awards. No adjustment may have the effect of reducing the exercise price to less than the par value of a Share.

SECTION 6
Options and SARS
6.1  Definitions.
(a)    The grant of an “Option” under the Plan entitles the Participant to purchase Shares at an Exercise Price established by the Committee at the time the Option is granted. Options granted under this Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options, as determined in the discretion of the Committee; provided, however, that Incentive Stock Options may only be granted to employees of the Company or a Subsidiary. An Option will be deemed to be a Non-Qualified Stock Option unless it is specifically designated by the Committee as an Incentive Stock Option.
(b)    A grant of a “stock appreciation right” or “SAR” entitles the Participant to receive, in cash or Shares (as determined in accordance with the terms of the Plan), value equal to the excess of: (i) the Fair Market Value of a specified number of Shares at the time of exercise; over (ii) an Exercise Price established by the Committee at the time of grant.
(c)    An Option may but need not be in tandem with an SAR, and an SAR may but need not be in tandem with an Option (in either case, regardless of whether the original award was granted under this Plan or another plan or arrangement). If an Option is in tandem with an SAR, the Exercise Price of both the Option and SAR will be the same, and the exercise of the Option or SAR with respect to a Share will cancel the corresponding tandem SAR or Option right with respect to such share.
6.2  Eligibility.  The Committee will designate the Participants to whom Options or SARs are to be granted under this Section 6 and will determine the number of Shares subject to each such Option or SAR and the other terms and conditions thereof, not inconsistent with the Plan.
6.3  Limits on Incentive Stock Options.  If the Committee grants Incentive Stock Options, then to the extent that the aggregate fair market value of Shares with respect to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year (under all plans of the Company or a Subsidiary) exceeds $100,000, such Options will be treated as Non-Qualified Stock Options to the extent required by section 422 of the Code.
6.4  Exercise Price.  The “Exercise Price” of an Option or SAR will be established by the Committee at the time the Option or SAR is granted; provided, however, in no event will such price be less than 100% of the Fair Market Value of a Share on such date or, in the case of an Option to subscribe unissued Shares, the par value of a Share on such date.
6.5  Exercise/Vesting.  Except as otherwise expressly provided in the Plan, an Option or SAR granted under the Plan will be exercisable in accordance with the following:
(a)    An Option or SAR granted under this Section 6 will be exercised, in whole or in part (but with respect to whole Shares only) by giving notice to the Company or its designee prior to the Expiration Date applicable thereto. Such notice will specify the number of Shares being exercised and such other information as may be required by the Committee or its designee.
(b)    No Option or SAR may be exercised prior to the date on which it is exercisable (or vested) or after the Expiration Date.
(c)    The terms and conditions relating to exercise and vesting of an Option or SAR will be established by the Committee to the extent not inconsistent with the Plan, and may include, without limitation, conditions relating to completion of a specified period of service, achievement of performance standards prior to exercise or the achievement of Share ownership objectives by the Participant. Notwithstanding the foregoing, in no event will an Option or SAR granted to any employee become exercisable or vested prior to the first anniversary of the date on which it is granted (subject to acceleration of exercisability and vesting, to the extent permitted by, and subject to such terms and conditions determined by the Committee, in the event of the Participant’s death, disability, retirement, or involuntary termination or in connection with a change in control).

