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, 2016
 
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.)	

	
			
122 LEADENHALL STREET, LONDON, ENGLAND	 	EC3V 4AN	
(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 July 21, 2016 :  265.6 million

	

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, 2016	 	June 30, 2015	June 30, 2016	 	June 30, 2015	
Revenue	 	 		 	 		 	 	 	
Commissions, fees and other	 	$	2,761		 	$	2,800		$	5,548		 	$	5,642		
Fiduciary investment income	 	5		 	5		10		 	10		
Total revenue	 	2,766		 	2,805		5,558		 	5,652		
Expenses	 	 		 	 		 	 	 	
Compensation and benefits	 	1,688		 	1,653		3,337		 	3,336		
Other general expenses	 	673		 	875		1,366		 	1,598		
Total operating expenses	 	2,361		 	2,528		4,703		 	4,934		
Operating income	 	405		 	277		855		 	718		
Interest income	 	3		 	4		5		 	7		
Interest expense	 	(73	)	 	(68	)	(142	)	 	(133	)	
Other income	 	—		 	1		18		 	43		
Income before income taxes	 	335		 	214		736		 	635		
Income taxes	 	55		 	26		129		 	106		
Net income	 	280		 	188		607		 	529		
Less: Net income attributable to noncontrolling interests	 	8		 	10		20		 	23		
Net income attributable to Aon shareholders	 	$	272		 	$	178		$	587		 	$	506		
 	 	 	 	 	 	 	 	
Basic net income per share attributable to Aon shareholders	 	$	1.01		 	$	0.63		$	2.17		 	$	1.78		
Diluted net income per share attributable to Aon shareholders	 	$	1.01		 	$	0.62		$	2.16		 	$	1.76		
Cash dividends per share paid on ordinary shares	 	$	0.33		 	$	0.30		$	0.63		 	$	0.55		
Weighted average ordinary shares outstanding - basic	 	268.0		 	284.5		269.9		 	284.3		
Weighted average ordinary shares outstanding - diluted	 	269.8		 	286.7		271.7		 	286.9		
 
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, 2016	 	June 30, 2015	June 30, 2016	 	June 30, 2015	
Net income	 	$	280		 	$	188		$	607		 	$	529		
Less: Net income attributable to noncontrolling interests	 	8		 	10		20		 	23		
Net income attributable to Aon shareholders	 	$	272		 	$	178		587		 	506		
Other comprehensive (loss) income, net of tax:	 	 		 	 		 		 	 		
Change in fair value of financial instruments	 	(4	)	 	(6	)	(11	)	 	(1	)	
Foreign currency translation adjustments	 	(59	)	 	175		(138	)	 	(147	)	
Post-retirement benefit obligation	 	51		 	21		(150	)	 	44		
Total other comprehensive (loss) income	 	(12	)	 	190		(299	)	 	(104	)	
Less: Other comprehensive loss attributable to noncontrolling interests	 	—		 	(1	)	—		 	(2	)	
Total other comprehensive (loss) income attributable to Aon shareholders	 	(12	)	 	191		(299	)	 	(102	)	
Comprehensive income attributable to Aon shareholders	 	$	260		 	$	369		$	288		 	$	404		
 
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,
2016	 	December 31,
2015	
 	 	(Unaudited)	 	 	
ASSETS	 	 		 	 		
CURRENT ASSETS	 	 		 	 		
Cash and cash equivalents	 	$	438		 	$	384		
Short-term investments	 	251		 	356		
Receivables, net	 	2,516		 	2,734		
Fiduciary assets	 	10,201		 	9,932		
Other current assets	 	395		 	329		
Total Current Assets	 	13,801		 	13,735		
Goodwill	 	8,473		 	8,448		
Intangible assets, net	 	2,107		 	2,180		
Fixed assets, net	 	751		 	765		
Non-current deferred tax assets	 	265		 	234		
Prepaid pension	 	720		 	1,033		
Other non-current assets	 	576		 	592		
TOTAL ASSETS	 	$	26,693		 	$	26,987		
 	 	 	 	 	
LIABILITIES AND EQUITY	 	 		 	 		
LIABILITIES	 	 		 	 		
CURRENT LIABILITIES	 	 		 	 		
Accounts payable and accrued liabilities	 	$	1,373		 	$	1,772		
Short-term debt and current portion of long-term debt	 	251		 	562		
Fiduciary liabilities	 	10,201		 	9,932		
Other current liabilities	 	872		 	819		
Total Current Liabilities	 	12,697		 	13,085		
Long-term debt	 	5,907		 	5,138		
Non-current deferred tax liabilities	 	39		 	37		
Pension, other post-retirement and post-employment liabilities	 	1,722		 	1,795		
Other non-current liabilities	 	767		 	769		
TOTAL LIABILITIES	 	21,132		 	20,824		
 	 	 	 	 	
EQUITY	 	 		 	 		
Ordinary shares - $0.01 nominal value
Authorized: 750 shares (issued: 2016 - 265.8; 2015 - 269.8)	 	3		 	3		
Additional paid-in capital	 	5,434		 	5,409		
Retained earnings	 	3,784		 	4,117		
Accumulated other comprehensive loss	 	(3,722	)	 	(3,423	)	
TOTAL AON SHAREHOLDERS' EQUITY	 	5,499		 	6,106		
Noncontrolling interests	 	62		 	57		
TOTAL EQUITY	 	5,561		 	6,163		
TOTAL LIABILITIES AND EQUITY	 	$	26,693		 	$	26,987		
 
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, 2015	 	269.8		 	$	5,412		 	$	4,117		 	$	(3,423	)	 	$	57		 	$	6,163		
Net income	 	—		 	—		 	587		 	—		 	20		 	607		
Shares issued - employee benefit plans	 	0.3		 	18		 	(1	)	 	—		 	—		 	17		
Shares issued - employee compensation	 	3.4		 	(163	)	 	—		 	—		 	—		 	(163	)	
Shares purchased	 	(7.7	)	 	—		 	(750	)	 	—		 	—		 	(750	)	
Tax benefit - employee benefit plans	 	—		 	58		 	—		 	—		 	—		 	58		
Share-based compensation expense	 	—		 	155		 	—		 	—		 	—		 	155		
Dividends to shareholders	 	—		 	—		 	(169	)	 	—		 	—		 	(169	)	
Net change in fair value of financial instruments	 	—		 	—		 	—		 	(11	)	 	—		 	(11	)	
Net foreign currency translation adjustments	 	—		 	—		 	—		 	(138	)	 	—		 	(138	)	
Net post-retirement benefit obligation	 	—		 	—		 	—		 	(150	)	 	—		 	(150	)	
Purchases of shares from noncontrolling interests	 	—		 	(43	)	 	—		 	—		 	(4	)	 	(47	)	
Dividends paid to noncontrolling interests on subsidiary common stock	 	—		 	—		 	—		 	—		 	(11	)	 	(11	)	
Balance at June 30, 2016	 	265.8		 	$	5,437		 	$	3,784		 	$	(3,722	)	 	$	62		 	$	5,561		
 
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, 2016	 	June 30, 2015	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 		 	 		
Net income	 	$	607		 	$	529		
Adjustments to reconcile net income to cash provided by operating activities:	 	 		 	 		
Gain from sales of businesses and investments, net	 	(41	)	 	(20	)	
Depreciation of fixed assets	 	114		 	113		
Amortization of intangible assets	 	135		 	159		
Share-based compensation expense	 	155		 	164		
Deferred income taxes	 	15		 	16		
Change in assets and liabilities:	 	 		 	 		
Fiduciary receivables	 	96		 	(116	)	
Short-term investments — funds held on behalf of clients	 	(449	)	 	52		
Fiduciary liabilities	 	353		 	64		
Receivables, net	 	175		 	59		
Accounts payable and accrued liabilities	 	(389	)	 	(387	)	
Current income taxes	 	(35	)	 	(152	)	
Pension, other post-retirement and other post-employment liabilities	 	(28	)	 	(122	)	
Other assets and liabilities	 	56		 	219		
CASH PROVIDED BY OPERATING ACTIVITIES	 	764		 	578		
 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 		 	 		
Proceeds from investments	 	23		 	10		
Purchases of investments	 	(29	)	 	(1	)	
Net (purchases) sales of short-term investments — non-fiduciary	 	106		 	(97	)	
Acquisition of businesses, net of cash acquired	 	(183	)	 	(23	)	
Proceeds from sale of businesses	 	103		 	52		
Capital expenditures	 	(104	)	 	(142	)	
CASH USED FOR INVESTING ACTIVITIES	 	(84	)	 	(201	)	
 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 		 	 		
Share repurchase	 	(750	)	 	(550	)	
Issuance of shares for employee benefit plans	 	(87	)	 	(161	)	
Issuance of debt	 	2,056		 	2,445		
Repayment of debt	 	(1,632	)	 	(1,896	)	
Cash dividends to shareholders	 	(169	)	 	(156	)	
Noncontrolling interests and other financing activities	 	(62	)	 	(23	)	
CASH USED FOR FINANCING ACTIVITIES	 	(644	)	 	(341	)	
 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	 	18		 	(43	)	
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	 	54		 	(7	)	
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	 	384		 	374		
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	438		 	$	367		
 	 	 	 	 	
Supplemental disclosures:	 	 		 	 		
Interest paid	 	$	144		 	$	128		
Income taxes paid, net of refunds	 	$	89		 	$	118		
 
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 of its controlled subsidiaries ("Aon" or the "Company").  All intercompany accounts and transactions have been eliminated.  The Condensed Consolidated Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company's consolidated financial position, results of operations and cash flows for all periods presented.
 
Certain information and disclosures normally included in the 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, 2015 .  The results for the three and six months ended June 30, 2016 are not necessarily indicative of operating results that may be expected for the full year ending December 31, 2016 .
 
Reclassification

Certain amounts in prior years' Condensed Consolidated Financial Statements and related notes have been reclassified to conform to the 2016 presentation.

Upon vesting of certain share-based payment arrangements, employees may elect to use a portion of the shares to satisfy tax withholding requirements, in which case Aon makes a payment to the taxing authority on the employee’s behalf and remits the remaining shares to the employee.   Prior to the fourth quarter of 2015, the Company presented amounts due to taxing authorities within Cash Flows From Operating Activities in the Condensed Consolidated Statements of Cash Flows.  These amounts are now included in “Issuance of shares for employee benefit plans” within Cash Flows From Financing Activities.  The Company believes this presentation provides greater clarity into the operating and financing activities of the Company as the substance and accounting for these transactions is that of a share repurchase.  It also aligns the Company’s presentation to be consistent with industry practice and share-based compensation guidance issued by the Financial Accounting Standards Board (the "FASB") in March 2016.  The amount reported in Issuance of shares for employee benefit plans was $213 million for the six months ended June 30, 2015 .  This amount, which was reclassified from Accounts payable and accrued liabilities and Other assets and liabilities, was $150 million and $63 million , respectively, for the six months ended June 30, 2015.

Changes to the presentation of the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 were made related to certain line items within financing activities.  In 2016, Purchases of shares from noncontrolling interests and Dividends paid to noncontrolling interests have been aggregated in a new line item titled “Noncontrolling interests and other financing activities” within financing activities. The balances held in these line items for the six months ended June 30, 2015 was $(5) million and $(18) million , respectively. Additionally, Restructuring reserves have been retrospectively reclassified to Other asset and liabilities. The balance held in Restructuring reserves for the six months ended June 30, 2015 , was $(19) million .

Use of Estimates
 
The preparation of the accompanying Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Management believes its estimates to be reasonable given the current facts available.  Aon adjusts such estimates and assumptions when facts and circumstances dictate.  Illiquid credit markets, volatile equity markets, and foreign currency exchange rate movements increase the uncertainty inherent in such estimates and assumptions.  As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.  Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the financial statements in future periods.

7

2.  Accounting Principles and Practices
 
New Accounting Pronouncements

Credit Losses
In June 2016, the FASB issued new accounting guidance on the measurement of credit losses on financial instruments. The new guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The guidance is effective for Aon in the first quarter of 2020 and early adoption is permitted beginning in the first quarter of 2019. Aon is currently evaluating the impact that the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption.
Share-based Compensation

In March 2016, the FASB issued new accounting guidance on several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  The new guidance requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement and treated as discrete items in the reporting period.  Further, excess tax benefits are required to be classified along with other income tax cash flows as an operating activity.  Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. The guidance is effective for Aon in the first quarter of 2017 and early adoption is permitted.  Aon is currently evaluating the impact that the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption.

Leases

In February 2016, the FASB issued new accounting guidance on leases, which requires lessees to recognize assets and liabilities for most leases. Under the new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from currently effective U.S. GAAP. The new standard will be effective for the Company in the first quarter of 2019, with early application permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. Aon is currently evaluating the impact the standard will have on its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption.
Financial Assets and Liabilities

In January 2016, the FASB issued new accounting guidance on recognition and measurement of financial assets and financial liabilities. The amendments in the new guidance make targeted improvements, which include the requirement to measure equity investments with readily determinable fair values at fair value through net income, simplification of the impairment assessment for equity investments without readily determinable fair values, adjustments to existing and additional disclosure requirements, and additional tax considerations. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the guidance. The guidance is effective for the Company in the first quarter of 2018 and early adoption is permitted. Aon is currently evaluating the impact that the standard will have on the its Condensed Consolidated Financial Statements, as well as the method of transition and period of adoption.

8

Presentation of Deferred Taxes

In November 2015, the FASB issued new accounting guidance on the balance sheet presentation of deferred taxes, which requires that deferred tax liabilities and assets be classified as non-current. Aon early adopted this guidance in the second quarter of 2016 and retrospectively applied its requirements to all periods presented. For the year ended December 31, 2015, Aon reclassified its current deferred tax positions to non-current and netted the new balances by jurisdiction, which increased Non-current deferred tax assets by $92 million and decreased Non-current deferred tax liabilities by $139 million on the Condensed Consolidated Statement of Financial Position.

Debt Issuance Costs

In April 2015, the FASB issued new accounting guidance on the presentation of debt issuance costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This guidance will also be applied to Aon's debt issuance costs related to its line-of-credit arrangements. This guidance was effective for Aon in the first quarter of 2016, which required retrospective application to prior year comparable periods. For the year ended December 31, 2015, Aon reclassified $4 million from Other current assets and $33 million from Other non-current assets to Long-term debt on the Condensed Consolidated Statement of Financial Position.

Consolidations

In February 2015, the FASB issued new accounting guidance on consolidations, which will eliminate the deferral granted to investment companies from applying the variable interest entities guidance and make targeted amendments to the current consolidation guidance. The new guidance applies to all entities involved with limited partnerships or similar entities and requires re-evaluation of these entities under the revised guidance, which could change previous consolidation conclusions. The guidance was effective for the Company in the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Revenue Recognition

In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers, which, when effective, 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 the Company in the first quarter of 2018 and early adoption is permitted beginning the first quarter of 2017. 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-2018 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. Aon is currently evaluating the impact that the standard will have on the Company's Condensed Consolidated Financial Statements. The Company is also determining the appropriate method of transition to the guidance, but expects to adopt upon the effective date of January 1, 2018.

3.  Cash and Cash Equivalents and Short-term Investments
 
Cash and cash equivalents include cash balances and all highly liquid debt instruments 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, respectively, which approximates fair value.
 
At June 30, 2016 , Cash and cash equivalents and Short-term investments were $689 million compared to $740 million at December 31, 2015 . Of the total balances, $87 million and $105 million was restricted as to its use at June 30, 2016 and December 31, 2015 , respectively. Included within the June 30, 2016 and December 31, 2015 balances, respectively, were £43.4 million ( $59.4 million at June 30, 2016 exchange rates) and £43.3 million ( $64.6 million at December 31, 2015 exchange rates) of operating funds required to be held by the Company in the U.K. by the Financial Conduct Authority, a U.K.-based regulator, which were included in Short-term investments.

9

4.  Other Financial Data
 
Condensed Consolidated Statements of Income Information

Other Income

Other income consists of the following (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
Foreign currency remeasurement (loss) gain	$	1		 	$	(7	)	 	$	(16	)	 	$	17		
Gain on disposal of business	6		 	1		 	41		 	20		
Equity earnings	1		 	4		 	3		 	6		
Income (loss) on financial instruments	(8	)	 	3		 	(10	)	 	—		
Total	$	—		 	$	1		 	$	18		 	$	43		

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,	
 	2016	 	2015	 	2016	 	2015	
Balance at beginning of period	$	62		 	$	70		 	$	58		 	$	74		
Provision charged to Other general expenses	6		 	3		 	12		 	11		
Accounts written off, net of recoveries	(4	)	 	(13	)	 	(7	)	 	(22	)	
Foreign currency translation	—		 	5		 	1		 	2		
Balance at end of period	$	64		 	$	65		 	$	64		 	$	65		

Other Current Assets

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

								
 	June 30, 2016	 	December 31, 2015	
Taxes receivable	$	146		 	$	94		
Prepaid expenses	152		 	130		
Deferred project costs	94		 	92		
Other	3		 	13		
Total	$	395		 	$	329		

10

Other Non-Current Assets

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

								
 	June 30, 2016	 	December 31, 2015	
Deferred project costs	$	200		 	$	210		
Investments	127		 	135		
Taxes receivable	81		 	82		
Other	168		 	165		
Total	$	576		 	$	592		
 
Other Current Liabilities

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

								
 	June 30, 2016	 	December 31, 2015	
Deferred revenue	$	433		 	$	394		
Taxes payable	67		 	94		
Other	372		 	331		
Total	$	872		 	$	819		

Other Non-Current Liabilities

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

								
 	June 30, 2016	 	December 31, 2015	
Taxes payable	$	260		 	$	223		
Deferred revenue	151		 	159		
Leases	172		 	166		
Compensation and benefits	59		 	59		
Other	125		 	162		
Total	$	767		 	$	769		

11

5.  Acquisitions and Dispositions of Businesses
 
Acquisitions
 
The number of acquisitions completed within each reportable segment is as follows:

								
 	Three months ended June 30,	Six Months Ended June 30,	
 	2016	 	2015	2016	 	2015	
Risk Solutions	2		 	1	2	 	2	
HR Solutions	—		 	1	2	 	2	
Total	2		 	2	4	 	4	

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,	
 	 	2016	 	2015	
Consideration	 	$	190		 	$	23		
Intangible assets:	 	 		 	 		
Goodwill	 	$	110		 	$	16		
Other intangible assets	 	82		 	1		
     Total	 	$	192		 	$	17		
 
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.

Dispositions
 
The number of dispositions completed within each reportable segment is as follows:

											
 	Three months ended June 30,	Six Months Ended June 30,	
 	2016	 	2015	2016	 	2015	
Risk Solutions	2		 	—		3		 	1		
HR Solutions	—		 	—		1		 	1		
Total	2		 	—		4		 	2		
Total pretax gains, net of losses, recognized were $6 million and $1 million , respectively, for the three months ended June 30, 2016 and June 30, 2015 . Total pretax gains, net of losses, recognized were $41 million and $20 million , respectively for the six months ended June 30, 2016 and June 30, 2015 . Gains and losses recognized as a result of a disposition are included in Other income in the Condensed Consolidated Statements of Income.

12

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, 2016 are as follows (in millions):

												
 	Risk
Solutions	 	HR
Solutions	 	Total	
Balance as of January 1, 2016	$	5,593		 	$	2,855		 	$	8,448		
Goodwill related to current year acquisitions	106		 	4		 	110		
Goodwill related to disposals	(7	)	 	(26	)	 	(33	)	
Goodwill related to prior year acquisitions	2		 	—		 	2		
Foreign currency translation	(40	)	 	(14	)	 	(54	)	
Balance as of June 30, 2016	$	5,654		 	$	2,819		 	$	8,473		

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

																								
 	June 30, 2016	 	December 31, 2015	
 	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	2,923		 	1,899		 	1,024		 	2,886		 	1,809		 	1,077		
Technology and other	542		 	478		 	64		 	541		 	457		 	84		
 Total	$	4,484		 	$	2,377		 	$	2,107		 	$	4,446		 	$	2,266		 	$	2,180		

Amortization expense from finite lived intangible assets was $68 million and $135 million , respectively, for the three and six months ended June 30, 2016 . Amortization expense from finite lived intangible assets was $79 million and $159 million , respectively, for the three and six months ended June 30, 2015 .
 
The estimated future amortization for finite lived intangible assets as of June 30, 2016 is as follows (in millions):

												
 	Risk Solutions	 	HR Solutions	 	Total	
Remainder of 2016	$	44		 	$	103		 	$	147		
2017	81		 	147		 	228		
2018	73		 	99		 	172		
2019	66		 	79		 	145		
2020	58		 	65		 	123		
Thereafter	157		 	116		 	273		
  Total	$	479		 	$	609		 	$	1,088		
 
7.  Debt

Revolving Credit Facilities

As of June 30, 2016 , Aon plc had two primary committed credit facilities outstanding: its $400 million U.S. credit facility expiring in March 2017 (the "2017 Facility") and its $900 million multi-currency U.S. credit facility expiring in February 2021 (the "2021 Facility").

Each of these facilities includes customary representations, warranties and covenants, including financial covenants that require Aon plc to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At June 30, 2016 , Aon plc did not have borrowings under either the 2017 Facility or the 2021 Facility, and was in compliance with all covenants contained therein during the six months ended June 30, 2016 .

13

Commercial Paper

Aon Corporation, a wholly-owned subsidiary of Aon plc, has established a U.S. commercial paper program, which provides for commercial paper to be issued in an aggregate principal amount of up to $900 million , and a European multi-currency commercial paper program, which provides for commercial paper to be issued in an aggregate principal amount of up to €300 million . The U.S. commercial paper program is fully and unconditionally guaranteed by Aon plc and the European commercial paper program is fully and unconditionally guaranteed by Aon Corporation. In the aggregate, the Company had $241 million and $50 million of commercial paper outstanding at June 30, 2016 and December 31, 2015 , respectively, which is included in Short-term debt and current portion of long-term debt in the Company's Condensed Consolidated Statements of Financial Position. The weighted average commercial paper outstanding for the three and six months ended June 30, 2016 , respectively, was $304 million and $240 million . The weighted average interest rate of the commercial paper outstanding for the three and six months ended June 30, 2016 was 0.59% and 0.41% , respectively.

Notes

On March 1, 2016, Aon plc issued $750 million of 3.875% Senior Notes due December 2025. The Company used the proceeds of the issuance for general corporate purposes.

On May 27, 2016, $500 million of 3.125% Senior Notes issued by Aon Corporation matured and were repaid in full.

8.  Income Taxes
 
The effective tax rate on net income was 16.4% and 17.5% for the three and six months ended June 30, 2016 , respectively. The effective tax rate on net income was 12.2% and 16.8% for the three and six months ended June 30, 2015, respectively. The effective tax rate in the second quarter of 2016 was impacted by changes in the geographical distribution of income and certain discrete items. The effective tax rate in the second quarter of 2015 was impacted by the reduction in U.S. income resulting from expenses relating to legacy legal settlements.

9.  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 (the "2012 Share Repurchase Program"). In November 2014, the Company's Board of Directors authorized a new $5.0 billion share repurchase program in addition to the existing program (the "2014 Share Repurchase Program" and, together, the "Repurchase Programs"). Under each 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, 2016 , the Company did not repurchase shares under the Repurchase Programs. During the six months ended June 30, 2016 , the Company repurchased 7.7 million shares at an average price per share of $97.92 for a total cost of approximately $750 million under the Repurchase Programs. Included in the 7.7 million shares repurchased was 0.6 million shares repurchased in March 2016 which did not settle until April 2016. These shares were settled at an average price per share of $103.58 and a total cost of approximately $65 million . In the three months ended June 30, 2015 , the Company repurchased 3.0 million shares at an average price per share of $100.92 for a total cost of approximately $300 million . During the six months ended June 30, 2015, we repurchased 5.5 million shares at an average price per share of $100.57 for a total cost of $550 million. In August 2015, the $5 billion of Class A Ordinary Shares authorized under the 2012 Share Repurchase Program was exhausted. At June 30, 2016 , the remaining authorized amount for share repurchase under the 2014 Share Repurchase Program was $3.3 billion . Under the Repurchase Programs, the Company has repurchased a total of 85.7 million shares for an aggregate cost of approximately $6.7 billion .

14

Net Income Per Share
 
Weighted average shares outstanding are as follows (in millions):

												
 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
Shares for basic earnings per share	268.0		 	284.5		 	269.9		 	284.3		
Common stock equivalents	1.8		 	2.2		 	1.8		 	2.6		
Shares for diluted earnings per share	269.8		 	286.7		 	271.7		 	286.9		
 
Certain ordinary share equivalents may be excluded from the computation of diluted net income per share if their inclusion would be antidilutive. There were no shares and 0.3 million shares excluded from the calculation for the three and six months ended June 30, 2016 and no shares excluded from the calculation for the three and six months ended June 30, 2015.

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

																
 	Change in Fair Value of Financial Instruments (1)	 	Foreign Currency Translation Adjustments	 	Post-Retirement Benefit Obligation (2)	 	Total	
Balance at December 31, 2015	$	(25	)	 	$	(771	)	 	$	(2,627	)	 	$	(3,423	)	
Other comprehensive (loss) income before reclassifications, net	(14	)	 	(138	)	 	(234	)	 	(386	)	
Amounts reclassified from accumulated other comprehensive loss:	 	 			 			 			
Amounts reclassified from accumulated other comprehensive loss	4		 	—		 	110		 	114		
Tax benefit	(1	)	 	—		 	(26	)	 	(27	)	
Amounts reclassified from accumulated other comprehensive loss, net	3		 	—		 	84		 	87		
Net current period other comprehensive (loss) income	(11	)	 	(138	)	 	(150	)	 	(299	)	
Balance at June 30, 2016	$	(36	)	 	$	(909	)	 	$	(2,777	)	 	$	(3,722	)	
______________________________________________
(1) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Other income , Other general expenses , and Compensation and benefits . See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity.
(2) Reclassifications from this category included in Accumulated other comprehensive loss are recorded in Compensation and benefits.
In March 2016, the Company entered into an insurance contract which covers a portion of the assets within select U.K. pension schemes. The transaction resulted in a decrease in Prepaid pension assets and Accumulated other comprehensive income of $267 million as the fair value in the insurance policies was deemed to be the present value of the current obligation.

15

10.  Employee Benefits
 
The following table provides the components of the net periodic (benefit) cost recognized in the Condensed Consolidated Statements of Income in Compensation and benefits for Aon's material U.K., U.S., and other significant international pension plans located in the Netherlands and Canada (in millions):

																								
 	Three months ended June 30,	
 	U.K.	 	U.S.	 	Other	
 	2016	 	2015	 	2016	 	2015	 	2016	 	2015	
Service cost	$	—		 	$	—		 	$	—		 	$	1		 	$	—		 	$	—		
Interest cost	43		 	50		 	28		 	33		 	7		 	9		
Expected return on plan assets, net of administration expenses	(65	)	 	(77	)	 	(39	)	 	(38	)	 	(12	)	 	(13	)	
Amortization of prior-service cost	1		 	—		 	1		 	—		 	—		 	—		
Amortization of net actuarial loss	9		 	10		 	12		 	13		 	3		 	3		
Net periodic (benefit) cost	(12	)	 	(17	)	 	2		 	9		 	(2	)	 	(1	)	
Loss on pension settlement	61		 	—		 	—		 	—		 	—		 	—		
Curtailment gain and other	—		 	—		 	—		 	—		 	—		 	—		
Total net periodic cost (benefit)	$	49			$	(17	)		$	2			$	9			$	(2	)		$	(1	)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Six months ended June 30,	
 	U.K.	 	U.S.	 	Other	
 	2016	 	2015	 	2016	 	2015	 	2016	 	2015	
Service cost	$	—		 	$	—		 	$	—		 	$	2		 	$	—		 	$	—		
Interest cost	86		 	99		 	55		 	66		 	14		 	17		
Expected return on plan assets, net of administration expenses	(129	)	 	(152	)	 	(78	)	 	(77	)	 	(24	)	 	(25	)	
Amortization of prior-service cost	1		 	—		 	1		 	—		 	—		 	—		
Amortization of net actuarial loss	17		 	20		 	25		 	27		 	5		 	6		
Net periodic (benefit) cost	(25	)	 	(33	)	 	3		 	18		 	(5	)	 	(2	)	
Loss on pension settlement	61		 	—		 	—		 	—		 	—		 	—		
Curtailment gain and other	—		 	—		 	—		 	(1	)	 	—		 	—		
Total net periodic cost (benefit)	$	36		 	$	(33	)	 	$	3		 	$	17		 	$	(5	)	 	$	(2	)	

Beginning in 2016, the Company has elected to utilize a full yield curve approach in the estimation of the service and interest cost components of net periodic pension and post-retirement benefit cost for Aon's major pension and other post-retirement benefit plans by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. In 2015 and prior years, the Company estimated these components of net periodic pension and post-retirement benefit cost by applying a single weighted-average discount rate, derived from the yield curve used to measure the benefit obligation at the beginning of the period. The Company made this change to improve the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of service and interest costs. This change does not affect the measurement of the projected benefit obligation as the change in the service cost and interest cost is completely offset in the actuarial (gain) loss recorded in other comprehensive income. The Company accounted for this change as a change in estimate and, accordingly, will account for it prospectively.

In March 2016, the Company announced a plan to offer a voluntary one-time lump sum payment option to certain eligible former employees under one of the Company’s U.K. pension plans, that if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during the second quarter of 2016. In total, lump sum payments from plan assets of  £116 million ( $159 million using June 30, 2016 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the second quarter of 2016, which in aggregate resulted in a net reduction to the projected benefit obligation of  £103 million ( $141 million using June 30, 2016 exchange rates) as well as a non-cash settlement charge of  £42 million ( $61 million using average June 2016 exchange rate), in the second quarter of 2016.

16

Contributions

The Company expects to contribute approximately $79 million , $54 million , and $17 million , based on exchange rates as of December 31, 2015, to its significant U.K., U.S., and other significant international pension plans, respectively, during 2016. During the three months ended June 30, 2016 , contributions of $17 million , $6 million , and $3 million were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively. During the six months ended June 30, 2016 , contributions of $34 million , $19 million , and $10 million were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively.

During the three months ended June 30, 2015 , contributions of $15 million , $28 million , and $4 million  were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively. During the six months ended June 30, 2015 , contributions of $34 million , $62 million , and $8 million  were made to the Company's significant U.K., U.S., and other significant international pension plans, respectively.
 
11.  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,	
 	2016	 	2015	 	2016	 	2015	
Restricted share units ("RSUs")	$	44		 	$	44		 	$	105		 	$	109		
Performance share awards ("PSAs")	25		 	28		 	45		 	49		
Share options	—		 	—		 	—		 	—		
Employee share purchase plans	2		 	2		 	6		 	6		
Total share-based compensation expense	$	71		 	$	74		 	$	156		 	$	164		
 
Restricted Share Units
 
A summary of the status of the Company's RSUs is as follows (shares in thousands):

														
 	Six months ended June 30,	
 	2016	 	2015	
 	Shares	 	Fair Value (1)	 	Shares	 	Fair Value (1)	
Non-vested at beginning of period	7,169		 	$	77		 	8,381		 	$	63		
Granted	2,023		 	101		 	2,144		 	98		
Vested	(2,581	)	 	70		 	(3,037	)	 	58		
Forfeited	(213	)	 	79		 	(130	)	 	67		
Non-vested at end of period	6,398		 	87		 	7,358		 	76		
 ______________________________________________
		
(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 cumulative 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 awards 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.

17

Information as of June 30, 2016 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, 2016 and the years ended December 31, 2015 and 2014 , respectively, is as follows (shares in thousands, dollars in millions, except fair value):

												
 	2016	 	2015	 	2014	
Target PSAs granted during period	783		 	993		 	816		
Weighted average fair value per share at date of grant	$	101		 	$	96		 	$	81		
Number of shares that would be issued based on current performance levels	772		 	963		 	1,552		
Unamortized expense, based on current performance levels	$	71		 	$	49		 	$	21		
 
Share Options
 
The Company did not grant any share options during either the six months ended June 30, 2016 or the six months ended June 30, 2015 .
 
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,	
 	2016	 	2015	
 	Shares	 	Weighted- Average
Exercise Price	 	Shares	 	Weighted- Average
Exercise Price	
Beginning outstanding	837		 	$	40		 	2,300		 	$	32		
Granted	—		 	—		 	—		 	—		
Exercised	(271	)	 	38		 	(1,388	)	 	27		
Forfeited and expired	(5	)	 	42		 	(13	)	 	39		
Outstanding at end of period	561		 	41		 	899		 	39		
Exercisable at end of period	561		 	41		 	899		 	39		
 
The weighted average remaining contractual life, in years, of outstanding options was 2.4 years and 2.7 years at June 30, 2016 and 2015 , respectively.
 
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 $109.23 as of June 30, 2016 , which would have been received by the option holders had those option holders exercised their options as of that date.  At June 30, 2016 , the aggregate intrinsic value of options outstanding, all of which were exercisable, was $38 million .
 
Other information related to the Company's share options is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
Aggregate intrinsic value of stock options exercised	$	9		 	$	6		 	$	17		 	$	100		
Cash received from the exercise of stock options	6		 	4		 	11		 	38		
Tax benefit realized from the exercise of stock options	2		 	1		 	4		 	35		
 
Unamortized deferred compensation expense, which includes both options and RSUs, amounted to $460 million as of June 30, 2016 , with a remaining weighted-average amortization period of approximately 2.0 years.

12.  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.

18

Foreign Exchange Risk Management
 
The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, enters into monetary intercompany transfers denominated in a currency that differs from its functional currency, or enters into 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. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income.
 
The Company also uses foreign exchange derivatives, typically forward contracts and options, to economically hedge the currency exposure of the Company's global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30 day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income in the Condensed Consolidated Statements of Income.
 
The notional and fair values of derivative instruments are as follows (in millions):

																								
 	Notional Amount	 	Derivative Assets (1)	 	Derivative Liabilities (2)	
 	June 30,
2016	 	December 31,
2015	 	June 30,
2016	 	December 31,
2015	 	June 30,
2016	 	December 31,
2015	
Foreign exchange contracts:	 		 	 		 	 		 	 		 	 		 	 		
Accounted for as hedges	$	808		 	$	778		 	$	16		 	$	32		 	$	12		 	$	18		
Not accounted for as hedges (3)	201		 	280		 	—		 	—		 	—		 	—		
   Total	$	1,009		 	$	1,058		 	$	16		 	$	32		 	$	12		 	$	18		
______________________________________________
		
(1)	Included within Other current assets ( $5 million at June 30, 2016 and $15 million  at December 31, 2015 ) or Other non-current assets ( $11 million at June 30, 2016 and $17 million  at December 31, 2015 ).	
		
(2)	Included within Other current liabilities ( $8 million at June 30, 2016 and $13 million  at December 31, 2015 ) or Other non-current liabilities ( $4 million at June 30, 2016 and $5 million  at December 31, 2015 ).	
		
(3)	These contracts typically are for 30 day durations are executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date.	

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)	
Derivatives accounted for as hedges:	June 30,
2016	 	December 31,
2015	 	June 30,
2016	 	December 31,
2015	 	June 30,
2016	 	December 31,
2015	
Foreign exchange contracts	$	16		 	$	32		 	$	(5	)	 	$	(13	)	 	$	11		 	$	19		
______________________________________________
(1) Included within Other current assets ( $2 million at June 30, 2016 and $6 million  at December 31, 2015 ) or Other non-current assets ( $9 million at June 30, 2016 and $13 million  at December 31, 2015 ).

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 (1)	
  Derivatives accounted for as hedges:	June 30,
2016	 	December 31,
2015	 	June 30,
2016	 	December 31,
2015	 	June 30,
2016	 	December 31,
2015	
Foreign exchange contracts	$	12		 	$	18		 	$	(5	)	 	$	(13	)	 	$	7		 	$	5		
______________________________________________
(1) Included within Other current liabilities ( $5 million at June 30, 2016 and $4 million  at December 31, 2015 ) or Other non-current liabilities ( $2 million at June 30, 2016 and $1 million  at December 31, 2015 ).

19

The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2016 and 2015 are as follows (in millions): 

																					
Cash Flow Hedge - Foreign Exchange Contracts	 	Location of future reclassification from Accumulated Other Comprehensive Loss	 	Gain (Loss) Recognized in Accumulated Other Comprehensive Loss:	
Three months ended June 30,	 	Compensation and Benefits	 	Other General Expenses	 	Interest Expense	 	Other Income (Expense)	 	Total	
2016	 	$	—		 	$	(2	)	 	$	—		 	$	(6	)	 	$	(8	)	
2015	 	1		 	3		 	—		 	10		 	14		

																					
Cash Flow Hedge - Foreign Exchange Contracts	 	Location of future reclassification from Accumulated Other Comprehensive Loss	 	Gain (Loss) Recognized in Accumulated Other Comprehensive Loss:	
Six months ended June 30,	 	Compensation and Benefits	 	Other General Expenses	 	Interest Expense	 	Other Income (Expense)	 	Total	
2016	 	$	(2	)	 	$	(5	)	 	$	—		 	$	(11	)	 	$	(18	)	
2015	 	6		 	1		 	—		 	6		 	13		

	
																					
Cash Flow Hedge - Foreign Exchange Contracts	 	Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion):	
Three months ended June 30,	 	Compensation and Benefits	 	Other General Expenses	 	Interest Expense	 	Other Income	 	Total	
2016	 	$	—		 	$	(1	)	 	$	(1	)	 	$	(2	)	 	$	(4	)	
2015	 	1		 	(1	)	 	(2	)	 	5		 	3		

																					
Cash Flow Hedge - Foreign Exchange Contracts	 	Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion):	
Six months ended June 30,	 	Compensation and Benefits	 	Other General Expenses	 	Interest Expense	 	Other Income	 	Total	
2016	 	$	1		 	$	(1	)	 	$	(1	)	 	$	(3	)	 	$	(4	)	
2015	 	1		 	(1	)	 	(4	)	 	(3	)	 	(7	)	
The Company estimates that approximately $15 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, 2016 and 2015 was not material.
 
During the three and six months ended June 30, 2016 , the Company recorded a loss of $2 million and $1 million , respectively, in Other income for foreign exchange derivatives not designated or qualifying as hedges. During the three and six months ended June 30, 2015 , the Company recorded a gain of $2 million and $9 million , respectively, in Other income for foreign exchange derivatives not designated or qualifying as hedges.

Net Investments in Foreign Operations Risk Management

The Company uses non-derivative financial instruments to protect the value of its investments in a number of foreign subsidiaries. Beginning in June 2016, the Company designated its Euro-denominated commercial paper issuances as a non-derivative hedge of a net investment in its European operations. The change in the carrying value of the designated portion of the Euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive income (loss), offsetting the foreign currency translation adjustment of the hedged net investments that is also recorded in Accumulated other comprehensive income (loss). Any ineffective portions of net investment hedges are reclassified from Accumulated other comprehensive income (loss) into earnings during the period of change.

20

As of June 30, 2016 , the Company has €217 million ( $241 million at June 30, 2016 exchange rates) of outstanding Euro-denominated commercial paper designated as a hedge of its net investment in its European operations. The weighted average commercial paper outstanding for June 2016 was €55 million . The associated gain recognized in Accumulated other comprehensive income (loss) related to the net investment hedge was $4 million .

The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive income (loss) to earnings during the three or six months ended June 30, 2016 . In addition, the Company did not have any ineffectiveness related to net investment hedges during the three or six months ended June 30, 2016 .
 
13.  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 are carried at cost as an approximation of fair value. Based on market convention, the Company considers cost a practical and expedient measure of fair value.
 
Equity investments consist of domestic and international equity securities valued using the closing stock price on a national securities exchange. The Company 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 securities.
 
Fixed income investments consist of corporate and government bonds. Corporate and government 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. 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. 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 to 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 management and the fair value estimate provided by the vendor is adjusted, if deemed appropriate. These adjustments do not occur frequently and have historically not been material to the fair value estimates used in the Condensed Consolidated Financial Statements.
 
Derivatives are carried at fair value, based upon industry standard valuation techniques that use, where possible, current market-based or independently sourced pricing inputs, such as interest rates, currency exchange rates, or implied volatilities.
 
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, 2016 and December 31, 2015 (in millions):

																
 	 	 	Fair Value Measurements Using	
 	Balance at June 30, 2016	 	Quoted Prices in Active Markets for Identical Assets (Level 1)	 	Significant Other Observable Inputs (Level 2)	 	Significant Unobservable Inputs (Level 3)	
Assets:	 		 	 		 	 		 	 		
Money market funds (1)	$	1,483		 	$	1,483		 	$	—		 	$	—		
Other investments:	 		 	 		 	 		 	 		
Government bonds	1		 	—		 	1		 	—		
Equity investments	10		 	6		 	4		 	—		
Derivatives (2):	 		 	 		 	 		 	 		
Foreign exchange contracts	16		 	—		 	16		 	—		
Liabilities:	 		 	 		 	 		 	 		
Derivatives:	 		 	 		 	 		 	 		
Foreign exchange contracts	12		 	—		 	12		 	—		
  ______________________________________________
(1) Included within 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. 
(2) See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity.

																
 	 	 	Fair Value Measurements Using	
 	Balance at December 31, 2015	 	Quoted Prices in Active Markets for Identical Assets (Level 1)	 	Significant Other Observable Inputs (Level 2)	 	Significant Unobservable Inputs (Level 3)	
Assets:	 		 	 		 	 		 	 		
Money market funds (1)	$	1,396		 	$	1,396		 	$	—		 	$	—		
Other investments:	 		 	 		 	 		 	 		
Government bonds	1		 	—		 	1		 	—		
Equity investments	10		 	6		 	4		 	—		
Derivatives (2):	 		 	 		 	 		 	 		
Foreign exchange contracts	32		 	—		 	32		 	—		
Liabilities:	 		 	 		 	 		 	 		
Derivatives:	 		 	 		 	 		 	 		
Foreign exchange contracts	18		 	—		 	18		 	—		
  ______________________________________________
(1)  Included within 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. 
(2) See Note 12 "Derivatives and Hedging" for additional information regarding the Company's derivative and hedging activity.
 
There were no transfers of assets or liabilities between fair value hierarchy levels in either the three or six months ended June 30, 2016 or 2015 . The Company recognized no realized or unrealized gains or losses in the Condensed Consolidated Statements of Income during either the three or six months ended  June 30, 2016 or 2015 , related to assets and liabilities measured at fair value using unobservable inputs.
 
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, 2016	 	December 31, 2015	
 	Carrying Value	 	Fair Value	 	Carrying Value	 	Fair Value	
Long-term debt	$	5,907		 	$	6,448		 	$	5,138		 	$	5,386		

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14.  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. While Aon maintains meaningful E&O insurance and other insurance programs 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 reasonably estimable are not accrued for in the financial statements.