6.6  Method of Exercise; Payment of Exercise Price.  A Participant may exercise an Option (i) by giving notice to the Committee or its designee specifying the number of whole Shares to be purchased and accompanying such notice with payment therefor in full or an appropriate undertaking to make such payment, and without any extension of credit, either (A) in cash, (B) except as may be prohibited by applicable law, by delivery (either actual delivery or by attestation procedures established by the Committee or its designee) to the Committee or its designee of previously owned whole Shares having a Fair Market Value, determined as of the date immediately preceding the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) except as may be prohibited by applicable law, authorizing the Committee to withhold whole Shares which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the amount necessary to satisfy such obligation, provided that the Committee determines that such withholding of Shares does not cause the Company to recognize an increased compensation expense under applicable accounting principles, (D) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom the Participant has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C) and (ii) by executing such documents as the Committee may reasonably request. Any fraction of a Share which would be required to pay such purchase price will be disregarded and the remaining amount due will be adjusted through the federal tax withholding mechanism. No Shares will be issued and no certification representing Ordianry Shares will be delivered until the full purchase price therefor and any withholding taxes thereon, as described in Section 9.5, have been paid or an appropriate undertaking to make such payments has been given to the Company.
6.7  Post-Exercise Limitations.  The Committee, in its discretion, may provide in an Award such restrictions on Shares acquired pursuant to the exercise of an Option as it determines to be desirable, including, without limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, Share ownership by the Participant and such other factors as the Committee determines to be appropriate.
6.8  No Repricing.  Except for adjustments pursuant to subsection 5.2 (Adjustments to Shares) or reductions of the Exercise Price approved by the Company’s shareholders, the Exercise Price for any outstanding Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted under the Plan be surrendered to the Company as consideration for the grant of a new Award, cash, or replacement Option or SAR with a lower exercise price. In addition, no repricing of an Option or SAR will be permitted without the approval of the Company’s shareholders if such approval is required under the rules of any stock exchange on which Shares are listed; provided, however, that the foregoing prohibition shall not apply to the actions permitted under subsection 9.2 (Change in Control).
6.9  Expiration Date.  The “Expiration Date” with respect to an Option or SAR means the date established as the Expiration Date by the Committee at the time of the grant; provided, however, that in no event will the Expiration Date of an Option or SAR be later than the date that is ten years after the date on which the Option or SAR is granted (or such shorter period required by law or the rules of any stock exchange).
SECTION 7
Full Value Awards
7.1  Definitions.
(a)    A “Full Value Award” is a grant of one or more Shares or a right to receive one or more Shares in the future (including restricted shares, restricted share units, deferred shares, deferred share units, performance shares and performance share units), with such grant subject to one or more of the following, as determined by the Committee:
(i)    The grant may be in consideration of a Participant’s previously performed services, or surrender of other compensation that may be due.
(ii)    The grant may be contingent on the achievement of performance or other objectives during a specified period.
(iii)    The grant may be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant or achievement of performance or other objectives.

(iv)    The grant may also be subject to such other conditions, restrictions and contingencies, as determined by the Committee, including provisions relating to dividend or dividend equivalent rights and deferred payment or settlement.
7.2  Special Vesting Rules.  If an employee’s right to become vested in a Full Value Award is conditioned on the completion of a specified period of service with the Company or one or more Subsidiaries, without achievement of performance targets or other performance objectives (whether or not related to performance measures) being required as a condition of vesting, and without it being granted in lieu of other compensation, then the required period of service for full vesting will be not less than one year (subject, to the extent provided by, and subject to such terms and conditions determined by, the Committee, to prorated vesting over the course of such one-year period and to acceleration of vesting in the event of the Participant’s death, disability, involuntary termination or otherwise in connection with a change in control, or retirement). The foregoing requirements will not apply to (a) grants made to newly eligible Participants to replace awards from a prior employer and (b) grants that are a form of payment of earned performance awards or other incentive compensation.
7.3  Performance-Based Full Value Awards.  Any Full Value Award granted to any Participant may constitute “Performance-Based Compensation” within the meaning of section 162(m) of the Code and regulations thereunder. If any such award is intended to satisfy the requirements for Performance-Based Compensation under section 162(m) of the Code, then to the extent required by section 162(m), any Full Value Award so designated will be conditioned on the achievement of one or more performance targets as determined by the Committee and the following additional requirements will apply:
(a)    The performance targets established for the performance period established by the Committee will be objective (as that term is described in regulations and other guidance under section 162(m) of the Code), and will be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee will be based on one or more of the Performance Criteria.
(b)    A Participant otherwise entitled to receive a Full Value Award for any performance period will not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this subsection 7.3(b), such exercise of discretion may not result in an increase in the amount of the payment unless such discretion is exercised pursuant to Section 9.2 hereof.
(c)    Except as otherwise provided by the Committee, if a Participant’s Termination Date occurs because of death or disability, the Participant’s Full Value Award will become vested without regard to whether the Full Value Award would be Performance-Based Compensation.
Nothing in this Section 7 will preclude the Committee from granting Full Value Awards under the Plan or the Committee, the Company or any Subsidiary from granting any cash incentive awards outside of the Plan that are not intended to be Performance-Based Compensation; provided, however, that to the extent that the provisions of this Section 7 reflect the requirements applicable to Performance-Based Compensation, such provisions will not apply to the portion of the Award, if any, that is not intended to constitute Performance-Based Compensation.
SECTION 8
Cash Incentive Awards
8.1  Grant of Cash Incentive Awards.  Subject to the terms of the Plan, the Committee may grant to a Participant the right to receive a payment in cash (or, in the discretion of the Committee, in Shares equivalent in value to the cash otherwise payable) at any time and from time to time, as determined by the Committee (“Cash Incentive Award”). Each Cash Incentive Award will have a value as determined by the Committee, and the Committee may subject an Award to Performance Criteria or any other conditions, restrictions or contingencies, as determined in the Committee’s discretion. Payment of earned Cash Incentive Awards will be as determined by the Committee and evidenced in the Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Cash Incentive Awards in the form of cash or Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Award. The determination of the Committee with respect to the time and form of payout of such Awards will be set forth in the Award Agreement pertaining to the grant of the Award.

8.2  Performance-Based Cash Incentive Awards.  Any Cash Incentive Award granted to any Participant may constitute “Performance-Based Compensation” within the meaning of section 162(m) of the Code and regulations thereunder. If any such award is intended to satisfy the requirements for Performance-Based Compensation under section 162(m) of the Code, then to the extent required by section 162(m), any Cash Incentive Award so designated will be conditioned on the achievement of one or more performance targets as determined by the Committee and the following additional requirements will apply:
(a)    The performance targets established for the performance period established by the Committee will be objective (as that term is described in regulations under section 162(m) of the Code), and will be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee will be based on one or more of the Performance Criteria.
(b)    A Participant otherwise entitled to receive a Cash Incentive Award for any performance period will not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this subsection 8.2, such exercise of discretion may not result in an increase in the amount of the payment, unless such discretion is exercised pursuant to Section 9.2 hereof.
(c)    Except as otherwise provided by the Committee, if a Participant’s Termination Date occurs because of death or disability, the Participant’s Cash Incentive Award will become vested without regard to whether the Cash Incentive Award would be Performance-Based Compensation.
(d)    The maximum amount payable pursuant to a Cash Incentive Award to any Participant in any calendar year is $10,000,000.
Nothing in this Section 8 will preclude the Committee from granting Cash Incentive Awards under the Plan or the Committee, the Company or any Subsidiary from granting any cash incentive awards outside of the Plan that are not intended to be Performance-Based Compensation; provided, however, that to the extent that the provisions of this Section 8 reflect the requirements applicable to Performance-Based Compensation, such provisions will not apply to any Cash Incentive Award that is not intended to constitute Performance-Based Compensation. Except as otherwise provided in the applicable program or arrangement, distribution of any Cash Incentive Awards by the Company or a Subsidiary for a performance period ending in a calendar year will be made to the Participant not later than March 15 of the following calendar year.
SECTION 9
Operation and Administration
9.1  Effective Date and Duration.  The Plan will be effective as of March 18, 2011, the date it was adopted by Aon’s Board of Directors (the “Effective Date”). The Plan will be unlimited in duration and, in the event of Plan termination, will remain in effect as long as any Awards awarded under it are outstanding and not fully vested; provided, however, that no new Awards will be made under the Plan on or after the tenth anniversary of the Effective Date.
9.2  Change in Control.  (a) Notwithstanding any provision of this Plan or Award agreement, in the event of a Change in Control, the Board (as constituted prior to such Change in Control) may, in its discretion:
(i)    require that (A) some or all outstanding Options and SARs will immediately become exercisable in full or in part, (B) the vesting period applicable to some or all outstanding restricted shares and restricted share units will lapse in full or in part, (C) the performance period applicable to some or all outstanding Awards will lapse in full or in part, and (D) the performance targets applicable to some or all outstanding Awards will be deemed to be satisfied at the target, maximum or any other level;
(ii)    require that shares of common stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, be substituted for some or all of the Shares subject to an outstanding Award, with an appropriate and equitable adjustment to such Award as determined by the Board in accordance with Section 5.2;