We have included in the matters described below certain matters in which (1) loss is probable, (2) loss is reasonably possible; that is, more than remote but not probable, or (3) there exists the reasonable possibility of loss greater than the accrued amount. In addition, we may from time to time disclose matters for which the probability of loss could be remote but the claim amounts associated with such matters are potentially significant. The reasonably possible range of loss for the matters described below, in excess of amounts that are deemed probable and estimable and therefore already accrued, is estimated to be between $0 and $0.3 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 may change, and the estimates themselves may change. In addition, many estimates involve significant judgment and uncertainty. For example, at the time of making an estimate, Aon may only have limited information about the facts underlying the claim, and predictions and assumptions about future court rulings and outcomes may prove to be inaccurate. Although management at present believes that the ultimate outcome of all matters described below, individually or in the aggregate, will not have a material adverse effect on the consolidated financial position of Aon, legal proceedings are subject to inherent uncertainties and unfavorable rulings or other events. Unfavorable resolutions could include substantial monetary or punitive damages imposed on Aon or its subsidiaries. If unfavorable outcomes of these matters were to occur, future results of operations or cash flows for any particular quarterly or annual period could be materially adversely affected.
 
Current Matters

A 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 in coverage from numerous insurers with whom this Aon subsidiary placed the client's property insurance coverage. The insurers contend that only $50 million in coverage (which has already been paid) is 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. In March 2015, the trial court granted partial summary judgment in favor of plaintiffs
and against the insurers, holding generally that the plaintiffs are entitled to $200 million in coverage under the language of the policies. In August 2015, a jury returned a verdict in favor of Opry Mills and against the insurers in the amount of $204 million . Aon understands that the insurers intend to appeal both of these trial court decisions. 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 sought approximately £189 million ( $259 million at June 30, 2016 exchange rates), plus interest and costs. In June 2015, the High Court ordered Philips to clarify several aspects of its claim. In its clarification, Philips increased the amount of its claim to £290 million ( $397 million at June 30, 2016 exchange rates), plus interest and costs. 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 business acquired by Aon and, later, an Aon

23

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 sought damages of approximately CHF 46 million ( $47 million at June 30, 2016 exchange rates) and $3 million , plus legal fees and interest of approximately $30 million . On December 2, 2014, the Geneva Tribunal of First Instance entered a judgment that accepted some, and rejected other, of IRU's claims. The judgment awarded IRU CHF 16.8 million ( $17 million at June 30, 2016 exchange rates) and $3.1 million , plus interest and adverse costs. The entire amount of the judgment, including interest through December 31, 2014, totaled CHF 27.9 million ( $29 million at June 30, 2016 exchange rates) and $5 million . On January 26, 2015, in return for IRU agreeing not to appeal the bulk of its dismissed claims, the Aon subsidiary agreed not to appeal a part of the judgment and to pay IRU CHF 12.8 million ( $13 million at June 30, 2016 exchange rates) and $4.7 million without Aon admitting liability. The Aon subsidiary appealed those aspects of the judgment it retained the right to appeal. IRU did not appeal. The Geneva Appellate Court affirmed the judgment of the Geneva Tribunal of First Instance. The Geneva Appellate Court’s judgment can be appealed to the Swiss Supreme Court. The Aon subsidiary's maximum liability on appeal is limited to CHF 8.7 million ( $9 million at June 30, 2016 exchange rates) and $115,000 (plus interest and costs) beyond what the subsidiary has already paid.

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 ( $62 million at June 30, 2016 exchange rates). In December 2014, the Court of Appeal granted the employer leave to appeal the High Court decision. The Court of Appeal hearing was set for October 2015, but has been postponed to permit the parties to discuss possible settlement. Aon believes that it has meritorious defenses and intends to vigorously defend itself against this potential claim.

On June 29, 2015, Lyttelton Port Company Limited ("LPC") sued Aon New Zealand in the Christchurch Registry of the High Court of New Zealand.  LPC alleges, among other things, that Aon was negligent and in breach of contract in arranging LPC’s property insurance program for the period covering June 30, 2010 to June 30, 2011.  LPC contends that acts and omissions by Aon caused LPC to recover less than it otherwise would have from insurers for losses suffered in the 2010/2011 Canterbury Earthquakes.  LPC claims damages of approximately NZD 184 million ( $131 million at June 30, 2016 exchange rates) plus interest and costs.  Aon believes that it has meritorious defenses and intends to vigorously defend itself against these claims.
 
In addition, 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 into 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") (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), and (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.
 
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.

24

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 of approximately $82 million at June 30, 2016 , compared to $58 million at December 31, 2015 . 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 the Company'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.
 
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 $12 million at June 30, 2016 and December 31, 2015 . During the three and six months ended June 30, 2016 , no significant commitments were funded.
 
Premium Payments

The Company has certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $89 million at June 30, 2016 compared to $104 million at December 31, 2015 .
 
15. 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.
 
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,	
 	2016		2015	 	2016	 	2015	
Risk Solutions	$	1,847		 	$	1,833		 	$	3,719		 	$	3,728		
HR Solutions	931		 	979		 	1,861		 	1,949		
Intersegment eliminations	(12	)	 	(7	)	 	(22	)	 	(25	)	
Total revenue	$	2,766		 	$	2,805		 	$	5,558		 	$	5,652		

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

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
Retail brokerage	$	1,508		 	$	1,498		 	$	3,003		 	$	3,011		
Reinsurance brokerage	334		 	330		 	706		 	707		
Total Risk Solutions Segment	1,842		 	1,828		 	3,709		 	3,718		
Consulting services	383		 	391		 	757		 	762		
Outsourcing	550		 	599		 	1,110		 	1,203		
Intrasegment	(2	)	 	(11	)	 	(6	)	 	(16	)	
Total HR Solutions Segment	931		 	979		 	1,861		 	1,949		
Intersegment	(12	)	 	(7	)	 	(22	)	 	(25	)	
Total commissions, fees and other revenue	$	2,761		 	$	2,800		 	$	5,548		 	$	5,642		
 
Fiduciary investment income by segment is as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
Risk Solutions	$	5		 	$	5		 	$	10		 	$	10		
HR Solutions	—		 	—		 	—		 	—		
Total fiduciary investment income	$	5		 	$	5		 	$	10		 	$	10		
 
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,	
 	2016	 	2015	 	2016	 	2015	
Risk Solutions	$	373		 	$	279		 	$	802		 	$	691		
HR Solutions	75		 	39		 	142		 	115		
Segment income before income taxes	448		 	318		 	944		 	806		
Unallocated expenses	(43	)	 	(41	)	 	(89	)	 	(88	)	
Interest income	3		 	4		 	5		 	7		
Interest expense	(73	)	 	(68	)	 	(142	)	 	(133	)	
Other income	—		 	1		 	18		 	43		
Income before income taxes	$	335		 	$	214		 	$	736		 	$	635		
 
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 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.

26

16.  Guarantee of Registered Securities
 
As described in Note 14, in connection with the Redomestication, Aon plc entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, including the 5.00% Notes due September 2020, the 8.205% Notes due January 2027 and the 6.25% Notes due September 2040. Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. All guarantees of Aon plc are full and unconditional. There are no other subsidiaries of Aon plc that are guarantors of the debt. In addition, 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% Notes due January 2027 and also agreed to guarantee the obligations of Aon plc arising under the 2.8% Notes due 2021, the 4.45% Notes due 2043, the 4.00% Notes due November 2023, the 2.875% Notes due May 2026, the 3.50% Notes due June 2024, the 4.60% Notes due June 2044, the 4.75% Notes due May 2045, and the 3.875% Notes due December 2025. 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, the 4.60% Notes due 2044, or the 4.75% Notes due 2045. As a result of the existence of these guarantees, the Company is required by Rule 3-10 of Regulation S-X to present the financial information set forth in this footnote.
 
The following tables set forth condensed consolidating statements of income for the three and six months ended June 30, 2016 and 2015 , condensed consolidating statements of comprehensive income for the three and six months ended June 30, 2016 and 2015 , condensed consolidating statements of financial position as of June 30, 2016 and December 31, 2015 , and condensed consolidating statements of cash flows for the six months ended June 30, 2016 and 2015 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 January 2015, Aon plc transferred its ownership of all of its directly held subsidiaries to Aon Global Holdings Limited, an intermediate holding company. The financial results of Aon Global Holdings Limited are 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 plc to Aon Global Holdings Limited below for all periods presented.

27

Condensed Consolidating Statement of Income

																					
 	 	Three months ended June 30, 2016	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	—		 	$	—		 	$	2,761		 	$	—		 	$	2,761		
Fiduciary investment income	 	—		 	—		 	5		 	—		 	5		
Total revenue	 	—		 	—		 	2,766		 	—		 	2,766		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	8		 	3		 	1,677		 	—		 	1,688		
Other general expenses	 	(1	)	 	2		 	672		 	—		 	673		
Total operating expenses	 	7		 	5		 	2,349		 	—		 	2,361		
Operating (loss) income	 	(7	)	 	(5	)	 	417		 	—		 	405		
Interest income	 	—		 	4		 	5		 	(6	)	 	3		
Interest expense	 	(49	)	 	(26	)	 	(4	)	 	6		 	(73	)	
Intercompany interest income (expense)	 	3		 	(137	)	 	134		 	—		 	—		
Intercompany other (expense) income	 	(57	)	 	(16	)	 	73		 	—		 	—		
Other income (loss)	 	2		 	(4	)	 	6		 	(4	)	 	—		
(Loss) income before taxes	 	(108	)	 	(184	)	 	631		 	(4	)	 	335		
Income tax (benefit) expense	 	(21	)	 	(64	)	 	140		 	—		 	55		
(Loss) income before equity in earnings of subsidiaries	 	(87	)	 	(120	)	 	491		 	(4	)	 	280		
Equity in earnings of subsidiaries, net of tax	 	363		 	236		 	116		 	(715	)	 	—		
Net income	 	276		 	116		 	607		 	(719	)	 	280		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	8		 	—		 	8		
Net income attributable to Aon shareholders	 	$	276		 	$	116		 	$	599		 	$	(719	)	 	$	272		

28

Condensed Consolidating Statement of Income  

																					
 	 	Three months ended June 30, 2015	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	—		 	$	—		 	$	2,800		 	$	—		 	$	2,800		
Fiduciary investment income	 	—		 	—		 	5		 	—		 	5		
Total revenue	 	—		 	—		 	2,805		 	—		 	2,805		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	5		 	10		 	1,638		 	—		 	1,653		
Other general expenses	 	(4	)	 	2		 	877		 	—		 	875		
Total operating expenses	 	1		 	12		 	2,515		 	—		 	2,528		
Operating (loss) income	 	(1	)	 	(12	)	 	290		 	—		 	277		
Interest income	 	(5	)	 	4		 	5		 	—		 	4		
Interest expense	 	(29	)	 	(33	)	 	(6	)	 	—		 	(68	)	
Intercompany interest income (expense)	 	119		 	(116	)	 	(3	)	 	—		 	—		
Intercompany other (expense) income	 	(56	)	 	(15	)	 	71		 	—		 	—		
Other income	 	(1	)	 	—		 	2		 	—		 	1		
Income (loss) before taxes	 	27		 	(172	)	 	359		 	—		 	214		
Income tax expense (benefit)	 	6		 	(66	)	 	86		 	—		 	26		
Income (loss) before equity in earnings of subsidiaries	 	21		 	(106	)	 	273		 	—		 	188		
Equity in earnings of subsidiaries, net of tax	 	157		 	170		 	64		 	(391	)	 	—		
Net income	 	178		 	64		 	337		 	(391	)	 	188		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	10		 	—		 	10		
Net income attributable to Aon shareholders	 	$	178		 	$	64		 	$	327		 	$	(391	)	 	$	178		

29

Condensed Consolidating Statement of Income  

																					
 	 	Six months ended June 30, 2016	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	—		 	$	—		 	$	5,548		 	$	—		 	$	5,548		
Fiduciary investment income	 	—		 	—		 	10		 	—		 	10		
Total revenue	 	—		 	—		 	5,558		 	—		 	5,558		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	51		 	6		 	3,280		 	—		 	3,337		
Other general expenses	 	6		 	4		 	1,356		 	—		 	1,366		
Total operating expenses	 	57		 	10		 	4,636		 	—		 	4,703		
Operating (loss) income	 	(57	)	 	(10	)	 	922		 	—		 	855		
Interest income	 	—		 	9		 	9		 	(13	)	 	5		
Interest expense	 	(94	)	 	(54	)	 	(7	)	 	13		 	(142	)	
Intercompany interest income (expense)	 	7		 	(270	)	 	263		 	—		 	—		
Intercompany other (expense) income	 	(111	)	 	(15	)	 	126		 	—		 	—		
Other income	 	2		 	(9	)	 	29		 	(4	)	 	18		
(Loss) income before taxes	 	(253	)	 	(349	)	 	1,342		 	(4	)	 	736		
Income tax (benefit) expense	 	(47	)	 	(126	)	 	302		 	—		 	129		
(Loss) income before equity in earnings of subsidiaries	 	(206	)	 	(223	)	 	1,040		 	(4	)	 	607		
Equity in earnings of subsidiaries, net of tax	 	797		 	603		 	380		 	(1,780	)	 	—		
Net income	 	591		 	380		 	1,420		 	(1,784	)	 	607		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	20		 	—		 	20		
Net income attributable to Aon shareholders	 	$	591		 	$	380		 	$	1,400		 	$	(1,784	)	 	$	587		

30

Condensed Consolidating Statement of Income  

																					
 	 	Six months ended June 30, 2015	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Revenue	 	 	 	 	 	 	 	 	 	 	
Commissions, fees and other	 	$	—		 	$	—		 	$	5,642		 	$	—		 	$	5,642		
Fiduciary investment income	 	—		 	—		 	10		 	—		 	10		
Total revenue	 	—		 	—		 	5,652		 	—		 	5,652		
Expenses	 	 	 	 	 	 	 	 	 	 	
Compensation and benefits	 	57		 	21		 	3,258		 	—		 	3,336		
Other general expenses	 	9		 	4		 	1,585		 	—		 	1,598		
Total operating expenses	 	66		 	25		 	4,843		 	—		 	4,934		
Operating (loss) income	 	(66	)	 	(25	)	 	809		 	—		 	718		
Interest income	 	(9	)	 	7		 	9		 	—		 	7		
Interest expense	 	(54	)	 	(68	)	 	(11	)	 	—		 	(133	)	
Intercompany interest income (expense)	 	239		 	(221	)	 	(18	)	 	—		 	—		
Intercompany other (expense) income	 	(106	)	 	(23	)	 	129		 	—		 	—		
Other income	 	1		 	8		 	34		 	—		 	43		
Income (loss) before taxes	 	5		 	(322	)	 	952		 	—		 	635		
Income tax expense (benefit)	 	1		 	(117	)	 	222		 	—		 	106		
Income (loss) before equity in earnings of subsidiaries	 	4		 	(205	)	 	730		 	—		 	529		
Equity in earnings of subsidiaries, net of tax	 	502		 	571		 	366		 	(1,439	)	 	—		
Net income	 	506		 	366		 	1,096		 	(1,439	)	 	529		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	23		 	—		 	23		
Net income attributable to Aon shareholders	 	$	506		 	$	366		 	$	1,073		 	$	(1,439	)	 	$	506		

31

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Three months ended June 30, 2016	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	276		 	$	116		 	$	607		 	$	(719	)	 	$	280		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	8		 	—		 	8		
Net income attributable to Aon shareholders	 	$	276		 	$	116		 	$	599		 	$	(719	)	 	$	272		
Other comprehensive (loss) income, net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of financial instruments	 	—		 	2		 	(6	)	 	—		 	(4	)	
Foreign currency translation adjustments	 	(2	)	 	10		 	(71	)	 	4		 	(59	)	
Post-retirement benefit obligation	 	—		 	3		 	48		 	—		 	51		
Total other comprehensive loss	 	(2	)	 	15		 	(29	)	 	4		 	(12	)	
Equity in other comprehensive loss of subsidiaries, net of tax	 	(14	)	 	(31	)	 	(16	)	 	61		 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	—		 	—		 	—		
Total other comprehensive loss attributable to Aon shareholders	 	(16	)	 	(16	)	 	(45	)	 	65		 	(12	)	
Comprehensive income attributable to Aon shareholders	 	$	260		 	$	100		 	$	554		 	$	(654	)	 	$	260		

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Three months ended June 30, 2015	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	178		 	$	64		 	$	337		 	$	(391	)	 	$	188		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	10		 	—		 	10		
Net income attributable to Aon shareholders	 	$	178		 	$	64		 	$	327		 	$	(391	)	 	$	178		
Other comprehensive income (loss), net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of financial instruments	 	—		 	2		 	(8	)	 	—		 	(6	)	
Foreign currency translation adjustments	 	—		 	4		 	171		 	—		 	175		
Post-retirement benefit obligation	 	—		 	9		 	12		 	—		 	21		
Total other comprehensive (loss) income	 	—		 	15		 	175		 	—		 	190		
Equity in other comprehensive income of subsidiaries, net of tax	 	191		 	173		 	188		 	(552	)	 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	(1	)	 	—		 	(1	)	
Total other comprehensive income attributable to Aon shareholders	 	191		 	188		 	364		 	(552	)	 	191		
Comprehensive income attributable to Aon Shareholders	 	$	369		 	$	252		 	$	691		 	$	(943	)	 	$	369		

32

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Six months ended June 30, 2016	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	591		 	$	380		 	$	1,420		 	$	(1,784	)	 	$	607		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	20		 	—		 	20		
Net income attributable to Aon shareholders	 	$	591		 	$	380		 	$	1,400		 	$	(1,784	)	 	$	587		
Other comprehensive (loss) income, net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of financial instruments	 	—		 	—		 	(11	)	 	—		 	(11	)	
Foreign currency translation adjustments	 	(2	)	 	21		 	(161	)	 	4		 	(138	)	
Post-retirement benefit obligation	 	—		 	16		 	(166	)	 	—		 	(150	)	
Total other comprehensive loss	 	(2	)	 	37		 	(338	)	 	4		 	(299	)	
Equity in other comprehensive loss of subsidiaries, net of tax	 	(301	)	 	(345	)	 	(308	)	 	954		 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	—		 	—		 	—		
Total other comprehensive loss attributable to Aon shareholders	 	(303	)	 	(308	)	 	(646	)	 	958		 	(299	)	
Comprehensive income attributable to Aon shareholders	 	$	288		 	$	72		 	$	754		 	$	(826	)	 	$	288		

Condensed Consolidating Statement of Comprehensive Income

																					
 	 	Six months ended June 30, 2015	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
Net income	 	$	506		 	$	366		 	$	1,096		 	$	(1,439	)	 	$	529		
Less: Net income attributable to noncontrolling interests	 	—		 	—		 	23		 	—		 	23		
Net income attributable to Aon shareholders	 	$	506		 	$	366		 	$	1,073		 	$	(1,439	)	 	$	506		
Other comprehensive income (loss), net of tax:	 	 	 	 	 	 	 	 	 	 	
Change in fair value of financial instruments	 	—		 	1		 	(2	)	 	—		 	(1	)	
Foreign currency translation adjustments	 	—		 	(19	)	 	(128	)	 	—		 	(147	)	
Post-retirement benefit obligation	 	—		 	17		 	27		 	—		 	44		
Total other comprehensive (loss) income	 	—		 	(1	)	 	(103	)	 	—		 	(104	)	
Equity in other comprehensive income of subsidiaries, net of tax	 	(102	)	 	(94	)	 	(95	)	 	291		 	—		
Less: Other comprehensive income attributable to noncontrolling interests	 	—		 	—		 	(2	)	 	—		 	(2	)	
Total other comprehensive income attributable to Aon shareholders	 	(102	)	 	(95	)	 	(196	)	 	291		 	(102	)	
Comprehensive income attributable to Aon Shareholders	 	$	404		 	$	271		 	$	877		 	$	(1,148	)	 	$	404		

33

Condensed Consolidating Statement of Financial Position  

																					
 	 	As of June 30, 2016	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
ASSETS	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	—		 	$	1,349		 	$	1,850		 	$	(2,761	)	 	$	438		
Short-term investments	 	—		 	118		 	133		 	—		 	251		
Receivables, net	 	—		 	1		 	2,515		 	—		 	2,516		
Fiduciary assets	 	—		 	—		 	10,201		 	—		 	10,201		
Intercompany receivables	 	55		 	4,847		 	9,436		 	(14,338	)	 	—		
Other current assets	 	—		 	24		 	371		 	—		 	395		
Total Current Assets	 	55		 	6,339		 	24,506		 	(17,099	)	 	13,801		
Goodwill	 	—		 	—		 	8,473		 	—		 	8,473		
Intangible assets, net	 	—		 	—		 	2,107		 	—		 	2,107		
Fixed assets, net	 	—		 	—		 	751		 	—		 	751		
Non-current deferred tax assets	 	154		 	746		 	176		 	(811	)	 	265		
Intercompany receivables	 	378		 	262		 	8,711		 	(9,351	)	 	—		
Prepaid pension	 	—		 	6		 	714		 	—		 	720		
Other non-current assets	 	—		 	111		 	465		 	—		 	576		
Investment in subsidiary	 	12,315		 	16,914		 	277		 	(29,506	)	 	—		
TOTAL ASSETS	 	$	12,902		 	$	24,378		 	$	46,180		 	$	(56,767	)	 	$	26,693		
 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Accounts payable and accrued liabilities	 	$	2,803		 	$	45		 	$	1,286		 	$	(2,761	)	 	$	1,373		
Short-term debt and current portion of long-term debt	 	241		 	—		 	10		 	—		 	251		
Fiduciary liabilities	 	—		 	—		 	10,201		 	—		 	10,201		
Intercompany payables	 	147		 	12,357		 	1,834		 	(14,338	)	 	—		
Other current liabilities	 	1		 	60		 	811		 	—		 	872		
Total Current Liabilities	 	3,192		 	12,462		 	14,142		 	(17,099	)	 	12,697		
Long-term debt	 	4,205		 	1,413		 	289		 	—		 	5,907		
Non-current deferred tax liabilities	 	—		 	—		 	850		 	(811	)	 	39		
Pension, other post-retirement and other post-employment liabilities	 	—		 	1,284		 	438		 	—		 	1,722		
Intercompany payables	 	—		 	8,878		 	473		 	(9,351	)	 	—		
Other non-current liabilities	 	6		 	64		 	697		 	—		 	767		
TOTAL LIABILITIES	 	7,403		 	24,101		 	16,889		 	(27,261	)	 	21,132		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL AON SHAREHOLDERS' EQUITY	 	5,499		 	277		 	29,229		 	(29,506	)	 	5,499		
Noncontrolling interests	 	—		 	—		 	62		 	—		 	62		
TOTAL EQUITY	 	5,499		 	277		 	29,291		 	(29,506	)	 	5,561		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL LIABILITIES AND EQUITY	 	$	12,902		 	$	24,378		 	$	46,180		 	$	(56,767	)	 	$	26,693		

34

Condensed Consolidating Statement of Financial Position

																					
 	 	As of December 31, 2015	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
ASSETS	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	—		 	$	2,083		 	$	1,242		 	$	(2,941	)	 	$	384		
Short-term investments	 	—		 	209		 	147		 	—		 	356		
Receivables, net	 	1		 	—		 	2,733		 	—		 	2,734		
Fiduciary assets	 	—		 	—		 	9,932		 	—		 	9,932		
Intercompany receivables	 	432		 	1,950		 	7,957		 	(10,339	)	 	—		
Other current assets	 	—		 	19		 	310		 	—		 	329		
Total Current Assets	 	433		 	4,261		 	22,321		 	(13,280	)	 	13,735		
Goodwill	 	—		 	—		 	8,448		 	—		 	8,448		
Intangible assets, net	 	—		 	—		 	2,180		 	—		 	2,180		
Fixed assets, net	 	—		 	—		 	765		 	—		 	765		
Intercompany receivables	 	375		 	526		 	8,633		 	(9,534	)	 	—		
Non-current deferred tax assets	 	154		 	756		 	141		 	(817	)	 	234		
Prepaid pension	 	—		 	6		 	1,027		 	—		 	1,033		
Other non-current assets	 	—		 	119		 	557		 	(84	)	 	592		
Investment in subsidiary	 	11,804		 	16,534		 	369		 	(28,707	)	 	—		
TOTAL ASSETS	 	$	12,766		 	$	22,202		 	$	44,441		 	$	(52,422	)	 	$	26,987		
 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 		 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	 	 	
Accounts payable and accrued liabilities	 	$	2,988		 	$	45		 	$	1,680		 	$	(2,941	)	 	$	1,772		
Short-term debt and current portion of long-term debt	 	—		 	550		 	12		 	—		 	562		
Fiduciary liabilities	 	—		 	—		 	9,932		 	—		 	9,932		
Intercompany payables	 	167		 	9,518		 	654		 	(10,339	)	 	—		
Other current liabilities	 	47		 	56		 	716		 	—		 	819		
Total Current Liabilities	 	3,202		 	10,169		 	12,994		 	(13,280	)	 	13,085		
Long-term debt	 	3,451		 	1,412		 	275		 	—		 	5,138		
Non-current deferred tax liabilities	 	—		 	—		 	855		 	(818	)	 	37		
Pension, other post-retirement and other post-employment liabilities	 	—		 	1,313		 	482		 	—		 	1,795		
Intercompany payables	 	—		 	8,799		 	735		 	(9,534	)	 	—		
Other non-current liabilities	 	7		 	140		 	705		 	(83	)	 	769		
TOTAL LIABILITIES	 	6,660		 	21,833		 	16,046		 	(23,715	)	 	20,824		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL AON SHAREHOLDERS' EQUITY	 	6,106		 	369		 	28,338		 	(28,707	)	 	6,106		
Noncontrolling interests	 	—		 	—		 	57		 	—		 	57		
TOTAL EQUITY	 	6,106		 	369		 	28,395		 	(28,707	)	 	6,163		
 	 	 	 	 	 	 	 	 	 	 	
TOTAL LIABILITIES AND EQUITY	 	$	12,766		 	$	22,202		 	$	44,441		 	$	(52,422	)	 	$	26,987		

35

Condensed Consolidating Statement of Cash Flows

																					
 	 	Six months ended June 30, 2016	
 	 	Aon	 	Aon	 	Other
Non-Guarantor	 	Consolidating	 	 	
(millions)	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 		 	 		 	 		 	 		 	 		
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	 	$	237		 	$	(625	)	 	$	1,156		 	$	(4	)	 	$	764		
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Proceeds from investments	 	—		 	14		 	9		 	—		 	23		
Purchases of investments	 	—		 	(13	)	 	(16	)	 	—		 	(29	)	
Net (purchases) sales of short-term investments - non-fiduciary	 	—		 	92		 	14		 	—		 	106		
Acquisition of businesses, net of cash acquired	 	—		 	—		 	(183	)	 	—		 	(183	)	
Proceeds from sale of businesses	 	—		 	—		 	103		 	—		 	103		
Capital expenditures	 	—		 	—		 	(104	)	 	—		 	(104	)	
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	 	—		 	93		 	(177	)	 	—		 	(84	)	
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Share repurchase	 	(750	)	 	—		 	—		 	—		 	(750	)	
Advances from (to) affiliates	 	(211	)	 	348		 	(321	)	 	184		 	—		
Issuance of shares for employee benefit plans	 	(87	)	 	—		 	—		 	—		 	(87	)	
Issuance of debt	 	1,239		 	817		 	—		 	—		 	2,056		
Repayment of debt	 	(259	)	 	(1,367	)	 	(6	)	 	—		 	(1,632	)	
Cash dividends to shareholders	 	(169	)	 	—		 	—		 	—		 	(169	)	
Noncontrolling interests and other financing activities	 	—		 	—		 	(62	)	 	—		 	(62	)	
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	 	(237	)	 	(202	)	 	(389	)	 	184		 	(644	)	
 	 	 	 	 	 	 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	 	—		 	—		 	18		 	—		 	18		
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	 	—		 	(734	)	 	608		 	180		 	54		
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	 	—		 	2,083		 	1,242		 	(2,941	)	 	384		
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	—		 	$	1,349		 	$	1,850		 	$	(2,761	)	 	$	438		

36

Condensed Consolidating Statement of Cash Flows

																					
 	 	Six months ended June 30, 2015	
 	 	 	 	 	 	Other	 	 	 	 	
 	 	Aon	 	Aon	 	Non-Guarantor	 	Consolidating	 	 	
(millions) 	 	plc	 	Corporation	 	Subsidiaries	 	Adjustments	 	Consolidated	
CASH FLOWS FROM OPERATING ACTIVITIES	 	 		 	 		 	 		 	 		 	 		
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	 	$	93		 	$	(368	)	 	$	853		 	$	—		 	$	578		
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM INVESTING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Proceeds from investments	 	—		 	—		 	10		 	—		 	10		
Purchases of investments	 	—		 	(1	)	 	—		 	—		 	(1	)	
Net (purchases) sales of short-term investments - non-fiduciary	 	—		 	41		 	(138	)	 	—		 	(97	)	
Acquisition of businesses, net of cash acquired	 	—		 	—		 	(23	)	 	—		 	(23	)	
Proceeds from sale of businesses	 	—		 	—		 	52		 	—		 	52		
Capital expenditures	 	—		 	—		 	(142	)	 	—		 	(142	)	
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	 	—		 	40		 	(241	)	 	—		 	(201	)	
 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	
Share repurchase	 	(550	)	 	—		 	—		 	—		 	(550	)	
Advances from (to) affiliates	 	172		 	(134	)	 	(1,191	)	 	1,153		 	—		
Issuance of shares for employee benefit plans	 	(161	)	 	—		 	—		 	—		 	(161	)	
Issuance of debt	 	712		 	1,732		 	1		 	—		 	2,445		
Repayment of debt	 	(110	)	 	(1,776	)	 	(10	)	 	—		 	(1,896	)	
Cash dividends to shareholders	 	(156	)	 	—		 	—		 	—		 	(156	)	
Noncontrolling interests and other financing activities	 	—		 	—		 	(23	)	 	—		 	(23	)	
CASH (USED FOR) PROVIDED BY
FINANCING ACTIVITIES	 	(93	)	 	(178	)	 	(1,223	)	 	1,153		 	(341	)	
 	 	 	 	 	 	 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	 	—		 	—		 	(43	)	 	—		 	(43	)	
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	 	—		 	(506	)	 	(654	)	 	1,153		 	(7	)	
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	 	—		 	2,727		 	1,361		 	(3,714	)	 	374		
CASH AND CASH EQUIVALENTS AT END OF PERIOD	 	$	—		 	$	2,221		 	$	707		 	$	(2,561	)	 	$	367		

37

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
 
EXECUTIVE SUMMARY OF SECOND QUARTER 2016 FINANCIAL RESULTS
 
During the second quarter of 2016 , we continued to face certain headwinds that adversely impacted our business in prior periods. In our Risk Solutions segment, these headwinds included adverse changes in foreign currency exchange rates and a negative market impact in our Reinsurance business. In our HR Solutions segment, these headwinds included price compression in our benefits administration business.
 
The following is a summary of our second quarter and first six months of 2016 financial results:

•	For the second quarter of 2016 , revenue decreased $39 million , or 1% , to $2.8 billion compared to the prior year period due primarily to a 2% unfavorable impact from foreign currency exchange rates and a 2% decrease in commissions and fees related to net divestitures, partially offset by organic revenue growth of 3% . For the first six months ended June 30, 2016 , revenue decreased 2% compared to the prior year period due primarily to a 3% unfavorable impact from foreign currency exchange rates and a 2% decrease in commissions and fees related to net divestitures, partially offset by organic revenue growth of 3% . In Risk Solutions, organic revenue growth in the second quarter and first six months of 2016 was driven by strong organic growth in Retail brokerage across both the Americas and International businesses, as well as modest growth in Reinsurance compared to the prior year periods. The HR Solutions segment for the second quarter and first six months of 2016 had modest organic growth in Consulting compared to the prior year periods.	

•	Operating expenses for the second quarter of 2016 were $2.4 billion , a decrease of $167 million , or 7% , compared to the prior year period. The decrease was primarily due to a $176 million decrease in expense related to certain legacy litigation settlements in the prior year quarter, a $52 million decrease in expenses related to net divestitures, a $49 million favorable impact from foreign currency translation, and an $11 million decrease in intangible asset amortization, partially offset by a $62 million increase in expense related to certain pension settlements and an increase in expense to support 3% organic revenue growth. Operating expenses for the first six months of 2016 decreased by $231 million compared to the prior year period primarily due to a $176 million decrease in expense related to certain legacy litigation settlements in the prior year period, a $131 million favorable impact from foreign currency exchange rates, a $93 million decrease in expenses related to acquisitions, net of divestitures, and a $24 million decrease in intangible asset amortization, partially offset by a $62 million increase in expense related to certain pension settlements, $20 million of transaction and portfolio repositioning related costs in HR Solutions associated with the sale of certain businesses, and an increase in expense to support the 3% organic growth.	

•	Operating margin increased to 14.6% in the second quarter 2016 from 9.9% in the prior year period. Operating Margin for the first six months of 2016 was 15.4% as compared to 12.7% for the same period in 2015 . The increase in operating margin from the prior year period and first six months of 2016 was driven by organic revenue growth of 3% , return on investments, and a favorable impact from changes in foreign currency exchange rates, partially offset by an increase in expense. Operating margin for Risk Solutions increased 500 basis points from 15.2% in the second quarter 2015 to 20.2% in the second quarter 2016 and 310 basis points from 18.5% for the first six months of 2015 to 21.6% for the first six months of 2016 . Operating margin for HR Solutions increased 410 basis points from 4.0% in the second quarter 2015 to 8.1% in the second quarter 2016 and 170 basis points from 5.9% for the first six months of 2015 to 7.6% for the first six months of 2016 .	

•	Due to the factors set forth above, Net income attributable to Aon shareholders increased $94 million , or 53% , to $272 million for the second quarter 2016 compared to the second quarter 2015 . During the first six months of 2016 , Net income attributable to sharesholders increased $81 million or 16% , to 587 million in compared to the first six months of 2015 .	

•	Cash flow provided by operating activities was $764 million for the first six months of 2016 , an increase of $186 million from $578 million provided by operating activities in the first six months of 2015 . The increase was driven by an increase in net income, a decrease in cash tax payments, a decline in cash paid for pension contributions, and underlying working capital improvements.	

38

We focus on four key non-GAAP metrics that we communicate to shareholders: organic revenue, adjusted operating margins, adjusted diluted earnings per share, and free cash flow.  The following is our measure of performance against these four metrics for the second quarter of 2016 :

•	Organic revenue growth, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Organic Revenue," was 3% for the second quarter and first six months of 2016 , an increase over 2% organic growth in the prior year second quarter and first six months of 2015 . In Risk Solutions, organic revenue growth was driven by strong growth in Retail brokerage across both the Americas and International businesses, as well as modest growth in Reinsurance organic revenue. HR Solutions had modest organic growth in Consulting.	

•	Adjusted operating margin, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Adjusted Operating Margin," was 19.3% for Aon overall, 24.9% for the Risk Solutions segment, and 12.8% for the HR Solutions segment for the second quarter 2016 .  Adjusted operating margin was 19.0% for Aon overall, 24.2% for the Risk Solutions segment, and 13.2% for the HR Solutions segment for the second quarter 2015 . For the first six months of 2016 , adjusted operating margin was 18.9% for Aon overall, 24.5% for the Risk Solutions segment, and 12.3% for the HR Solutions operating segment. For the first six months of 2015 , adjusted operating margin was 18.6% for Aon overall, 23.7% for the Risk Solutions segment, and 13.2% for the HR Solutions segment. The increase in adjusted operating margin for the Risk Solutions segment in the second quarter and first six months of 2016 as compared to the prior year period primarily reflected organic revenue growth of 3% , a favorable impact from foreign currency exchange rates, and return on investments in data and analytics. In the HR Solutions segment in the second quarter of 2016 , the operating margin decline was primarily driven by an increase in expense to support future growth, partially offset by organic revenue growth of 1% . For the first six months of 2016 , the decrease in adjusted operating margin as compared to the prior year period was primarily driven by $20 million of transaction and portfolio repositioning related costs associated with the sale of certain businesses and increase in expense to support future growth, partially offset by organic growth of 2% .	

•	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 $1.39 per share in the second quarter and $2.75 per share in the first six months of 2016 , compared to $1.31 per share in the second quarter and $2.67 per share in the first six months of 2015 .	

•	Free cash flow, a non-GAAP measure as defined under the caption "Review of Consolidated Results — Free Cash Flow," increased $224 million , or 51% , to $660 million from the prior year period, driven by a 32% increase in cash flow from operations and a decrease of $38 million in capital expenditures.	

39

REVIEW OF CONSOLIDATED RESULTS
 
Summary of Results
 
Our consolidated results of operations follow (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
Revenue:	 		 	 		 	 	 	 	
Commissions, fees and other	$	2,761		 	$	2,800		 	$	5,548		 	$	5,642		
Fiduciary investment income	5		 	5		 	10		 	10		
Total revenue	2,766		 	2,805		 	5,558		 	5,652		
Expenses:	 		 	 		 	 	 	 	
Compensation and benefits	1,688		 	1,653		 	3,337		 	3,336		
Other general expenses	673		 	875		 	1,366		 	1,598		
Total operating expenses	2,361		 	2,528		 	4,703		 	4,934		
Operating income	405		 	277		 	855		 	718		
Interest income	3		 	4		 	5		 	7		
Interest expense	(73	)	 	(68	)	 	(142	)	 	(133	)	
Other income	—		 	1		 	18		 	43		
Income before income taxes	335		 	214		 	736		 	635		
Income taxes	55		 	26		 	129		 	106		
Net income	280		 	188		 	607		 	529		
Less: Net income attributable to noncontrolling interests	8		 	10		 	20		 	23		
Net income attributable to Aon shareholders	$	272		 	$	178		 	$	587		 	$	506		
 
Revenue
 
Total revenue decreased by $39 million , or 1% , in the second quarter 2016 compared to the second quarter 2015 .  This change resulted from a $14 million increase in Risk Solutions and a $48 million decrease in HR Solutions, excluding intersegment eliminations. The results of the Risk Solutions segment reflected 3% organic growth in commissions and fees, partially offset by a 2% unfavorable impact from foreign currency exchange rates. The decrease in revenue in the HR Solutions segment was driven by a 5% decrease in fees and commissions related to net divestitures and a 1% unfavorable impact from foreign currency exchange rates, partially offset by 1% organic revenue growth.

First the first six months of 2016 , revenue decreased 2% , or $94 million , compared to the prior year period. The change consists of a $9 million decrease in the Risk Solutions segment and a $88 million decrease in the HR Solutions segment. The results of the Risk Solutions segment reflected a 3% unfavorable impact from foreign currency exchange rates, partially offset by 3% organic growth in commissions and fees. The decrease in HR Solutions revenue was driven by a 5% decrease in fees and commissions related to net divestitures and a 2% unfavorable impact from foreign currency exchange rates, partially offset by 2% organic growth.

Compensation and Benefits
 
Compensation and benefits increased $35 million , or 2% , in the second quarter of 2016 compared to the second quarter 2015 . This increase was primarily driven by a $62 million increase in expenses related to certain pension settlements and an increase in expense associated with 3% organic revenue growth, partially offset by a $34 million favorable impact from foreign currency exchange rates and a $32 million decrease in expenses related to net divestitures.

Compensation and benefits increased $1 million compared to the first six months of 2015 . The increase was primarily driven by a $62 million increase in expenses related to certain pension settlements, $20 million of transaction and portfolio repositioning costs primarily associated with the sale of certain businesses, and an increase in expense to support 3% organic growth, partially offset by a $92 million favorable impact from foreign currency exchange rates and a $61 million favorable impact related to net divestitures.

40

Other General Expenses
 
Other general expenses in the second quarter of 2016 decreased $202 million , or 23% , compared to the second quarter 2015 . This decrease was due primarily to a $176 million decrease in expense related to certain legacy litigation settlements in the prior year quarter, a $20 million decrease in expenses related to net divestitures, a $15 million favorable impact from foreign currency exchange rates, and an $11 million decrease in intangible asset amortization, partially offset by an increase in expense to support 3% organic revenue growth.

Other general expenses in the first six months of 2016 decreased $232 million , or 15% , compared to the first six months of 2015 . This decrease was due primarily to a $176 million decrease in expense related to certain legacy litigation settlements in the prior year quarter, $39 million favorable impact from foreign currency exchange rates, a $32 million decrease in expenses related to net divestitures, and a $24 million decrease in intangible asset amortization, partially offset by an increase in expense to support 3% organic revenue growth.

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 2016 , interest income decreased $1 million to $3 million compared to the second quarter 2015 . For the first six months of 2016 , Interest income decreased $2 million to $5 million compared to the first six months of 2015 .

Interest Expense
 
Interest expense, which represents the cost of our debt obligations, increased $5 million during the second quarter 2016 compared to the second quarter of 2015 and increased $9 million compared to the first six months of 2015 . The increase in interest expense is due to the overlap of $750 million of notes issued in the first quarter of 2016 for notes that matured in the second quarter of 2016.

Other Income (Expense)

Other income was immaterial for the second quarter of 2016 , compared to $1 million for the second quarter of 2015 .  Other income for the second quarter 2016 includes net gains on the sale of certain businesses that were offset by net losses on certain long term investments and losses on foreign currency remeasurement. Other income of $1 million in the second quarter 2015 primarily included net gains on certain long term investments and the sale of certain businesses.

Other income was $18 million for the first six months of 2016 , compared to $43 million for the first six months of 2015 .  Other income for the first six months of 2016 includes $41 million of net gains on the sale of certain businesses, partially offset by a $16 million net loss on foreign currency remeasurement and $10 million of net losses on certain long term investments. Other income of $43 million in the first six months of 2015 primarily included a $20 million gain on the sale of businesses, and $17 million of foreign currency remeasurement gains.

Income before Income Taxes
 
Income before income taxes for the second quarter of 2016 was $335 million , a 57% increase from $214 million in the second quarter of 2015 . Income before income taxes for the first six months of 2016 was $736 million , a 16% increase from $635 million from the first six months of 2015 .

Income Taxes
 
The effective tax rate on net income was 16.4% and 12.2% for the quarters ended June 30, 2016 and 2015 , respectively. The effective tax rate on net income was 17.5% and 16.8% for the six months ended June 30, 2016 and 2015 , respectively. The effective tax rate for the six months ended June 30, 2016 was impacted by changes in the geographical distribution of income and certain discrete items.

41

Net Income Attributable to Aon Shareholders  

Net income attributable to Aon shareholders for the three months ended June 30, 2016 increased to $272 million , or $1.01 per diluted share, from $178 million , or $0.62 per diluted share, in the prior year period. Net income attributable to Aon shareholders for the first six months of 2016 to $587 million , or $2.16 per diluted share, from $506 million , or $1.76 per diluted share, in the prior year period.

Non-GAAP Metrics
 
In our discussion of consolidated results, we sometimes refer to certain non-GAAP supplemental information derived from consolidated financial information specifically related to organic revenue growth, adjusted operating margin, adjusted diluted earnings per share, 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 intangible asset amortization, because management does not believe these expenses reflect our core operating performance. 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.