(iii)    require outstanding Awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment in an amount equal to (x) in the case of an Option or a SAR, the number of Shares then subject to the portion of such Option or SAR surrendered, to the extent such Option or SAR is then exercisable or becomes exercisable pursuant to Section 6.5 above, multiplied by the excess, if any, of the Fair Market Value of a Share as of the date of the Change in Control, over the purchase price or base price per Share subject to such Option or SAR, (y) in the case of restricted shares or restricted stock units, the number of Shares then subject to the portion of such Award surrendered, to the extent the vesting period and performance period, if any, on such Award have lapsed or will lapse pursuant to Section 7.2 above and to the extent that the performance targets, if any, have been satisfied or are deemed satisfied pursuant to Sections 7.2 or 7.3 above, multiplied by the Fair Market Value of a Share as of the date of the Change in Control, and (z) in the case of performance shares and performance share units, the Fair Market Value of the Shares then subject to the portion of such Award surrendered, to the extent the performance period applicable to such Award has lapsed or will lapse pursuant to Section 7.3 above and to the extent the performance targets applicable to such Award have been satisfied or are deemed satisfied pursuant to Section 7.3 above; (B) shares of common stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to Clause (B) above; and/or
(iv)    take such other action as the Board deems appropriate, in its sole discretion.
9.3  Special Director Provisions.  Notwithstanding any other provision of the Plan to the contrary, unless otherwise provided by the Board, awards to non-employee directors will be made in accordance with the terms of the Aon Corporation Non-Employee Directors’ Deferred Stock Unit Plan, as amended, and all such awards will be deemed to be made under the Plan.
9.4  Limit on Distribution.  Distribution of Shares or other amounts under the Plan will be subject to the following:
(a)    Notwithstanding any other provision of the Plan, the Company will have no liability to deliver any Shares under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity.
(b)    In the case of a Participant who is subject to Section 16(a) and 16(b) of the Exchange Act, the Committee may, at any time, add such conditions and limitations to any Award to such Participant, or any feature of any such Award, as the Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or 16(b) and the rules and regulations thereunder or to obtain any exemption therefrom.
(c)    To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
9.5  Withholding.  All Awards and other payments under the Plan are subject to withholding of all applicable taxes and employee social security contributions, which withholding obligations may be satisfied, with the consent of the Committee, through the surrender of Shares which the Participant already owns or to which a Participant is otherwise entitled under the Plan; provided, however, with the consent of the Committee, previously-owned Shares that have been held by the Participant or Shares to which the Participant is entitled under the Plan may only be used to satisfy the tax withholding required by applicable law (or such other rates that will not have a negative accounting impact).
9.6  Transferability.  Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution or, to the extent provided by the Committee, pursuant to a qualified domestic relations order (within the meaning of the Code and applicable rules thereunder). To the extent that the Participant who receives an Award under the Plan has the right to exercise such Award, the Award may be exercised during the lifetime of the Participant only by the Participant. Notwithstanding the foregoing provisions of this subsection 9.6, the Committee may permit Awards under the Plan to be transferred to or for the benefit of the Participant’s family (including, without limitation, to a trust or partnership for the benefit of a Participant’s family), subject to such procedures as the Committee may establish. In no event will an Incentive Stock Option be transferable to the extent that such transferability would violate the requirements applicable to such option under section 422 of the Code.
9.7  Notices.  Any notice or document required to be filed with the Committee or the Company under the Plan will be properly filed if delivered or mailed by registered mail, postage prepaid, to the Committee, in care of the Company, or the