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

												
 	Three months ended June 30, 2016	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	2,766		 	$	1,847		 	$	931		
Operating income — U.S. GAAP	$	405		 	$	373		 	$	75		
Intangible asset amortization	68		 	25		 	43		
Pension Settlement	62		 	61		 	1		
Operating income — as adjusted	$	535		 	$	459		 	$	119		
Operating margins — U.S. GAAP	14.6	%	 	20.2	%	 	8.1	%	
Operating margins — as adjusted	19.3	%	 	24.9	%	 	12.8	%	
 	 	 	 	 	 	
 	Six months ended June 30, 2016	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	5,558		 	$	3,719		 	$	1,861		
Operating income — U.S. GAAP	$	855		 	$	802		 	$	142		
Intangible asset amortization	135		 	49		 	86		
Pension Settlement	62		 	61		 	1		
Operating income — as adjusted	$	1,052		 	$	912		 	$	229		
Operating margins — U.S. GAAP	15.4	%	 	21.6	%	 	7.6	%	
Operating margins — as adjusted	18.9	%	 	24.5	%	 	12.3	%	

42

	
												
 	Three months ended June 30, 2015	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	2,805		 	$	1,833		 	$	979		
Operating income — U.S. GAAP	$	277		 	$	279		 	$	39		
Intangible asset amortization	79		 	28		 	51		
Legacy Litigation	176		 	137		 	39		
Operating income — as adjusted	$	532		 	$	444		 	$	129		
Operating margins — U.S. GAAP	9.9	%	 	15.2	%	 	4.0	%	
Operating margins — as adjusted	19.0	%	 	24.2	%	 	13.2	%	
 	 	 	 	 	 	
 	Six months ended June 30, 2015	
 	Total Aon (1)	 	Risk Solutions	 	HR Solutions	
Revenue — U.S. GAAP	$	5,652		 	$	3,728		 	$	1,949		
Operating income — U.S. GAAP	$	718		 	$	691		 	$	115		
Intangible asset amortization	159		 	56		 	103		
Legacy Litigation	176		 	137		 	39		
Operating income — as adjusted	$	1,053		 	$	884		 	$	257		
Operating margins — U.S. GAAP	12.7	%	 	18.5	%	 	5.9	%	
Operating margins — as adjusted	18.6	%	 	23.7	%	 	13.2	%	
 	 	 	 	 	 	
(1) Includes unallocated expenses and the elimination of inter-segment revenue.	

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 intangible asset amortization, along with related income taxes, because management does not believe these expenses are representative of our core earnings. 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.

The effective tax rates used in the U.S. GAAP financial statements were 16.4% and 12.2% for the three months ended June 30, 2016 and 2015, respectively, and 17.5% and 16.8% for the six months ended June 30, 2016 and June 30, 2015 , respectively. After adjusting to exclude the applicable tax impact associated with expenses for pension settlements, the adjusted effective tax rates for the second quarter and first six months of 2016 were 17.4% and 17.9%, respectively. After adjusting to exclude the applicable tax impact associated with expenses for legacy litigation, the adjusted effective tax rates for the second quarter and first six months of 2015 were 18.0% and 18.6%, respectively.

43

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, 2016	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	405		 	$	130		 	$	535		
Interest income	3		 	—		 	3		
Interest expense	(73	)	 	—		 	(73	)	
Other income	—		 	—		 	—		
Income before income taxes	335		 	130		 	465		
Income taxes	55		 	26		 	81		
Net income	280		 	104		 	384		
Less: Net income attributable to noncontrolling interests	8		 	—		 	8		
Net income attributable to Aon shareholders	$	272		 	$	104		 	$	376		
Diluted earnings per share	$	1.01		 	$	0.38		 	$	1.39		
Weighted average ordinary shares outstanding — diluted	269.8		 	—		 	269.8		
 	 	 	 	 	 	
 	Six months ended June 30, 2016	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	855		 	$	197		 	$	1,052		
Interest income	5		 	—		 	5		
Interest expense	(142	)	 	—		 	(142	)	
Other income	18		 	—		 	18		
Income before income taxes	736		 	197		 	933		
Income taxes	129		 	38		 	167		
Net income	607		 	159		 	766		
Less: Net income attributable to noncontrolling interests	20		 	—		 	20		
Net income attributable to Aon shareholders	$	587		 	$	159		 	$	746		
Diluted earnings per share	$	2.16		 	$	0.59		 	$	2.75		
Weighted average ordinary shares outstanding — diluted	271.7		 	—		 	271.7		

44

	
												
 	Three months ended June 30, 2015	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	277		 	$	255		 	$	532		
Interest income	4		 	—		 	4		
Interest expense	(68	)	 	—		 	(68	)	
Other income	1		 	—		 	1		
Income before income taxes	214		 	255		 	469		
Income taxes	26		 	58		 	84		
Net income	188		 	197		 	385		
Less: Net income attributable to noncontrolling interests	10		 	—		 	10		
Net income attributable to Aon shareholders	$	178		 	$	197		 	$	375		
Diluted earnings per share	$	0.62		 	$	0.69		 	$	1.31		
Weighted average ordinary shares outstanding — diluted	286.7		 	—		 	286.7		
 	 	 	 	 	 	
 	Six months ended June 30, 2015	
 	U.S. GAAP	 	Adjustments	 	As Adjusted	
Operating income	$	718		 	$	335		 	$	1,053		
Interest income	7		 	—		 	7		
Interest expense	(133	)	 	—		 	(133	)	
Other income	43		 	—		 	43		
Income before income taxes	635		 	335		 	970		
Income taxes	106		 	74		 	180		
Net income	529		 	261		 	790		
Less: Net income attributable to noncontrolling interests	23		 	—		 	23		
Net income attributable to Aon shareholders	$	506		 	$	261		 	$	767		
Diluted earnings per share	$	1.76		 	$	0.91		 	$	2.67		
Weighted average ordinary shares outstanding — diluted	286.9		 	—		 	286.9		

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,	
 	2016	 	2015	
Cash provided by operating activities - U.S. GAAP	$	764		 	$	578		
Less: Capital expenditures	(104	)	 	(142	)	
Free cash flow	$	660		 	$	436		

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.  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 the prior year quarter's revenue, expenses, and net income using the current quarter's foreign exchange rates. 

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Translating prior year quarter results at current quarter foreign exchange rates, currency fluctuations had no impact and an unfavorable impact of $0.05 on net income per diluted share during the three and six months ended June 30, 2016 , respectively, and an unfavorable impact of $0.07 and $0.21 on adjusted net income per diluted share during the three and six months ended June 30, 2015 , respectively. Currency fluctuations had no impact and an unfavorable impact of $0.05 on adjusted net income per diluted share during the three and six months ended June 30, 2016 , respectively, and an unfavorable impact of $0.08 and $0.22 on adjusted net income per diluted share during the three and six months ended June 30, 2015 , respectively. 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.

LIQUIDITY AND FINANCIAL CONDITION

Liquidity

Executive Summary

We believe that our balance sheet and strong cash flow provide us with adequate liquidity.  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, pension obligations, and shareholder dividends. We believe that cash flows from operations, available credit facilities and the capital markets will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, pension contributions, and anticipated working capital requirements, for the foreseeable future.

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 generally 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, 2016 increased $186 million , or 32% , to $764 million from the prior year period. This amount represents net income reported by the Company, as adjusted for gains or losses on sales of business, financial instruments and foreign exchange, and our non-cash expenses, which include share-based compensation, depreciation, and amortization, as well as changes in working capital that relate primarily to the timing of payments of accounts payable and accrued liabilities and collection of receivables. The increase from the prior year was primarily driven by increases in current income taxes, partially offset by reductions in pension contributions and restructuring payments, as well as working capital improvements.

Pension contributions were $63 million for the six months ended June 30, 2016 as compared to $104 million for the six months ended June 30, 2015 . For the remainder of 2016 , we expect to contribute approximately $87 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 2016 to be sufficient to service our debt and contractual obligations, finance capital expenditures, continue purchases of shares under the Repurchase Programs, 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 access the commercial paper markets or borrow under our credit facilities to accommodate any timing differences in cash flows.  We have committed credit facilities totaling $1.3 billion , of which all $1.3 billion was available at June 30, 2016 , 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 used for investing activities was $84 million during the six months ended June 30, 2016 . The primary drivers of the cash flow used for investing activities were $104 million of capital expenditures, $183 million of acquisitions of businesses, net of cash acquired, and $6 million of net purchases of long-term investments, offset by $103 million in proceeds from the sale of businesses and $106 million in net sales of short-term investments. The gains and losses corresponding to cash flows provided by the net sales of long-term investments are recognized in Other income in the Condensed Consolidated Statements of Income.

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Cash flow used for investing activities was $201 million during the six months ended June 30, 2015 . The primary drivers of the cash flow used for investing activities were $97 million in net purchases of short-term investments, $142 million of capital expenditures, and $23 million of acquisitions of businesses, net of cash acquired, offset by $52 million in proceeds from the sale of businesses and $9 million of net proceeds from long-term investments.
 
Financing Activities
 
Cash flow used for financing activities during the six months ended June 30, 2016 was $644 million . The primary drivers of the cash flow used for financing activities were $750 million of share repurchases, $169 million of dividends paid to shareholders, $87 million in net cash payments related to issuance of shares, and $62 million of transactions with noncontrolling interests and other financing activities, partially offset by $424 million of issuances of debt, net of repayments .
 
Cash flow used for financing activities during the six months ended June 30, 2015 was $341 million . The primary drivers of cash flow used for financing activities were $550 million of share repurchases, $156 million of dividends paid to shareholders, $161 million in net cash payments related to issuance of shares, and $23 million of transactions with noncontrolling interests and other financing activities, partially offset by $549 million of issuances of debt, net of repayments.
 
As a U.K. incorporated company, we are required under U.K. law to have available "distributable reserves" to make share repurchases or pay dividends to shareholders. Distributable reserves are created through the earnings of the U.K. parent company. Distributable reserves are not linked to a U.S. GAAP reported amount (e.g., retained earnings). As of June 30, 2016 and December 31, 2015 , we had distributable reserves in excess of $2.3 billion and $2.1 billion , respectively. We believe that we will have sufficient distributable reserves to fund shareholder dividends, if and to the extent declared, for the foreseeable future.
 
Cash and Investments
 
At June 30, 2016 , our cash and cash equivalents and short-term investments were $689 million , a decrease of $51 million from December 31, 2015 . This decrease was primarily related to $750 million in share repurchases, $104 million of capital expenditures, $183 million in acquisitions of businesses, net of cash acquired, and $169 million in dividends, partially offset by $764 million cash provided by operations and $424 million in proceeds from debt issuances, net of repayments.  Of the total balance as of June 30, 2016 , $87 million was restricted as to its use, which was comprised of $59 million of operating funds in the U.K., as required by the Financial Conduct Authority, and $28 million held as collateral for various business purposes.  At June 30, 2016 , $1.6 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 $897 million were held in other countries. We maintain multicurrency cash pools with a third-party banks in which various Aon entities participate. Individual Aon entities are permitted to overdraw on their individual accounts provided the overall global balance does not fall below zero. At June 30, 2016 , 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, 2015 , $105 million was restricted as to its use, which was comprised of $65 million of operating funds in the U.K., as required by the Financial Conduct Authority, and $40 million held as collateral for various business purposes. At December 31, 2015 , $2.6 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 $1.9 billion were 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 premiums, claims, and refunds, make payments to underwriters and insureds, collect funds from clients and make payments on their behalf, and the movement of foreign currency exchange rates.  Fiduciary assets, because of their nature, are generally invested in very liquid securities with highly-rated, credit-worthy financial institutions.  In our Condensed Consolidated Statements of Financial Position, the amounts we report for Fiduciary assets and Fiduciary liabilities are equal.  Our Fiduciary assets included cash and short-term investments of $3.8 billion and $3.4 billion at June 30, 2016 and December 31, 2015 , respectively, and fiduciary receivables of $6.4 billion and $6.5 billion at June 30, 2016 and December 31, 2015 , respectively.  While we earn investment income on the fiduciary assets held in cash and investments, the cash and investments cannot be used for general corporate purposes.

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As disclosed in Note 13 "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 are not aware of any market liquidity issues that would materially impact the fair value of these investments.
 
At June 30, 2016 , our investments in money market funds had a fair value of $1.5 billion and are reported as Short-term investments or Fiduciary assets in the Condensed Consolidated Statements of Financial Position depending on their nature.

The following table summarizes our Fiduciary assets, non-fiduciary Cash and cash equivalents, and Short-term investments at June 30, 2016 (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	 	$	438		 	$	—		 	$	2,582		 	$	3,020		
Money market funds	 	—		 	251		 	1,232		 	1,483		
Other investments due within one year	 	—		 	—		 	—		 	—		
Cash and short-term investments	 	438		 	251		 	3,814		 	4,503		
Fiduciary receivables	 	—		 	—		 	6,387		 	6,387		
Total	 	$	438		 	$	251		 	$	10,201		 	$	10,890		
 
Share Repurchase Program
 
In April 2012, our Board of Directors authorized the 2012 Share Repurchase Program under which up to $5.0 billion of Class A Ordinary Shares may be repurchased. In November 2014, our Board of Directors authorized the 2014 Share Repurchase Program pursuant to which up to $5.0 billion may be repurchased in addition to the $5.0 billion authorized under the 2012 Share Repurchase Program. Under each program, shares may be repurchased through the open market or in privately negotiated transactions, based on prevailing market conditions, funded from available capital.

In the second quarter of 2016, the Company did not repurchase shares. During the six months ended June 30, 2016, we repurchased 7.7 million shares at an average price per share of $97.92 for a total cost of approximately $750 million. Included in the 7.7 million shares repurchased were 0.6 million shares repurchased in March 2016 that did not settle until April 2016. These shares were settled at an average price per share of $103.58 and total cost of $65 million. In the second quarter of 2015 , the Company repurchased 3.0 million shares at an average price per share of $100.92 for a total cost of approximately $300 million . During the six months ended June 30, 2015, we repurchased 5.5 million shares at an average price per share of $100.57 for a total cost of approximately $550 million.

In August 2015, the $5 billion of Class A Ordinary Shares authorized under the 2012 Share Repurchase Program was exhausted. At June 30, 2016 , the remaining authorized amount for share repurchase under the 2014 Share Repurchase Program is approximately $3.3 billion . Under the Repurchase Programs, the Company has repurchased a total of 85.7 million shares for an aggregate cost of approximately $6.7 billion .
 
For information regarding share repurchases made during the second quarter of 2016 , see Part II, Item 2 — "Unregistered Sales of Equity Securities and Use of Proceeds" below.

Borrowings
 
Total debt at June 30, 2016 was $6.2 billion , which represents an increase of $458 million compared to December 31, 2015 . This increase is primarily due to the issuance of $750 million of 3.875% Senior Notes due December 2025 and an increase in commercial paper outstanding of $191 million , partially offset by the repayment of $500 million of 3.125% Senior Notes which matured in May 2016. Commercial paper activity during the three and six months ended June 30, 2016 included total issuances of $1.0 billion and $1.3 billion , respectively, compared to $976 million and $1.8 billion for the three and six months ended June 30, 2015 , respectively. The proceeds of the commercial paper issuances were used primarily for short-term working capital needs.

On March 1, 2016, Aon plc issued $750 million of 3.875% Senior Notes due December 2025. We used the proceeds of the issuance for general corporate purposes.

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On May 27, 2016, $500 million of 3.125% Senior Notes issued by Aon Corporation matured and were repaid.
 
Credit Facilities
 
As of June 30, 2016 , Aon plc had two primary committed credit facilities outstanding: its $400 million U.S. credit facility expiring in March 2017 (the "2017 Facility") and its $900 million multi-currency U.S. credit facility originally expiring in February 2020. Effective February 2, 2016, the $900 million multi-currency U.S. credit facility terms were extended for one year and will now expire on February 2, 2021 (the "2021 Facility"). Each of these facilities is intended to support our commercial paper obligations and our general working capital needs.  In addition, each of these facilities includes customary representations, warranties and covenants, including financial covenants that require us to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, tested quarterly.  At June 30, 2016 , we had no borrowings under, and were in compliance with, these financial covenants and all other covenants contained in the 2017 Facility and the 2021 Facility during the three and six months ended June 30, 2016 .
Our total debt-to-EBITDA ratio at June 30, 2016 and 2015 based on a rolling twelve months is calculated as follows: 

						
 	For the twelve months ended June 30,	
 	2016	 	2015	
Net income	1,500		 	1,311		
Interest expense	282		 	265		
Income taxes	290		 	295		
Depreciation of fixed assets	230		 	233		
Amortization of intangible assets	290		 	338		
Total EBITDA	2,592		 	2,442		
 	 	 	 	
Total Debt	6,158		 	6,061		
 	 	 	 	
Total debt-to-EBITDA ratio	2.4	 	2.5	
We use EBITDA, as defined by our financial covenants, as a non-GAAP measure. This supplemental information related to EBITDA represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Consolidated Financial Statements and Notes thereto.

Shelf Registration Statement

On September 3, 2015, 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 29, 2016 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	
 
A downgrade in the credit ratings of our senior debt and commercial paper could increase our borrowing costs, reduce or eliminate our access to capital, reduce our financial flexibility, increase our commercial paper interest rates, or restrict our access to the commercial paper market altogether, and/or impact future pension contribution requirements.

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Letters of Credit and Other Guarantees
 
We had total LOCs outstanding of approximately $82 million at June 30, 2016 , compared to $58 million at December 31, 2015 . 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.
 
We have certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $89 million at June 30, 2016 , compared to $104 million at December 31, 2015 .
 
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 $12 million at June 30, 2016 and December 31, 2015 , respectively.  During the three and six months ended June 30, 2016 , we did not fund any significant commitments.

Other Liquidity Matters

We do not have significant 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, 2016 , our net assets were $5.6 billion , representing total assets minus total liabilities, a decrease from $6.2 billion at December 31, 2015 . The decrease was due primarily to $750 million of share repurchases, $169 million of dividend payments, and an increase of $299 million in Accumulated other comprehensive loss related primarily to foreign currency translation adjustment and post-retirement benefit obligations, partially offset by Net income of $607 million for the six months ended June 30, 2016 .  Working capital increased by $454 million to $1,104 million from December 31, 2015 .
 
Accumulated Other Comprehensive Loss
 
Accumulated other comprehensive loss increased $299 million to $3,722 million at June 30, 2016 as compared to $3,423 million at December 31, 2015 , which was primarily driven by the following:

•	negative net foreign currency translation adjustments of $138 million , which are attributable to the strengthening of the U.S. dollar against certain foreign currencies,	
		
•	an increase of $150 million in net post-retirement benefit obligations, and	
		
•	net financial instrument losses of $11 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)	2016	 	2015	 	2016	 	2015	
Revenue	$	1,847		 	$	1,833		 	$	3,719		 	$	3,728		
Operating income	373		 	279		 	802		 	691		
Operating margin	20.2	%	 	15.2	%	 	21.6	%	 	18.5	%	
 
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 2016 , pricing was modestly negative on average globally, and we still consider this 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 2016 , we faced difficult conditions as a result of continued weakness in the global economy and the repricing of credit risk.  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 the second quarter. 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 Inpoint; 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,	
 	2016	 	2015	 	2016	 	2015	
Retail brokerage:	 		 	 		 	 	 	 	
Americas	$	830		 	$	837		 	$	1,538		 	$	1,550		
International (1)	678		 	661		 	1,465		 	1,461		
Total retail brokerage	1,508		 	1,498		 	3,003		 	3,011		
Reinsurance brokerage	334		 	330		 	706		 	707		
Total	$	1,842		 	$	1,828		 	$	3,709		 	$	3,718		
  ______________________________________________
(1) Includes the U.K., Europe, Middle East, Africa and Asia Pacific.
 
Commissions, fees and other revenue for Risk Solutions increased $14 million , or 1% , in the second quarter 2016 compared to the second quarter 2015 . The increase in revenue was driven by 3% organic growth, partially offset by a 2% unfavorable

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impact from foreign currency exchange rates. During the first six months of 2016 , Commissions, fees, and other revenue decreased $9 million , as compared to the first six months of 2015 due to a 3% unfavorable impact from foreign currency exchange rates, offset by 3% organic growth.
 
Reconciliation of organic revenue growth to reported commissions, fees and other revenue growth for 2016 versus 2015 is as follows:

													
Three months ended June 30, 2016	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Retail brokerage:	 	 		 	 		 	 		 	 		
Americas	 	(1	)%	 	(3	)%	 	—	 %	 	2	%	
International (1)	 	3		 	(2	)	 	(1	)	 	6		
Total retail brokerage	 	1		 	(3	)	 	—		 	4		
Reinsurance brokerage	 	1		 	—		 	—		 	1		
Total	 	1	 %	 	(2	)%	 	—	 %	 	3	%	
 	 	 	 	 	 	 	 	 	
Six months ended June 30,	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Retail brokerage:	 	 		 	 		 	 		 	 		
Americas	 	(1	)%	 	(3	)%	 	(1	)%	 	3	%	
International (1)	 	—		 	(4	)	 	(1	)	 	5		
Total retail brokerage	 	—		 	(4	)	 	—		 	4		
Reinsurance brokerage	 	—		 	(1	)	 	—		 	1		
Total	 	—	 %	 	(3	)%	 	—	 %	 	3	%	
____________________________________________
(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 of 2016 driven by 4% organic revenue growth, partially offset by a 3% unfavorable impact from foreign currency exchange rates. For the first six months of 2016 , commissions, fees, and other revenue remained flat, as 4% organic revenue growth was offset by a 4% unfavorable impact from foreign currency exchange rates.
 
Americas Commissions, fees and other revenue decreased 1% in both the second quarter and first six months of 2016 , reflecting 2% growth in organic revenue that was more than offset by a 3% unfavorable impact from foreign currency exchange rates for the second quarter of 2016. For the first six months of 2016, the decrease in revenue was driven by a 3% unfavorable impact from foreign currency exchange rates and a 1% decrease in commissions and fees related to net divestitures, partially offset by 3% growth in organic revenue. Organic revenue growth of 2% and 3% in the three and six months ended June 30, 2016 , respectively, was driven by strong growth in Affinity and modest growth in Latin America and US Retail.
 