Company at its principal executive offices. The Committee may, by advance written notice to affected persons, revise such notice procedure from time to time. Any notice required under the Plan (other than a notice of election) may be waived by the person entitled to notice.
9.8  Form and Time of Elections.  Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, will be in writing filed with the Committee at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee requires.
9.9  Agreement With the Company or Subsidiary.  At the time of an Award to a Participant under the Plan, the Committee may require a Participant to enter into an agreement with the Company or the Subsidiary, as applicable (the “Agreement”), in a form specified by the Committee, agreeing to the terms and conditions of the Plan and to such additional terms and conditions, not inconsistent with the Plan, as the Committee may, in its sole discretion, prescribe.
9.10  Limitation of Implied Rights.
(a)    Neither a Participant nor any other person will, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Company whatsoever, including without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant will have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of the Company. Nothing contained in the Plan constitutes a guarantee by the Company or any Subsidiary that the assets of such companies will be sufficient to pay any benefits to any person.
(b)    The Plan does not constitute a contract of employment or continued service, and selection as a Participant will not give any employee the right to be retained in the employ or service of the Company or a Subsidiary, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan, no Award under the Plan will confer upon the holder thereof any right as a shareholder of the Company prior to the date on which he fulfills all service requirements and other conditions for receipt of such rights and Shares are registered in his name. Without limiting the generality of the foregoing, to the extent permitted or required by law, as determined by the Committee, Participants holding restricted shares granted under the Plan may be granted the right to exercise full voting rights with respect to those restricted shares during the vesting period. A Participant will have no voting rights with respect to any restricted share units granted hereunder.
(c)    During the vesting period, Participants holding restricted shares, restricted share units, performance Shares or performance share units granted hereunder may, if the Committee so determines, be credited with dividends paid with respect to the underlying Shares or dividend equivalents while they are so held in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including, but not limited to, cash or Shares.
9.11  Forfeiture Events.  The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but are not limited to, termination of employment for cause, violation of material Company, Affiliate or Subsidiary policy, breach of noncompetition, non-solicitation or confidentiality provisions that apply to the Participant, a determination that the payment of the Award was based on an incorrect determination that financial or other criteria were met or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates or the Subsidiaries.
9.12  Clawback Policy.  Any compensation earned or paid pursuant to this Plan is subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law or such approval by shareholders as may be required by applicable law.
9.13  Evidence.  Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.

9.14  Action by the Company or Subsidiary.  Any action required or permitted to be taken by the Company or any Subsidiary will be by resolution of its board of directors or by action of one or more members of the board (including a committee of the board) who are duly authorized to act for the board or (except to the extent prohibited by applicable law or the rules of any stock exchange) by a duly authorized officer of the Company.
9.15  Gender and Number.  Where the context allows, words in any gender include any other gender, words in the singular include the plural and the plural includes the singular, and the term “or” also means “and/or” and the term “including” means “including but not limited to”.
9.16  Applicable Law.  The provisions of the Plan will be construed in accordance with the laws of the State of Delaware, without giving effect to choice of law principles.
9.17  Foreign Participants.  Notwithstanding any other provision of the Plan to the contrary, the Committee may grant Awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan. In furtherance of such purposes, the Committee may make such modifications, amendments, procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or a Subsidiary operates or has employees.
9.18  Construction.  If any provision of the Plan or any Award agreement relating to an award intended to satisfy the requirements for Performance-Based Compensation under section 162(m) of the Code does not comply or is inconsistent with such requirements of section 162(m) of the Code, such provision will be construed or deemed amended to the extent necessary to conform to such requirements.
SECTION 10
Amendment and Termination
The Board may, at any time, amend or terminate the Plan, and the Board or the Committee may amend any Agreement, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living and if applicable, the Beneficiary), adversely affect the rights of any Participant or, if applicable, Beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board (or the Committee, if applicable); and further provided that adjustments pursuant to subsection 5.2 will not be subject to the foregoing limitations of this Section 10; and further provided no amendment will be made to the provisions of subsection 6.8 (relating to Option and SAR repricing) without the approval of the Company’s shareholders; and provided further, that no other amendment will be made to the Plan without the approval of the Company’s shareholders if the approval of the Company’s shareholders of such amendment is required by law or the rules of any stock exchange on which Shares are listed.
SECTION 11
Section 409A of the Code
11.1  Intent to Comply with Section 409A of the Code.  Notwithstanding anything in this Plan to the contrary (for purposes of this section, “Plan” includes all Awards under the Plan), the Plan will be construed, administered or deemed amended as necessary to comply with the requirements of Section 409A of the Code to avoid taxation under Section 409A(a)(1) of the Code to the extent subject to Section 409A of the Code. The Committee, in its sole discretion, will determine the requirements of Section 409A of the Code applicable to the Plan and will interpret the terms of the Plan consistently therewith. Under no circumstances, however, will the Company or any Subsidiary or Affiliate or any of its employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including any taxes, penalties or interest imposed under Section 409A of the Code. Any payments to Award holders pursuant to this Plan are also intended to be exempt from Section 409A of the Code to the maximum extent possible, first, to the extent such payments are scheduled to be paid and are in fact paid during the short-term deferral period, as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and then, if applicable, under the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii), and for this purpose each payment will be considered a separate payment such that the determination of whether a payment qualifies as a short-term deferral will be made without regard to whether other payments so qualify and the determination of whether a payment qualifies under the separation pay exemption will be made without regard to any payments which qualify as short-term deferrals. To the extent any amounts under this Plan are payable by reference to an Award holder’s “termination of employment,” such term will be deemed to refer to the Award holder’s “separation from service,” within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Plan, if an Award holder is a “specified employee,” as defined in Section 409A of the Code, as of the date of the Award holder’s separation from service, then to the extent any amount payable under this Plan