International Commissions, fees and other revenue increased 3% in the second quarter 2016 , driven by 6% organic revenue growth, partially offset by a 2% unfavorable impact from foreign currency exchange rates and a 1% decrease in commissions and fees related to net divestitures. For the first six months of 2016 , commissions, fees, and other revenue remained flat as organic growth of 5% was offset by a 4% unfavorable impact from foreign currency exchange rates and a 1% decrease in commissions and fees related to net divestitures. Strong organic revenue growth in both periods was driven by continued growth across Asia and the Pacific, as well as solid growth in continental Europe driven by both new business generation and management of the renewal book portfolio.
 
Reinsurance brokerage Commissions, fees and other revenue increased 1% in the second quarter of 2016 , as compared to the prior year period, driven by 1% organic revenue growth. For the first six months of 2016 , commissions, fees, and other revenue was flat as compared to the prior year period, as 1% organic revenue growth was offset by a 1% unfavorable impact from foreign currency exchange rates. Organic revenue growth for both the second quarter and first six months of 2016 was driven primarily by growth in facultative placements and net new business generation in treaty placements, partially offset by an unfavorable market impact.

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Operating Income
 
Operating income for the second quarter 2016 increased $94 million , or 34% , from the second quarter of 2015 to $373 million in the first quarter of 2016 , and operating income margin increased from 15.2% in the first quarter of 2015 to 20.2% in the first quarter of 2016 .  For the first six months of 2016 , operating income increased $111 million , or 16% , to $802 million . The increase in both periods was driven primarily by solid organic revenue growth and return on investments in data and analytics across the portfolio, as well as a decrease in expense related to certain legacy litigation.
 
HR Solutions

																
 	Three months ended June 30,	 	Six months ended June 30,	
(millions, except percentage data)	2016	 	2015	 	2016	 	2015	
Revenue	$	931		 	$	979		 	$	1,861		 	$	1,949		
Operating income	75		 	39		 	142		 	115		
Operating margin	8.1	%	 	4.0	%	 	7.6	%	 	5.9	%	
 
Our HR Solutions segment generated approximately 34% of our consolidated total revenues in the second quarter of 2016 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 ("HR BPO") provides market-leading solutions to manage employee data; administers benefits, payroll and other human resources processes; and records and manages talent, workforce and other core human resource process transactions as well as other complementary services such as flexible spending, dependent audit and participant advocacy.	
 
Revenue
 
Commissions, fees and other revenue were as follows (in millions):

																
 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
Consulting services	$	383		 	$	391		 	$	757		 	$	762		
Outsourcing	550		 	599		 	1,110		 	1,203		
Intrasegment	(2	)	 	(11	)	 	(6	)	 	(16	)	
Total	$	931		 	$	979		 	$	1,861		 	$	1,949		

Commissions, fees and other revenue for HR Solutions decreased $48 million , or 5% , in the second quarter 2016 compared to the second quarter 2015 . The modest decrease in revenue reflects a 5% decrease in commissions and fees related to net divestitures and a 1% unfavorable impact from foreign exchange rates, partially offset by 1% organic growth in commissions and fees. For the first six months of 2016 , revenue decreased $88 million due to a 5% decrease in commissions and fees related to net divestitures and a 2% unfavorable impact from foreign currency exchange rates, partially offset by 2% organic growth.

53

Reconciliation of organic revenue growth to reported commissions, fees and other revenue growth for 2016 versus 2015 is as follows:

													
Three months ended June 30, 2016	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Consulting services	 	(2	)%	 	(2	)%	 	(1	)%	 	1	%	
Outsourcing	 	(8	)	 	(1	)	 	(7	)	 	—		
Total	 	(5	)%	 	(1	)%	 	(5	)%	 	1	%	
 	 	 	 	 	 	 	 	 	
Six months ended June 30,	 	Percent Change	 	Less: Currency Impact	 	Less: Acquisitions, Divestitures & Other	 	Organic Revenue	
Consulting services	 	(1	)%	 	(2	)%	 	(1	)%	 	2	%	
Outsourcing	 	(8	)	 	(1	)	 	(7	)	 	—		
Total	 	(5	)%	 	(2	)%	 	(5	)%	 	2	%	

Consulting services revenue decreased $8 million , or 2% , for the second quarter of 2016 as compared to the prior year period due primarily to a 2% unfavorable impact from foreign currency exchange rates and a 1% decrease in commissions and fees related to net divestitures, partially offset by 1% organic revenue growth. For the first six months of 2016 , revenue decreased $5 million , or 1% as compared to the prior year period, as a result of a 2% unfavorable impact from foreign currency rates and a 1% decrease in commissions and fees related to net divestitures, partially offset by 2% organic growth. Organic revenue growth for both periods was driven primarily by continued growth in investment consulting, as well as growth in pension solutions.
 
Outsourcing revenue decreased $49 million , or 8% , for the second quarter of 2016 as compared to the prior year period due to a 7% decrease in commissions and fees related to net divestitures and a 1% unfavorable impact from foreign currency exchange rates. For the first six months of 2016 , revenue decreased $93 million , or 8% , as a result of a 7% decrease in commissions and fees related to net divestitures, and a 1% unfavorable impact from foreign currency exchange rates. Organic revenue growth in both periods was driven primarily by continued growth in HR BPO for cloud-based solutions, offset by a modest decline in benefits administration and project-related work.

Operating Income
 
Operating income for the second quarter of 2016 was $75 million , an increase of $36 million , or 92% , from the second quarter of 2015 . For the first six months of 2016 , operating income was $142 million , an increase from $115 million in the prior year period. The increase in both the second quarter and first six months of 2016 was primarily driven by organic revenue growth, a decrease in expenses related to certain legacy litigation settlements in the prior year quarter, and expense discipline. Operating margin for the HR Solutions segment was 8.1% in the second quarter, an increase from 4.0% in 2015 . For the first six months of 2016 , operating margin was 7.6% , an increase from 5.9% in 2015 .
 
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,	
 	2016	 	2015	 	2016	 	2015	
Operating income (loss):	 		 	 		 	 	 	 	
Risk Solutions	$	373		 	$	279		 	$	802		 	$	691		
HR Solutions	75		 	39		 	142		 	115		
Unallocated	(43	)	 	(41	)	 	(89	)	 	(88	)	
Operating income	405		 	277		 	855		 	718		
Interest income	3		 	4		 	5		 	7		
Interest expense	(73	)	 	(68	)	 	(142	)	 	(133	)	
Other income	—		 	1		 	18		 	43		
Income before income taxes	$	335		 	$	214		 	$	736		 	$	635		

54

Unallocated operating expense
 
Unallocated operating expense includes corporate governance costs not allocated to the operating segments.  Net unallocated expenses increased $2 million to $43 million in the second quarter 2016 as compared to the prior year period. Net unallocated expenses were $89 million for the first six months of 2016 and $88 million for the first six months of 2015 .
 
Interest income, Interest expense, and Other income
 
For a discussion of the components of Interest income, Interest expense, and Other income, see Management's Discussion of Financial Condition and Results of Operations - Review of Consolidated Results.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
There have been no changes in our critical accounting policies, which include revenue recognition, pensions, goodwill and other intangible assets, contingencies, share-based payments, and income taxes, as discussed in our 2015 Annual Report on Form 10-K.

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 reports we will subsequently file or furnish and have previously filed or 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," "probably," "potential," "looking forward," 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 and political conditions in different countries in which we do business around the world;	
		
•	changes in the competitive environment;	

•	fluctuations in exchange and interest rates, including negative yield in some jurisdictions, that could influence revenue and expense;	
		
•	changes in global equity and fixed income markets that could affect 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;	
		
•	the level of our debt limiting financial flexibility;	
		
•	rating agency actions that could affect our ability to borrow funds;	
		
•	the effect of the change in global headquarters and jurisdiction of incorporation, including differences in the anticipated benefits;	
		
•	changes in estimates or assumptions on our financial statements;	
		
•	limits on our subsidiaries to make dividend and other payments to us;	

55

		
•	the impact of lawsuits and other contingent liabilities and loss contingencies arising from errors and omissions and other claims against us;	
		
•	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 businesses and the possibility of conflicting regulatory requirements across jurisdictions in which we do business;	
		
•	the impact of any investigations brought by regulatory authorities in the U.S., U.K. and other countries;	
		
•	the impact of 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 effects of English law on our operating flexibility and the enforcement of judgments against us;	
		
•	the failure to retain and attract qualified personnel;	
		
•	international risks associated with our global operations;	
		
•	the effect of natural or man-made disasters;	
		
•	the potential of a system or network breach or disruption resulting in operational interruption or improper disclosure of personal data;	
		
•	our ability to develop and implement new technology;	
		
•	damage to our reputation among clients, markets or third parties;	
		
•	the actions taken by third parties that perform aspects of our business operations and client services;	
		
•	the extent to which we manage certain risks created in connection with the various services, including fiduciary and investments and other advisory services and business process outsourcing services, among others, that we currently provide, or will provide in the future, to clients;	
		
•	our ability to grow, develop and integrate companies that it acquires or new lines of business;	
		
•	changes in commercial property and casualty markets, commercial premium rates or methods of compensation;	
		
•	changes in the health care system or our relationships with insurance carriers; and	
		
•	our ability to implement initiatives intended to yield cost savings and the ability to achieve those cost savings.	
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, 2015 . These factors may be revised or supplemented in subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.
 
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 2015 Annual Report on Form 10-K.

56

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 British Pounds.  At June 30, 2016 , we have hedged approximately 45% of our U.K. subsidiaries' expected exposures to both U.S. Dollar and Euro transactions for the years ending December 31, 2016 and 2017, respectively. 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 not be impacted during the three months ended June 30, 2016 and would be unfavorably impacted by approximately $0.05 during the six months ended June 30, 2016 .  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 not be impacted during the three months ended June 30, 2016 and would be unfavorably impacted by approximately $0.05 during the six months ended June 30, 2016 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 in continental 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, 2016 .  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 appropriate statute, 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, 2016  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 14 "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, 2015 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
 
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 2016 :

	
															
Period	 	Total Number of Shares Purchased	 	Average Price Paid per Share	 	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	 	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)	
4/1/16 - 4/30/16	 	—		 	$	—		 	—		 	$	3,324,314,629		
5/1/16 - 5/31/16	 	—		 	—		 	—		 	3,324,314,629		
6/1/16 - 6/30/16	 	—		 	—		 	—		 	3,324,314,629		
Total	 	—		 	 	 	—		 	$	3,324,314,629		
  ______________________________________________

(1)  Our Board of Directors authorized the 2012 Share Repurchase Program in April 2012 and the 2014 Share Repurchase Program in November 2014. During the second quarter of 2016 , we did not repurchase shares under the Share Repurchase Program.

We did not make any unregistered sales of equity in the second quarter.
 
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 29, 2016	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	
10.1	 	International Assignment Letter with Gregory C. Case, effective July 1, 2016.	
10.2	 	International Assignment Letter with Christa Davies, effective July 1, 2016.	
10.3	 	International Assignment Letter with Stephen P. McGill, effective July 1, 2016.	
10.4	 	International Assignment Letter with Peter Lieb, effective July 1, 2016.	
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	

60

Greg Case
Aon Corporation
United States

June 17, 2016

International Assignment: Chicago, Illinois to London, England

Dear Greg,

This international assignment letter (this “Letter”) amends, restates, and extends the terms of your international assignment from Chicago, Illinois to London, England (your “International Assignment”). Unless otherwise explicitly provided herein, this Letter shall govern the terms and conditions of your International Assignment from July 1, 2016 through June 30, 2018 (the “Term”), and sets forth the entire agreement between you and the Company regarding your International Assignment during the Term. The terms and conditions of the letter entered into between you and Aon Corporation (the “Company”) dated January 12, 2012 and the extension letter entered into between you and the Company dated July 1, 2014 shall continue to apply through June 30, 2016.

We are committed to working with you to ensure that your International Assignment continues to be as successful and effectively managed as possible. This Letter sets out the terms and conditions of your International Assignment and the assistance we are committed to provide in connection with your International Assignment, consistent with the approval of, and directions provided by, the Board of Directors of Aon plc.

1.	Introduction	

Your continued International Assignment is subject to your acceptance of the terms and conditions outlined in this Letter. To the extent that anything in this Letter conflicts with the amended and restated employment agreement entered into between you and the Company dated January 16, 2015 (your “Employment Agreement”) or the Company's employment-related policies and practices generally (your Employment Agreement, together with such policies and practices, are your “Employment Terms”), this Letter, once countersigned by you, will be a variation to and modify your Employment Terms. Unless otherwise specified herein or in a subsequent agreement between the parties hereto, your Employment Terms will remain unchanged for the duration of your International Assignment. For purposes of this Letter, the terms “Cause,” “Good Reason,” “Termination Date,” and “Notice Date” shall have the meanings provided in your Employment Agreement unless otherwise specified. 

2.	International Assignment Duration	

Once the Term is completed, you will return to the Company's offices in Chicago, Illinois, provided that the Company may, in consultation with you, extend or shorten the Term according to business needs and/or your personal circumstances. Notwithstanding the foregoing, in the event that your International Assignment is extended beyond 36 months from the beginning of the Term, the Company reserves the right to "localize" your terms and conditions by maintaining your International Assignment and terminating the Term under this Letter.

3.	Immigration	

Your continued International Assignment is conditional upon the Company being able to maintain the appropriate work permit, visa, and/or other authorization documents for you to remain on your International Assignment. The Company will cover the cost of maintaining the appropriate work permit, visa, and/or other authorization documents for you. In addition, should you wish, the Company will use reasonable efforts to assist your spouse or partner in obtaining a work permit, visa, and/or other authorization documents to work in London, England.

4.	Changes to Compensation Arrangements	

The changes to your compensation and benefits package during your International Assignment, as described below, are designed to provide you, to the largest extent practicable, with a level of income and benefits that does not disadvantage you in comparison to that which you would have received in the United States. We have also taken into consideration any additional costs that you may reasonably incur as a result of living in London, England. Unless otherwise noted below as being a non-taxable benefit, the following benefits will be provided to you subject to income and social taxes.

4.1	Foreign Service Allowance	

During the Term, you will receive an annual foreign service allowance of US$135,000. The allowance will be paid semi-monthly via your U.S. payroll.

4.2	Housing Allowance	

During the Term, you will receive an annual housing allowance of US$382,013 (a monthly allowance of US$31,834). The allowance is to be used to pay accommodation rental, furniture rental and incidental costs associated therewith, and utility costs (excluding telephone and internet access which are personal expenses) arising from such accommodation. This allowance will be reviewed annually and may be adjusted to reflect foreign exchange and local market rate variation, and will be paid semi-monthly via your U.S. payroll. The Company will not be responsible in any way for your current residence in your home location. The payment of your U.S. housing expenses will remain your responsibility.

4.3	Cost of Living Allowance	

During the Term, you will receive an annual cost of living allowance of US$97,500. This allowance will be reviewed annually and may be adjusted to reflect foreign exchange and local market rate variation, and will be paid semi-monthly via your U.S. payroll.

4.4	Tax Preparation Services	

The Company will also provide you with enhanced tax preparation, financial planning, and expatriate services for the tax years covered by your International Assignment and tax years for which international earnings are taxed by U.K. tax authorities following repatriation at the conclusion of the Term (or to the extent provided pursuant to Section 7).

5.	Hours of Work and Holidays	

Your work schedule, work hours, and observed holidays on your International Assignment will follow the practice in London, England.

6.	Repayment Agreement	

Subject to the immediately following paragraph, should you elect to resign from the Company without Good Reason to work with a direct competitor, during your International Assignment, or the period 12 months after the end of the Term, the Company reserves the right to require repayment of all expatriate allowances you received in the preceding 12 months pursuant to the terms and conditions of this Letter. You agree that the Company may set off any such amounts against any amount the Company owes you on or after the effective date of such resignation.

For the avoidance of doubt, if you elect to resign from the Company under any circumstance other than the foregoing, if your employment is terminated by the Company with or without Cause, or if a comparable U.S.-based role is not available at the completion of your International Assignment, this repayment agreement will not apply.

7.	Termination of Employment	

Notwithstanding anything to the contrary in this Letter if your employment is terminated by the Company without Cause or by you for Good Reason, or if you resign for any reason after attaining age 55, in each case, during the Term, the following provisions will apply during the Term and thereafter for as long as you continue to abide by the conditions of Sections 7 and 8 of your Employment Agreement and comply in all material respects with Section 9 of your Employment Agreement, in each case, as and to the extent provided therein:

•	Your cost of living allowance will continue until the Termination Date.	

•	Your housing allowance will continue until the later to occur of (1) the Termination Date or (2) the date of termination or expiration of any agreement, commitment or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment, or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment, or arrangement following the Termination Date (but without obligation for you to incur cost in doing so).	

•	Your enhanced tax preparation and financial planning benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards and benefits received under or contemplated by your Employment Agreement or this Letter before or after your Termination Date) and such benefits will be considered earned and vested on the Termination Date.	

For the avoidance of doubt, while on your International Assignment, if your employment is terminated by the Company for Cause or terminated by you other than (1) for Good Reason, (2) pursuant to mutual consent, or (3) for any reason after attaining age 55, you will bear all relocation and other costs arising after your Termination Date.

8.	Completion of International Assignment	

At the end of your International Assignment, the Company will endeavor to repatriate you into a position consistent with your then current employment agreement, if applicable, and in accordance with your capabilities, interest, and career potential. Your relocation will be managed in accordance with the provisions of the Company's policy.

9.	Repatriation Assistance	

The Company will pay the transportation and moving cost for you and your family back to the U.S. at the end of the Term or once your International Assignment ends due to your termination of employment without Cause or for Good Reason, or for any reason after attaining age 55, in accordance with the Company's international relocation policy.

10.	Third Party Beneficiary	

Each affiliate of the Company is a third party beneficiary of this Letter, and each of them has the full right and power to enforce rights, interests and obligations under this Letter without limitation or other restriction.

11.	No Waiver	

No failure or delay by any party in exercising any right, power or remedy under this Letter shall operate as a waiver thereof, nor shall any single or particular exercise of the same preclude any further exercise thereof or the exercise of any other right, power, or remedy. Without limiting the foregoing, no waiver by any party of any breach of any provision of this Letter shall be deemed to be a waiver of any subsequent breach of that or any other provision of this Letter.

12.	Withholding and Deductions	

While it is anticipated that all or most of your compensation from the Company will be subject to a hypothetical tax deduction rather than actual tax withholdings, all amounts paid pursuant to this Letter shall be subject to deductions and withholding for taxes (national, local, foreign, or otherwise) to the extent required by applicable law.

13.	Code Section 409A	

We intend that this Letter and the benefits provided hereunder be interpreted and construed to be exempt from or otherwise comply with the applicable requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and all Treasury regulations and guidance issued thereunder ("Code Section 409A"), including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions. To the extent that any provision of this Letter would fail to comply with the applicable requirements of Code Section 409A, the Company may, in its sole and absolute discretion and without requiring your consent, make such modifications to the Letter and/or payments to be made thereunder to the extent it determines necessary or advisable to comply with the requirements of Code Section 409A. Notwithstanding any provision of this Letter to the contrary, if you are a “specified employee” within the meaning of Code Section 409A, any payments or arrangements due upon a termination of your employment that are subject to the requirements of Code Section 409A shall be delayed and paid or provided on the earlier of six months after your termination of employment or the date of your death. Upon the expiration of this delay period, all payments and benefits delayed shall be paid or reimbursed to you in a lump sum, and any remaining payments and benefits due under this Letter shall be paid or provided in accordance with the terms and conditions of this Letter. For purposes of applying the provisions of Code Section 409A, each separately identifiable amount to which you are entitled will be treated as a separate payment. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Letter providing for payment of amounts subject to Code Section 409A upon or following a termination of employment unless the termination is also a “separation from service” under Code Section 409A.

14.	Governing Law	

This Letter will be construed in accordance with and governed by the laws of the State of Illinois, without regard to the choice of law principles thereof. Any suit, action, or other legal proceeding arising out of or relating to this Letter shall be brought exclusively in the Federal or state courts located in the State of Illinois. You agree to submit to personal jurisdiction in the foregoing courts and to venue in those courts. You further agree to waive all legal challenges and defenses to the propriety of a forum in Chicago, Illinois and to the application of Federal or Illinois law therein.

Please confirm acceptance of the terms and conditions set out in this Letter by signing below and returning a copy of the signed Letter to me.

Sincerely,

/s/ Anthony R. Goland
Anthony R. Goland
EVP, Chief Human Resources Officer

Employee's Acknowledgement:

By signing below, I acknowledge receipt of this Letter, I accept the terms and conditions contained herein, and I consent to my International Assignment.  I acknowledge and agree that my consent herein to my International Assignment, and my repatriation thereafter, shall not give rise to any right to terminate my employment for Good Reason (as defined in my Employment Agreement or any other agreement or arrangement between me and the Company) now or hereafter.

/s/ Greg Case
Greg Case

June 17, 2016
Date          

1

Christa Davies
Aon Corporation
United States

June 21, 2016

International Assignment: Chicago, Illinois to London, England

Dear Christa,

This international assignment letter (this “Letter”) amends, restates, and extends the terms of your international assignment from Chicago, Illinois to London, England (your “International Assignment”). Unless otherwise explicitly provided herein, this Letter shall govern the terms and conditions of your International Assignment from July 1, 2016 through June 30, 2018 (the “Term”), and sets forth the entire agreement between you and the Company regarding your International Assignment during the Term. The terms and conditions of the letter entered into between you and Aon Corporation (the “Company”) dated January 12, 2012 and the extension letter entered into between you and the Company dated July 1, 2014 shall continue to apply through June 30, 2016.