(i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the Award holder’s separation from service and (iii) under the terms of this Plan would be payable prior to the six-month anniversary of the Award holder’s separation from service, such payment will be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service or (b) the date of the Award holder’s death.
11.2  Prohibition on Acceleration of Payments.  The time or schedule of any settlement or amount scheduled to be paid pursuant to the terms of the Plan or any Agreement may not be accelerated except as otherwise permitted under Code Section 409A and the guidance and Treasury regulations issued thereunder.

Exhibit 10.2

Greg Case
Aon Service Corporation
United States (U.S.)

July 1, 2014

Relocation Assignment Extension

Dear Greg -

This letter documents the extension of your international assignment for an additional twenty-four (24) months. For the duration of your ongoing assignment, you will continue to work exclusively for the benefit of Aon plc. Your current role as President and Chief Executive Officer, remains unchanged. As an executive, Aon plc may require you to resign from any directorship or other corporate office in Aon plc or any affiliate of Aon plc at any time without compensation and/or take up any other directorship or corporate office for Aon plc instead of or in addition to such directorship or other office without any additional remuneration.
With the exception of the changes outlined below, which amend and supplement the terms of the attached original assignment letter dated January 12, 2012 (Attachment), the terms and conditions of your assignment remain unchanged and in full force.

1)	Effective July 1, 2014, your annual cost of living allowance (COLA) is USD 97,500. This reflects a foreign exchange rate of USD 1.70 to GBP 1.00.	

2)	Your annual base housing allowance will increase by 5% annually effective July 1, 2014 to USD 382,013 and USD 401,113 effective July 1, 2015.	

3)	The exchange rates for the COLA and housing allowance will be reviewed quarterly and adjusted accordingly to reflect foreign exchange variation. I will meet with you to review the quarterly adjustment methodology.	
During your assignment, all components of your remuneration and benefits package are provided in consideration of your work on behalf of Aon plc and any corporate office held for such entity.
If you agree to the terms of this extension please sign the declaration below and return to me. Please contact me or your manager with any questions.
Sincerely -

/s/ Gregory J. Besio
Gregory J. Besio
EVP and Chief Human Resources Officer

I acknowledge receipt of this letter of understanding and accept the terms and conditions contained herein.

	
			
/s/ Greg Case	 	July 1, 2014	
Greg Case	 	Date	

Exhibit 10.3

Christa Davies
Aon Service Corporation
United States (U.S.)