We are committed to working with you to ensure that your International Assignment continues to be as successful and effectively managed as possible. This Letter sets out the terms and conditions of your International Assignment and the assistance we are committed to provide in connection with your International Assignment, consistent with the approval of, and directions provided by, the Organization and Compensation Committee of the Board of Directors of Aon plc.

1.	Introduction	

Your continued International Assignment is subject to your acceptance of the terms and conditions outlined in this Letter. To the extent that anything in this Letter conflicts with the employment agreement entered into between you and the Company dated October 3, 2007, as amended March 27, 2012 and February 20, 2015 (your “Employment Agreement”) or the Company's employment-related policies and practices generally (your Employment Agreement, together with such policies and practices, are your “Employment Terms”), this Letter, once countersigned by you, will be a variation to and modify your Employment Terms. Unless otherwise specified herein or in a subsequent agreement between the parties hereto, your Employment Terms will remain unchanged for the duration of your International Assignment. For purposes of this Letter, the terms “Cause,” “Good Reason,” “Termination Date,” and “Notice Date” shall have the meanings provided in your Employment Agreement unless otherwise specified. 

2.	International Assignment Duration	

Once the Term is completed, you will return to the Company's offices in Chicago, Illinois, provided that the Company may, in consultation with you, extend or shorten the Term according to business needs and/or your personal circumstances. Notwithstanding the foregoing, in the event that your International Assignment is extended beyond 36 months from the beginning of the Term, the Company reserves the right to "localize" your terms and conditions by maintaining your International Assignment and terminating the Term under this Letter.

3.	Immigration	

Your continued International Assignment is conditional upon the Company being able to maintain the appropriate work permit, visa, and/or other authorization documents for you to remain on your International Assignment. The Company will cover the cost of maintaining the appropriate work permit, visa, and/or other authorization documents for you. In addition, should you wish, the Company will use reasonable efforts to assist your spouse or partner in obtaining a work permit, visa, and/or other authorization documents to work in London, England.

4.	Changes to Compensation Arrangements	

The changes to your compensation and benefits package during your International Assignment, as described below, are designed to provide you, to the largest extent practicable, with a level of income and benefits that does not disadvantage you in comparison to that which you would have received in the United States. We have also taken into consideration any additional costs that you may reasonably incur as a result of living in London, England. Unless otherwise noted below as being an excluded or non-taxable benefit, the following benefits will be grossed up for applicable taxes to compensate you for any tax differential in accordance with the Company’s tax equalization policy for international assignments (as described in Appendix A), in each case, as provided in Section 4.6 of this Letter.

4.1	Foreign Service Allowance	

During the Term, you will receive an annual foreign service allowance of US$120,000. While on your International Assignment, your annual foreign service allowance will be added to your base salary for purposes of determining your annual target incentive opportunity. The allowance will be paid semi-monthly via your U.S. payroll.

4.2	Housing Allowance	

During the Term, you will receive an annual housing allowance of US$286,510 (a monthly allowance of US$23,876). The allowance is to be used to pay accommodation rental, furniture rental and incidental costs associated therewith, and utility costs (excluding telephone and internet access which are personal expenses) arising from such accommodation. This allowance will be reviewed annually and may be adjusted to reflect foreign exchange and local market rate variation, and will be paid semi-monthly via your U.S. payroll. The payment of your U.S. housing expenses will remain your responsibility. Notwithstanding the foregoing, the Company shall provide you with home sale assistance in connection with the sale of your current residence in Summerfold House Pitch Hill, Ewhurst, Cranleigh GU67NL, England that is substantially equivalent (to the extent practicable) to that provided under the Company’s Senior Executive Domestic Transfer Policy.

4.3	Cost of Living Allowance	

During the Term, you will receive an annual cost of living allowance of US$97,500. This allowance will be reviewed annually and may be adjusted to reflect foreign exchange and local market rate variation, and will be paid semi-monthly via your U.S. payroll.

4.4	School Tuition Allowance	

The Company will pay the tuition, application, and registration fees for your children from kindergarten through preparatory/high school age to attend an American school, or equivalent, in London. School invoices will be paid directly by the Company’s relocation vendor.

4.5	Car Allowance	

During the Term, you will receive an annual car allowance of US$23,500. This allowance will be paid semi-monthly via your U.S. payroll.

4.6	Income Taxes Payable in the U.K. (Equalization Tax)	

It is likely that all or a portion of your earned income during any given U.K. tax year will be subject to tax in the U.K. The Company applies a tax equalization policy (as described in Appendix A) which is designed to ensure the income and social taxes you pay will be no more than what you would have paid had all of your earnings been taxable solely in the U.S.

4.7	Tax Preparation Services	

The Company will also provide you with enhanced tax preparation, financial planning, and expatriate services for the tax years covered by your International Assignment and tax years for which international earnings are taxed by U.K. tax authorities following repatriation at the conclusion of the Term (or to the extent provided pursuant to Section 7).

5.	Hours of Work and Holidays	

Your work schedule, work hours, and observed holidays on your International Assignment will follow the practice in London, England.

6.	Repayment Agreement	

Subject to the immediately following paragraph, should you elect to resign from the Company without Good Reason to work with a direct competitor, during your International Assignment or the period 12 months after the end of the Term, the Company reserves the right to require repayment of all expatriate allowances you received in the preceding 12 months pursuant to the terms and conditions of this Letter. You agree that the Company may set off any such amounts against any amount the Company owes you on or after the effective date of such resignation.

For the avoidance of doubt, if you elect to resign from the Company under any circumstance other than the foregoing, if your employment is terminated by the Company with or without Cause, or if a comparable U.S.-based role is not available at the completion of your International Assignment, this repayment agreement will not apply.

7.	Termination of Employment	

Notwithstanding anything to the contrary in this Letter, if your employment is terminated by the Company without Cause or by you for Good Reason, or if you resign for any reason after attaining age 55, in each case, during the Term, the following provisions will apply during the Term and thereafter for as long as you continue to abide by the conditions of Sections 6 and 7 of your Employment Agreement, comply in all material respects with Section 8 of your Employment Agreement, and sign and return the release required under Section 6 of the Executive Committee Combined Severance and Change in Control Plan (as amended from time to time), in each case, as and to the extent provided therein:

•	Your cost of living allowance (and all tax gross-ups thereon) will continue until the Termination Date.	

•	Your housing and car allowances (and all tax gross-ups thereon) will continue until the later to occur of (1) the Termination Date, or (2) the date of termination or expiration of any agreement, commitment, or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment or arrangement following the Termination Date (but without obligation for you to incur cost in doing so).	

•	Your enhanced tax preparation, financial planning benefits (and all tax gross-ups thereon), and tax equalization benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards, and benefits received under or contemplated by your Employment Agreement, the Executive Committee Combined Severance and Change in Control Plan (as amended from time to time), or this Letter before or after the Termination Date), and such benefits will be considered earned and vested on the Termination Date.	

For the avoidance of doubt, while on your International Assignment, if your employment is terminated by the Company for Cause or terminated by you other than (1) for Good Reason, (2) pursuant to mutual consent, or (3) for any reason after attaining age 55, you will bear all relocation and other costs arising after your Termination Date.

8.	Completion of International Assignment	

At the end of your International Assignment, the Company will endeavor to repatriate you into a position consistent with your then current employment agreement, if applicable, and in accordance with your capabilities, interest, and career potential. Your relocation will be managed in accordance with the provisions of the Company's policy.

9.	Repatriation Assistance	

The Company will pay the transportation and moving cost (and all tax gross-ups thereon) for you and your family back to the U.S. at the end of the Term or once your International Assignment ends due to your termination of employment without Cause or for Good Reason, or for any reason after attaining age 55, in accordance with the Company's international relocation policy.

10.	Third Party Beneficiary	

Each affiliate of the Company is a third party beneficiary of this Letter, and each of them has the full right and power to enforce rights, interests and obligations under this Letter without limitation or other restriction.

11.	No Waiver	

No failure or delay by any party in exercising any right, power or remedy under this Letter shall operate as a waiver thereof, nor shall any single or particular exercise of the same preclude any further exercise thereof or the exercise of any other right, power, or remedy. Without limiting the foregoing, no waiver by any party of any breach of any provision of this Letter shall be deemed to be a waiver of any subsequent breach of that or any other provision of this Letter.

12.	Withholding and Deductions	

While it is anticipated that all or most of your compensation from the Company will be subject to a hypothetical tax deduction rather than actual tax withholdings, all amounts paid pursuant to this Letter shall be subject to deductions and withholding for taxes (national, local, foreign, or otherwise) to the extent required by applicable law.

13.	Code Section 409A	

We intend that this Letter and the benefits provided hereunder be interpreted and construed to be exempt from or otherwise comply with the applicable requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and all Treasury regulations and guidance issued thereunder ("Code Section 409A"), including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions. To the extent that any provision of this Letter would fail to comply with the applicable requirements of Code Section 409A, the Company may, in its sole and absolute discretion and without requiring your consent, make such modifications to the Letter and/or payments to be made thereunder to the extent it determines necessary or advisable to comply with the requirements of Code Section 409A. Notwithstanding any provision of this Letter to the contrary, if you are a “specified employee” within the meaning of Code Section 409A, any payments or arrangements due upon a termination of your employment that are subject to the requirements of Code Section 409A shall be delayed and paid or provided on the earlier of six months after your termination of employment or the date of your death. Upon the expiration of this delay period, all payments and benefits delayed shall be paid or reimbursed to you in a lump sum, and any remaining payments and benefits due under this Letter shall be paid or provided in accordance with the terms and conditions of this Letter. For purposes of applying the provisions of Code Section 409A, each separately identifiable amount to which you are entitled will be treated as a separate payment. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Letter providing for payment of amounts subject to Code Section 409A upon or following a termination of employment unless the termination is also a “separation from service” under Code Section 409A.

14.	Governing Law	

This Letter will be construed in accordance with and governed by the laws of the State of Illinois, without regard to the choice of law principles thereof. Any suit, action or other legal proceeding arising out of or relating to this Letter shall be brought exclusively in the Federal or state courts located in the State of Illinois. You agree to submit to personal jurisdiction in the foregoing courts and to venue in those courts. You further agree to waive all legal challenges and defenses to the propriety of a forum in Chicago, Illinois and to the application of Federal or Illinois law therein.

Please confirm acceptance of the terms and conditions set out in this Letter by signing below and returning a copy of the signed Letter to me.

Sincerely,

/s/ Anthony R. Goland
Anthony R. Goland
EVP, Chief Human Resources Officer

Employee's Acknowledgement:

By signing below, I acknowledge receipt of this Letter, I accept the terms and conditions contained herein, and I consent to my International Assignment. I acknowledge and agree that my consent herein to my International Assignment, and my repatriation thereafter, shall not give rise to any right to terminate my employment for Good Reason (as defined in my Employment Agreement or any other agreement or arrangement between me and the Company) now or hereafter.

I further acknowledge that I have read and agree to be bound by the Company's tax equalization policy (as set forth on Appendix A). With regard to that policy, I specifically acknowledge and agree that, if I owe any monies to the Company, I will make payment of such monies to the Company within 60 calendar days of receiving written notification of the amount due, and I authorize the Company to deduct (or reduce from my earnings) any amounts owed under this policy from my paycheck where permitted by law.

/s/ Christa Davis
Christa Davies  

June 21, 2016
Date          

Appendix A

Tax Equalization Policy

The Company will apply the following tax equalization policy to ensure that the income and social taxes you pay will be no more than that you would have paid had all of your earnings been taxable solely in the U.S. For the avoidance of doubt, the policy does not provide for the grossing up for U.S. income and social taxes on the relocation benefits described in the Letter.

The Company will determine an estimate of the tax liability you would have paid in the U.S. on your earnings from the Company, known as your "hypothetical'' tax liability, and will deduct this estimated hypothetical tax from your monthly earnings via the Company's U.S. payroll. This policy will not protect you in your capacity as a shareholder of the Company from capital gains recognized pursuant to U.S. federal income tax as a result of the merger; however, your earnings related to granting or vesting of equity-based awards during your International Assignment will be covered by this policy.

Hypothetical tax is paid on salary and on any other income paid to you by the Company (e.g., bonus) or compensation recognized by you (e.g., granting or vesting of stock-based incentives). Please note, for the avoidance of doubt, the Company will deduct hypothetical tax from your income at the point the income is paid to you and not by reference to the payment date that might have applied had you not taken up the International Assignment.

Please note that you will be responsible for the cost of any tax or additional charges arising in any tax jurisdiction on any personal income or gains, spousal income or any other U.S. source income.

For the duration of your International Assignment and any tail period required, the Company will authorize and pay for a tax adviser to: (1) prepare your joint or individual U.S. Federal and State tax returns and U.K. tax returns as required, and (2) reconcile the hypothetical tax deductions made from your earnings.

If the amount of your final hypothetical tax liability to the Company is greater than the amount of any estimated hypothetical tax payments deducted by the Company from your salary or other payments, then you will be required to pay the additional hypothetical tax to the Company within 60 calendar days of the relevant tax returns being finalized.  If it is less, then the Company will reimburse any excess to you within 60 calendar days.

Provided you meet your obligations to the Company in respect of your hypothetical fax liability and provide such information and assistance as the Company and/or its designated tax adviser shall require in order to resolve your tax affairs on a timely basis and within the filing deadlines set down by the applicable tax authorities, the Company will pay any actual tax or social security liability arising in respect of your earned income.

Should you delay providing the necessary information to the tax advisers you will be responsible for any additional fees and/or penalties that arise as a result of the delay.

Although the Company will retain and pay an external tax adviser on your behalf to prepare your tax returns and to calculate your tax equalization calculations, it remains your personal obligation to file such returns within the applicable time limits and to abide by the tax laws in both the U.S. and U.K. The external tax adviser will provide regular information regarding your obligations and filing schedules.

1

Steve McGill
Aon Corporation
United States

June 17, 2016

International Assignment: Chicago, Illinois to London, England

Dear Steve,

This international assignment letter (this “Letter”) amends, restates, and extends the terms of your international assignment from Chicago, Illinois to London, England (your “International Assignment”). Unless otherwise explicitly provided herein, this Letter shall govern the terms and conditions of your International Assignment from July 1, 2016 through June 30, 2018 (the “Term”), and sets forth the entire agreement between you and the Company regarding your International Assignment during the Term. The terms and conditions of the letter entered into between you and Aon Corporation (the “Company”) dated January 12, 2012 and the extension letter entered into between you and the Company dated July 1, 2014 shall continue to apply through June 30, 2016.

We are committed to working with you to ensure that your International Assignment continues to be as successful and effectively managed as possible. This Letter sets out the terms and conditions of your International Assignment and the assistance we are committed to provide in connection with your International Assignment, consistent with the approval of, and directions provided by, the Organization and Compensation Committee of the Board of Directors of Aon plc.

1.	Introduction	

Your continued International Assignment is subject to your acceptance of the terms and conditions outlined in this Letter. To the extent that anything in this Letter conflicts with the employment agreement entered into between you and the Company dated July 8, 2015 (your “Employment Agreement”) or the Company's employment-related policies and practices generally (your Employment Agreement, together with such policies and practices, are your “Employment Terms”), this Letter, once countersigned by you, will be a variation to and modify your Employment Terms. Unless otherwise specified herein or in a subsequent agreement between the parties hereto, your Employment Terms will remain unchanged for the duration of your International Assignment. For purposes of this Letter, the terms “Cause,” “Good Reason,” “Termination Date,” and “Notice Date” shall have the meanings provided in your Employment Agreement unless otherwise specified. 

2.	International Assignment Duration	

Once the Term is completed, you will return to the Company's offices in Chicago, Illinois, provided that the Company may, in consultation with you, extend or shorten the Term according to business needs and/or your personal circumstances. Notwithstanding the foregoing, in the event that your International Assignment is extended beyond 36 months from the beginning of the Term, the Company reserves the right to "localize" your terms and conditions by maintaining your International Assignment and terminating the Term under this Letter.

3.	Immigration	

Your continued International Assignment is conditional upon the Company being able to maintain the appropriate work permit, visa, and/or other authorization documents for you to remain on your International Assignment. The Company will cover the cost of maintaining the appropriate work permit, visa, and/or other authorization documents for you. In addition, should you wish, the Company will use reasonable efforts to assist your spouse or partner in obtaining a work permit, visa, and/or other authorization documents to work in London, England.

4.	Changes to Compensation Arrangements	

The changes to your compensation and benefits package during your International Assignment, as described below, are designed to provide you, to the largest extent practicable, with a level of income and benefits that does not disadvantage you in comparison to that which you would have received in the United States. We have also taken into consideration any additional costs that you may reasonably incur as a result of living in London, England. Unless otherwise noted below as being an excluded or non-taxable benefit, the following benefits will be grossed up for applicable taxes to compensate you for any tax differential in accordance with the Company’s tax equalization policy for international assignments (as described in Appendix A), in each case, as provided in Section 4.3 of this Letter.

4.1	Cost of Living Allowance	

During the Term, you will receive an annual cost of living allowance of US$97,500. This allowance will be reviewed annually and may be adjusted to reflect foreign exchange and local market rate variation, and will be paid semi-monthly via your U.S. payroll.

4.2	Car Allowance	

During the Term, you will receive an annual car allowance of US$23,500. This allowance will be paid semi-monthly via your U.S. payroll.

4.3	Income Taxes Payable in the U.K. (Equalization Tax)	

It is likely that all or a portion of your earned income during any given U.K. tax year will be subject to tax in the U.K. The Company applies a tax equalization policy (as described in Appendix A) which is designed to ensure the income and social taxes you pay will be no more than what you would have paid had all of your earnings been taxable solely in the U.S.

4.4	Tax Preparation Services	

The Company will also provide you with enhanced tax preparation, financial planning, and expatriate services for the tax years covered by your International Assignment and tax years for which international earnings are taxed by U.K. tax authorities following repatriation at the conclusion of the Term (or to the extent provided pursuant to Section 7).

5.	Hours of Work and Holidays	

Your work schedule, work hours, and observed holidays on your International Assignment will follow the practice in London, England.

6.	Repayment Agreement	

Subject to the immediately following paragraph, should you elect to resign from the Company without Good Reason to work with a direct competitor, during your International Assignment or the period 12 months after the end of the Term, the Company reserves the right to require repayment of all expatriate allowances you received in the preceding 12 months pursuant to the terms and conditions of this Letter. You agree that the Company may set off any such amounts against any amount the Company owes you on or after the effective date of such resignation.

For the avoidance of doubt, if you elect to resign from the Company under any circumstance other than the foregoing, if your employment is terminated by the Company with or without Cause, or if a comparable U.S.-based role is not available at the completion of your International Assignment, this repayment agreement will not apply.

7.	Termination of Employment	

Notwithstanding anything to the contrary in this Letter, if your employment is terminated by the Company without Cause or by you for Good Reason, or if you resign for any reason after attaining age 55, in each case, during the Term, the following provisions will apply during the Term and thereafter for as long as you continue to abide by the conditions of Sections 4(b) and 4(c) of your Employment Agreement, comply in all material respects with Section 6 of your Employment Agreement, and sign and return the release required under Section 3(b)(ii) of your Employment Agreement , in each case, as and to the extent provided therein:

•	Your cost of living allowance (and all tax gross-ups thereon) will continue until the Termination Date.	

•	Your car allowance (and all tax gross-ups thereon) will continue until the later to occur of (1) the Termination Date or (2) the date of termination or expiration of any agreement, commitment or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment, or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment, or arrangement following the Termination Date (but without obligation for you to incur cost in doing so).	

•	Your enhanced tax preparation, financial planning benefits (and all tax gross-ups thereon), and tax equalization benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards, and benefits received under or contemplated by your Employment Agreement, the Executive Committee Combined Severance and Change in Control Plan (as amended from time to time), or this Letter before or after the Termination Date), and such benefits will be considered earned and vested on the Termination Date.	

For the avoidance of doubt, while on your International Assignment, if your employment is terminated by the Company for Cause or terminated by you other than (1) for Good Reason, (2) pursuant to mutual consent, or (3) for any reason after attaining age 55, you will bear all relocation and other costs arising after your Termination Date.

8.	Completion of International Assignment	

At the end of your International Assignment, the Company will endeavor to repatriate you into a position consistent with your then current employment agreement, if applicable, and in accordance with your capabilities, interest, and career potential. Your relocation will be managed in accordance with the provisions of the Company's policy.

9.	Repatriation Assistance	

The Company will pay the transportation and moving cost (and all tax gross-ups thereon) for you and your family back to the U.S. at the end of the Term or once your International Assignment ends due to your termination of employment without Cause or for Good Reason, or for any reason after attaining age 55, in accordance with the Company's international relocation policy.

10.	Third Party Beneficiary	

Each affiliate of the Company is a third party beneficiary of this Letter, and each of them has the full right and power to enforce rights, interests and obligations under this Letter without limitation or other restriction.

11.	No Waiver	

No failure or delay by any party in exercising any right, power or remedy under this Letter shall operate as a waiver thereof, nor shall any single or particular exercise of the same preclude any further exercise thereof or the exercise of any other right, power, or remedy. Without limiting the foregoing, no waiver by any party of any breach of any provision of this Letter shall be deemed to be a waiver of any subsequent breach of that or any other provision of this Letter.

12.	Withholding and Deductions	

While it is anticipated that all or most of your compensation from the Company will be subject to a hypothetical tax deduction rather than actual tax withholdings, all amounts paid pursuant to this Letter shall be subject to deductions and withholding for taxes (national, local, foreign, or otherwise) to the extent required by applicable law.