July 1, 2014

Relocation Assignment Extension

Dear Christa -

This letter documents the extension of your international assignment for an additional twenty-four (24) months. For the duration of your ongoing assignment, you will continue to work exclusively for the benefit of Aon plc. Your current reporting relationship to the Chief Executive Officer of Aon plc and role as Chief Financial Officer, remain unchanged. As an executive, Aon plc may require you to resign from any directorship or other corporate office in Aon plc or any affiliate of Aon plc at any time without compensation and/or take up any other directorship or corporate office for Aon plc instead of or in addition to such directorship or other office without any additional remuneration.
With the exception of the changes outlined below, which amend and supplement the terms of the attached original assignment letter dated January 12, 2012 (Attachment), the terms and conditions of your assignment remain unchanged and in full force.

1)	Effective July 1, 2014, your annual cost of living allowance (COLA) is USD 97,500. This reflects a foreign exchange rate of USD 1.70 to GBP 1.00.	
		
2)	Your annual base housing allowance will increase by 5% annually effective July 1, 2014 to USD 286,510 and USD 300,835 effective July 1, 2015.	
		
3)	School invoices for your eligible children’s tuition and fees will be paid directly by our relocation vendor. Lisa Rodriguez will reach out to you to get the details if they are not already on file.	
		
4)	Your Home Leave and Car allowances remain unchanged.	
		
5)	Effective July 1, 2014, your COLA, housing, school tuition, home leave and car allowances will be grossed up for applicable U.S. taxes. All allowances will continue to be equalized for tax differential according to Aon’s tax equalization policy as described in your original assignment letter.	
		
6)	The exchange rates for the COLA and housing allowance will be reviewed quarterly and adjusted accordingly to reflect foreign exchange variation. I will meet with you to review the quarterly adjustment methodology.	
During your assignment, all components of your remuneration and benefits package are provided in consideration of your work on behalf of Aon plc and any corporate office held for such entity.
If you agree to the terms of this extension please sign the declaration below and return to me. Please contact me or your manager with any questions.
Sincerely -

/s/ Gregory J. Besio
Gregory J. Besio
EVP and Chief Human Resources Officer

I acknowledge receipt of this letter of understanding and accept the terms and conditions contained herein.

	
			
/s/ Christa Davies	 	June 24, 2014	
Christa Davies	 	Date	

Exhibit 10.4

Steve McGill
Aon Risk Solutions
United States (U.S.)

July 1, 2014

Relocation Assignment Extension

Dear Steve -

This letter documents the extension of your international assignment for an additional twenty-four (24) months. For the duration of your ongoing assignment, you will continue to work exclusively for the benefit of Aon plc. Your current reporting relationship to the Chief Executive Officer of Aon plc and role as Group President of Aon plc and CEO of Aon Risk remain unchanged. As an executive, Aon plc may require you to resign from any directorship or other corporate office in Aon plc or any affiliate of Aon plc at any time without compensation and/or take up any other directorship or corporate office for Aon plc instead of or in addition to such directorship or other office without any additional remuneration.
With the exception of the changes outlined below, which amend and supplement the terms of the attached original assignment letter dated January 12, 2012 (Attachment), the terms and conditions of your assignment remain unchanged and in full force.

1)	Effective July 1, 2014, your annual cost of living allowance (COLA) is USD 97,500. This reflects a foreign exchange rate of USD 1.70 to GBP 1.00	

2)	Your car allowance remains unchanged.	

3)	Effective July 1, 2014, your COLA and car allowances will be grossed up for applicable U.S. taxes. All allowances will continue to be equalized for tax differential according to Aon’s tax equalization policy as described in your original assignment letter.	

4)	The exchange rates for the COLA will be reviewed quarterly and adjusted accordingly to reflect foreign exchange variation. I will meet with you to review the quarterly adjustment methodology.	
During your assignment, all components of your remuneration and benefits package are provided in consideration of your work on behalf of Aon plc and any corporate office held for such entity.

If you agree to the terms of this extension please sign the declaration below and return to me. Please contact me or your manager with any questions.

Sincerely -

/s/ Gregory J. Besio
Gregory J. Besio
EVP and Chief Human Resources Officer

I acknowledge receipt of this letter of understanding and accept the terms and conditions contained herein.

	
			
/s/ Steve McGill	 	July 1, 2014	
Steve McGill	 	Date	

Exhibit 12.1
Aon plc and Consolidated Subsidiaries
Combined With Unconsolidated Subsidiaries
Computation of Ratio of Earnings to Fixed Charges

	
																									
 	 	Six Months Ended June 30,	 	Years Ended December 31,	
(millions except ratio)	 	2014	 	2013	 	2013	 	2012	 	2011	 	2010	
Income from continuing operations before income taxes and noncontrolling interests (1)	 	$	794		 	$	710		 	1,538		 	$	1,380		 	$	1,388		 	$	1,059		
Less: Equity in earnings on less than 50% owned entities	 	6		 	6		 	20		 	13		 	7		 	10		
Add back fixed charges:	 	 	 	 	 	 	 	 	 	 	 	 	
     Interest on indebtedness	 	123		 	100		 	210		 	228		 	245		 	182		
     Interest on uncertain tax positions	 	—		 	(1	)	 	5		 	5		 	—		 	(1	)	
     Portion of rents representative of interest factor	 	26		 	23		 	52		 	42		 	55		 	48		
          Income as adjusted	 	$	937		 	$	826		 	$	1,785		 	$	1,642		 	$	1,681		 	$	1,278		
Fixed charges:	 	 	 	 	 	 	 	 	 	 	 	 	
     Interest on indebtedness	 	$	123		 	$	100		 	$	210		 	$	228		 	$	245		 	$	182		
     Interest on uncertain tax positions	 	—		 	(1	)	 	5		 	5		 	—		 	(1	)	
     Portion of rents representative of interest factor	 	26		 	23		 	52		 	42		 	55		 	48		
          Total fixed charges	 	$	149		 	$	122		 	$	267		 	$	275		 	$	300		 	$	229		
Ratio of earnings to fixed charges	 	6.3		 	6.8		 	6.7		 	6.0		 	5.6			5.6		

(1) For the years ended December 31, 2012, and 2011 amounts related to discontinued operations have been included in Other income to conform to amounts included in the Consolidated Financial Statements. These amounts in the years ended December 31, 2012 and 2011, which were historically included in Income (loss) from discontinued operations, have been reclassified to conform with current presentation. The amounts reclassified were $1 million loss and $4 million income for the years ended December 31, 2012 and 2011, respectively, from Income (loss) from discontinued operations to Other income. For the year ended December 31, 2010, amounts related to discontinued operations remain in Income (loss) from discontinued operations as they are more meaningful to the presentation of continuing operations in that year.

Exhibit 31.1
CERTIFICATIONS
I, Gregory C. Case, the Chief Executive Officer of Aon plc, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Aon plc;	

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

			
Date:	July 25, 2014	/s/ GREGORY C. CASE	
 	 	Gregory C. Case
Chief Executive Officer	

Exhibit 31.2
CERTIFICATIONS
I, Christa Davies, the Chief Financial Officer of Aon plc, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Aon plc;	

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

	
			
Date:	July 25, 2014	/s/ CHRISTA DAVIES	
 	 	Christa Davies
Chief Financial Officer	

Exhibit 32.1
Certification Pursuant to Section 1350 of Chapter 63
of Title 18 of the United States Code
I, Gregory C. Case, the Chief Executive Officer of Aon plc (the “ Company ”), certify that (i) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2014 (the “ Report ”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

		
 	/s/ GREGORY C. CASE	
 	Gregory C. Case
Chief Executive Officer	
 	July 25, 2014	

Exhibit 32.2
Certification Pursuant to Section 1350 of Chapter 63
of Title 18 of the United States Code
I, Christa Davies, the Chief Financial Officer of Aon plc (the “ Company ”), certify that (i) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2014 (the “ Report ”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

		
 	/s/ CHRISTA DAVIES	
 	Christa Davies
Chief Financial Officer	
 	July 25, 2014