13.	Code Section 409A	

We intend that this Letter and the benefits provided hereunder be interpreted and construed to be exempt from or otherwise comply with the applicable requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and all Treasury regulations and guidance issued thereunder ("Code Section 409A"), including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions. To the extent that any provision of this Letter would fail to comply with the applicable requirements of Code Section 409A, the Company may, in its sole and absolute discretion and without requiring your consent, make such modifications to the Letter and/or payments to be made thereunder to the extent it determines necessary or advisable to comply with the requirements of Code Section 409A. Notwithstanding any provision of this Letter to the contrary, if you are a “specified employee” within the meaning of Code Section 409A, any payments or arrangements due upon a termination of your employment that are subject to the requirements of Code Section 409A shall be delayed and paid or provided on the earlier of six months after your termination of employment or the date of your death. Upon the expiration of this delay period, all payments and benefits delayed shall be paid or reimbursed to you in a lump sum, and any remaining payments and benefits due under this Letter shall be paid or provided in accordance with the terms and conditions of this Letter. For purposes of applying the provisions of Code Section 409A, each separately identifiable amount to which you are entitled will be treated as a separate payment. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Letter providing for payment of amounts subject to Code Section 409A upon or following a termination of employment unless the termination is also a “separation from service” under Code Section 409A.

14.	Governing Law	

This Letter will be construed in accordance with and governed by the laws of the State of Illinois, without regard to the choice of law principles thereof. Any suit, action or other legal proceeding arising out of or relating to this Letter shall be brought exclusively in the Federal or state courts located in the State of Illinois. You agree to submit to personal jurisdiction in the foregoing courts and to venue in those courts. You further agree to waive all legal challenges and defenses to the propriety of a forum in Chicago, Illinois and to the application of Federal, or Illinois law therein.

Please confirm acceptance of the terms and conditions set out in this Letter by signing below and returning a copy of the signed Letter to me.

Sincerely,

/s/ Anthony R. Goland
Anthony R. Goland
EVP, Chief Human Resources Officer

Employee's Acknowledgement:

By signing below, I acknowledge receipt of this Letter, I accept the terms and conditions contained herein, and I consent to my International Assignment.  I acknowledge and agree that my consent herein to my International Assignment, and my repatriation thereafter, shall not give rise to any right to terminate my employment for Good Reason (as defined in my Employment Agreement or any other agreement or arrangement between me and the Company) now or hereafter.

I further acknowledge that I have read and agree to be bound by the Company's tax equalization policy (as set forth on Appendix A). With regard to that policy, I specifically acknowledge and agree that, if I owe any monies to the Company, I will make payment of such monies to the Company within 60 calendar days of receiving written notification of the amount due, and I authorize the Company to deduct (or reduce from my earnings) any amounts owed under this policy from my paycheck where permitted by law.

/s/ Steve McGill  
Steve McGill

June 17, 2016
Date          

Appendix A

Tax Equalization Policy

The Company will apply the following tax equalization policy to ensure that the income and social taxes you pay will be no more than that you would have paid had all of your earnings been taxable solely in the U.S. For the avoidance of doubt, the policy does not provide for the grossing up for U.S. income and social taxes on the relocation benefits described in the Letter.

The Company will determine an estimate of the tax liability you would have paid in the U.S. on your earnings from the Company, known as your "hypothetical'' tax liability, and will deduct this estimated hypothetical tax from your monthly earnings via the Company's U.S. payroll. This policy will not protect you in your capacity as a shareholder of the Company from capital gains recognized pursuant to U.S. federal income tax as a result of the merger; however, your earnings related to granting or vesting of equity-based awards during your International Assignment will be covered by this policy.

Hypothetical tax is paid on salary and on any other income paid to you by the Company (e.g., bonus) or compensation recognized by you (e.g., granting or vesting of stock-based incentives). Please note, for the avoidance of doubt, the Company will deduct hypothetical tax from your income at the point the income is paid to you and not by reference to the payment date that might have applied had you not taken up the International Assignment.

Please note that you will be responsible for the cost of any tax or additional charges arising in any tax jurisdiction on any personal income or gains, spousal income, or any other U.S. source income.

For the duration of your International Assignment and any tail period required, the Company will authorize and pay for a tax adviser to: (1) prepare your joint or individual U.S. Federal and State tax returns and U.K. tax returns as required, and (2) reconcile the hypothetical tax deductions made from your earnings.

If the amount of your final hypothetical tax liability to the Company is greater than the amount of any estimated hypothetical tax payments deducted by the Company from your salary or other payments, then you will be required to pay the additional hypothetical tax to the Company within 60 calendar days of the relevant tax returns being finalized.  If it is less, then the Company will reimburse any excess to you within 60 calendar days.

Provided you meet your obligations to the Company in respect of your hypothetical fax liability and provide such information and assistance as the Company and/or its designated tax adviser shall require in order to resolve your tax affairs on a timely basis and within the filing deadlines set down by the applicable tax authorities, the Company will pay any actual tax or social security liability arising in respect of your earned income.

Should you delay providing the necessary information to the tax advisers you will be responsible for any additional fees and/or penalties that arise as a result of the delay.

Although the Company will retain and pay an external tax adviser on your behalf to prepare your tax returns and to calculate your tax equalization calculations, it remains your personal obligation to file such returns within the applicable time limits and to abide by the tax laws in both the U.S. and U.K. The external tax adviser will provide regular information regarding your obligations and filing schedules.

1

Peter Lieb
Aon Corporation
United States

June 16, 2016

International Assignment: Chicago, Illinois to London, England

Dear Peter,

This international assignment letter (this “Letter”) amends, restates, and extends the terms of your international assignment from Chicago, Illinois to London, England (your “International Assignment”). Unless otherwise explicitly provided herein, this Letter shall govern the terms and conditions of your International Assignment from July 1, 2016 through June 30, 2018 (the “Term”), and sets forth the entire agreement between you and the Company regarding your International Assignment during the Term. The terms and conditions of the letter entered into between you and Aon Corporation (the “Company”) dated January 12, 2012 and the extension letter entered into between you and the Company dated July 1, 2014 shall continue to apply through June 30, 2016.

We are committed to working with you to ensure that your International Assignment continues to be as successful and effectively managed as possible. This Letter sets out the terms and conditions of your International Assignment and the assistance we are committed to provide in connection with your International Assignment, consistent with the approval of, and directions provided by, the Organization and Compensation Committee of the Board of Directors of Aon plc.

1.	Introduction	

Your continued International Assignment is subject to your acceptance of the terms and conditions outlined in this Letter. To the extent that anything in this Letter conflicts with the employment agreement entered into between you and the Company dated January 1, 2014 (your “Employment Agreement”) or the Company's employment-related policies and practices generally (your Employment Agreement, together with such policies and practices, are your “Employment Terms”), this Letter, once countersigned by you, will be a variation to and modify your Employment Terms. Unless otherwise specified herein or in a subsequent agreement between the parties hereto, your Employment Terms will remain unchanged for the duration of your International Assignment. For purposes of this Letter, the terms “Cause,” “Good Reason,” “Termination Date,” and “Notice Date” shall have the meanings provided in your Employment Agreement unless otherwise specified. 

2.	International Assignment Duration	

Once the Term is completed, you will return to the Company's offices in Chicago, Illinois, provided that the Company may, in consultation with you, extend or shorten the Term according to business needs and/or your personal circumstances. Notwithstanding the foregoing, in the event that your International Assignment is extended beyond 36 months from the beginning of the Term, the Company reserves the right to "localize" your terms and conditions by maintaining your International Assignment and terminating the Term under this Letter.

3.	Immigration	

Your continued International Assignment is conditional upon the Company being able to maintain the appropriate work permit, visa, and/or other authorization documents for you to remain on your International Assignment. The Company will cover the cost of maintaining the appropriate work permit, visa, and/or other authorization documents for you. In addition, should you wish, the Company will use reasonable efforts to assist your spouse or partner in obtaining a work permit, visa, and/or other authorization documents to work in London, England.

4.	Changes to Compensation Arrangements	

The changes to your compensation and benefits package during your International Assignment, as described below, are designed to provide you, to the largest extent practicable, with a level of income and benefits that does not disadvantage you in comparison to that which you would have received in the United States. We have also taken into consideration any additional costs that you may reasonably incur as a result of living in London, England. Unless otherwise noted below as being an excluded or non-taxable benefit, the following benefits will be grossed up for applicable taxes to compensate you for any tax differential in accordance with the Company’s tax equalization policy for international assignments (as described in Appendix A), in each case, as provided in Section 4.6 of this Letter.

4.1	Foreign Service Allowance	

During the Term, you will receive an annual foreign service allowance of US$105,000. While on your International Assignment, your annual foreign service allowance will be added to your base salary for purposes of determining your annual target incentive opportunity. The allowance will be paid semi-monthly via your U.S. payroll.

4.2	Housing Allowance	

During the Term, you will receive an annual housing allowance of US$286,510 (a monthly allowance of US$23,876). The allowance is to be used to pay accommodation rental, furniture rental and incidental costs associated therewith, and utility costs (excluding telephone and internet access which are personal expenses) arising from such accommodation. This allowance will be reviewed annually and may be adjusted to reflect foreign exchange and local market rate variation, and will be paid semi-monthly via your U.S. payroll. The Company will not be responsible in any way for your current residence in your home location. The payment of your U.S. housing expenses will remain your responsibility.

4.3	Cost of Living Allowance	

During the Term, you will receive an annual cost of living allowance of US$97,500. This allowance will be reviewed annually and may be adjusted to reflect foreign exchange and local market rate variation, and will be paid semi-monthly via your U.S. payroll.

4.4	Car Allowance	

During the Term, you will receive an annual car allowance of US$23,500. This allowance will be paid semi-monthly via your U.S. payroll.

4.5	Home Leave Allowance	

You and each family member that has relocated or is relocating with you are entitled to one round-trip flight to the U.S. for each complete year you are on your International Assignment. In addition, any immediate family members (e.g., university-aged dependent children) not accompanying you on your International Assignment are entitled to two round-trip flights to the U.K. for each complete year you are on your International Assignment.

4.6	Income Taxes Payable in the U.K. (Equalization Tax)	

It is likely that all or a portion of your earned income during any given U.K. tax year will be subject to tax in the U.K. The Company applies a tax equalization policy (as described in Appendix A) which is designed to ensure the income and social taxes you pay will be no more than what you would have paid had all of your earnings been taxable solely in the U.S.

4.7	Tax Preparation Services	

The Company will also provide you with enhanced tax preparation, financial planning, and expatriate services for the tax years covered by your International Assignment and tax years for which international earnings are taxed by U.K. tax authorities following repatriation at the conclusion of the Term (or to the extent provided pursuant to Section 7).

5.	Hours of Work and Holidays	

Your work schedule, work hours, and observed holidays on your International Assignment will follow the practice in London, England.

6.	Repayment Agreement	

Subject to the immediately following paragraph, should you elect to resign from the Company without Good Reason to work with a direct competitor during your International Assignment or the period 12 months after the end of the Term, the Company reserves the right to require repayment of all expatriate allowances you received in the preceding 12 months pursuant to the terms and conditions of this Letter. You agree that the Company may set off any such amounts against any amount the Company owes you on or after the effective date of such resignation.

For the avoidance of doubt, if you elect to resign from the Company under any circumstance other than the foregoing, if your employment is terminated by the Company with or without Cause, or if a comparable U.S.-based role is not available at the completion of your International Assignment, this repayment agreement will not apply.

7.	Termination of Employment	

Notwithstanding anything to the contrary in this Letter, if your employment is terminated by the Company without Cause or by you for Good Reason, or if you resign for any reason after attaining age 55, in each case, during the Term, the following provisions will apply during the Term and thereafter for as long as you continue to abide by the conditions of Section 5(b) and 5(c) of your Employment Agreement, comply in all material respects with Section 7 of your Employment Agreement, and sign and return the release required under Section 4(b)(ii) of your Employment Agreement, in each case, as and to the extent provided therein:

•	Your cost of living and home leave allowances (and all tax gross-ups thereon) will continue until the Termination Date.	

•	Your housing and car allowances (and all tax gross-ups thereon) will continue until the later to occur of (1) the Termination Date or (2) the date of termination or expiration of any agreement, commitment or arrangement pursuant to which you have obtained such housing or car; provided, however, that if the Company requires you to leave the premises on the Notice Date or otherwise informs you that you will not be required to perform any further services prior to the Termination Date, that you will not take any action thereafter to extend such agreement, commitment, or arrangement other than to extend the arrangement to the Termination Date, and that you will use your reasonable efforts to mitigate the cost of termination of any such agreement, commitment, or arrangement following the Termination Date (but without obligation for you to incur cost in doing so).	

•	Your enhanced tax preparation, financial planning benefits (and all tax gross-ups thereon), and tax equalization benefits will continue for all periods in which you receive income attributable to the period of your International Assignment (including all compensation, earnings recognized on the granting or vesting of equity-based awards, and benefits received under or contemplated by your Employment Agreement, the Executive Committee Combined Severance and Change in Control Plan (as amended from time to time), or this Letter before or after the Termination Date), and such benefits will be considered earned and vested on the Termination Date.	

For the avoidance of doubt, while on your International Assignment, if your employment is terminated by the Company for Cause or terminated by you other than (1) for Good Reason, (2) pursuant to mutual consent, or (3) for any reason after attaining age 55, you will bear all relocation and other costs arising after your Termination Date.

8.	Completion of International Assignment	

At the end of your International Assignment, the Company will endeavor to repatriate you into a position consistent with your then current employment agreement, if applicable, and in accordance with your capabilities, interest, and career potential. Your relocation will be managed in accordance with the provisions of the Company's policy.

9.	Repatriation Assistance	

The Company will pay the transportation and moving cost (and all tax gross-ups thereon) for you and your family back to the U.S. at the end of the Term or once your International Assignment ends due to your termination of employment without Cause or for Good Reason, or for any reason after attaining age 55, in accordance with the Company's international relocation policy.

10.	Third Party Beneficiary	

Each affiliate of the Company is a third party beneficiary of this Letter, and each of them has the full right and power to enforce rights, interests and obligations under this Letter without limitation or other restriction.

11.	No Waiver	

No failure or delay by any party in exercising any right, power or remedy under this Letter shall operate as a waiver thereof, nor shall any single or particular exercise of the same preclude any further exercise thereof or the exercise of any other right, power, or remedy. Without limiting the foregoing, no waiver by any party of any breach of any provision of this Letter shall be deemed to be a waiver of any subsequent breach of that or any other provision of this Letter.

12.	Withholding and Deductions	

While it is anticipated that all or most of your compensation from the Company will be subject to a hypothetical tax deduction rather than actual tax withholdings, all amounts paid pursuant to this Letter shall be subject to deductions and withholding for taxes (national, local, foreign, or otherwise) to the extent required by applicable law.

13.	Code Section 409A	

We intend that this Letter and the benefits provided hereunder be interpreted and construed to be exempt from or otherwise comply with the applicable requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and all Treasury regulations and guidance issued thereunder ("Code Section 409A"), including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions. To the extent that any provision of this Letter would fail to comply with the applicable requirements of Code Section 409A, the Company may, in its sole and absolute discretion and without requiring your consent, make such modifications to the Letter and/or payments to be made thereunder to the extent it determines necessary or advisable to comply with the requirements of Code Section 409A. Notwithstanding any provision of this Letter to the contrary, if you are a “specified employee” within the meaning of Code Section 409A, any payments or arrangements due upon a termination of your employment that are subject to the requirements of Code Section 409A shall be delayed and paid or provided on the earlier of six months after your termination of employment or the date of your death. Upon the expiration of this delay period, all payments and benefits delayed shall be paid or reimbursed to you in a lump sum, and any remaining payments and benefits due under this Letter shall be paid or provided in accordance with the terms and conditions of this Letter. For purposes of applying the provisions of Code Section 409A, each separately identifiable amount to which you are entitled will be treated as a separate payment. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Letter providing for payment of amounts subject to Code Section 409A upon or following a termination of employment unless the termination is also a “separation from service” under Code Section 409A.

14.	Governing Law	

This Letter will be construed in accordance with and governed by the laws of the State of Illinois, without regard to the choice of law principles thereof. Any suit, action or other legal proceeding arising out of or relating to this Letter shall be brought exclusively in the Federal or state courts located in the State of Illinois. You agree to submit to personal jurisdiction in the foregoing courts and to venue in those courts. You further agree to waive all legal challenges and defenses to the propriety of a forum in Chicago, Illinois and to the application of Federal or Illinois law therein.

Please confirm acceptance of the terms and conditions set out in this Letter by signing below and returning a copy of the signed Letter to me.

Sincerely,

/s/ Anthony R. Goland
Anthony R. Goland
EVP, Chief Human Resources Officer

Employee's Acknowledgement:

By signing below, I acknowledge receipt of this Letter, I accept the terms and conditions contained herein, and I consent to my International Assignment.  I acknowledge and agree that my consent herein to my International Assignment, and my repatriation thereafter, shall not give rise to any right to terminate my employment for Good Reason (as defined in my Employment Agreement or any other agreement or arrangement between me and the Company) now or hereafter.

I further acknowledge that I have read and agree to be bound by the Company's tax equalization policy (as set forth on Appendix A). With regard to that policy, I specifically acknowledge and agree that, if I owe any monies to the Company, I will make payment of such monies to the Company within 60 calendar days of receiving written notification of the amount due, and I authorize the Company to deduct (or reduce from my earnings) any amounts owed under this policy from my paycheck where permitted by law.

/s/ Peter Lieb
Peter Lieb  

June 16, 2016
Date          

Appendix A

Tax Equalization Policy

The Company will apply the following tax equalization policy to ensure that the income and social taxes you pay will be no more than that you would have paid had all of your earnings been taxable solely in the U.S. For the avoidance of doubt, the policy does not provide for the grossing up for U.S. income and social taxes on the relocation benefits described in the Letter.

The Company will determine an estimate of the tax liability you would have paid in the U.S. on your earnings from the Company, known as your "hypothetical'' tax liability, and will deduct this estimated hypothetical tax from your monthly earnings via the Company's U.S. payroll. This policy will not protect you in your capacity as a shareholder of the Company from capital gains recognized pursuant to U.S. federal income tax as a result of the merger; however, your earnings related to granting or vesting of equity-based awards during your International Assignment will be covered by this policy.

Hypothetical tax is paid on salary and on any other income paid to you by the Company (e.g., bonus) or compensation recognized by you (e.g., granting or vesting of stock-based incentives). Please note, for the avoidance of doubt, the Company will deduct hypothetical tax from your income at the point the income is paid to you and not by reference to the payment date that might have applied had you not taken up the International Assignment.

Please note that you will be responsible for the cost of any tax or additional charges arising in any tax jurisdiction on any personal income or gains, spousal income, or any other U.S. source income.

For the duration of your International Assignment and any tail period required, the Company will authorize and pay for a tax adviser to: (1) prepare your joint or individual U.S. Federal and State tax returns and U.K. tax returns as required, and (2) reconcile the hypothetical tax deductions made from your earnings.

If the amount of your final hypothetical tax liability to the Company is greater than the amount of any estimated hypothetical tax payments deducted by the Company from your salary or other payments, then you will be required to pay the additional hypothetical tax to the Company within 60 calendar days of the relevant tax returns being finalized. If it is less, then the Company will reimburse any excess to you within 60 calendar days.

Provided you meet your obligations to the Company in respect of your hypothetical fax liability and provide such information and assistance as the Company and/or its designated tax adviser shall require in order to resolve your tax affairs on a timely basis and within the filing deadlines set down by the applicable tax authorities, the Company will pay any actual tax or social security liability arising in respect of your earned income.

Should you delay providing the necessary information to the tax advisers you will be responsible for any additional fees and/or penalties that arise as a result of the delay.

Although the Company will retain and pay an external tax adviser on your behalf to prepare your tax returns and to calculate your tax equalization calculations, it remains your personal obligation to file such returns within the applicable time limits and to abide by the tax laws in both the U.S. and U.K. The external tax adviser will provide regular information regarding your obligations and filing schedules.

1

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)	 	2016	 	2015	 	2015	 	2014	 	2013	 	2012	
Income from continuing operations before income taxes and noncontrolling interests (1)	 	$	736		 	$	635		 	$	1,689		 	$	1,765		 	$	1,538		 	$	1,380		
Less: Equity in earnings on less than 50% owned entities	 	3		 	6		 	13		 	12		 	20		 	13		
Add back fixed charges:	 	 	 	 	 	 	 	 	 	 	 	 	
     Interest on indebtedness	 	142		 	133		 	273		 	255		 	210		 	228		
     Interest on uncertain tax positions	 	—		 	(2	)	 	—		 	4		 	5		 	5		
     Portion of rents representative of interest factor	 	17		 	22		 	45		 	50		 	52		 	42		
          Income as adjusted	 	$	892		 	$	782		 	$	1,994		 	$	2,062		 	$	1,785		 	$	1,642		
Fixed charges:	 	 	 	 	 	 	 	 	 	 	 	 	
     Interest on indebtedness	 	$	142		 	$	133		 	$	273		 	$	255		 	$	210		 	$	228		
     Interest on uncertain tax positions	 	—		 	(2	)	 	—		 	4		 	5		 	5		
     Portion of rents representative of interest factor	 	17		 	22		 	45		 	50		 	52		 	42		
          Total fixed charges	 	$	159		 	$	153		 	$	318		 	$	309		 	$	267		 	$	275		
Ratio of earnings to fixed charges	 	5.6		 	5.1		 	6.3		 	6.7		 	6.7			6.0		

(1) For the year ended December 31, 2012, amounts related to discontinued operations have been included in Other income to conform to amounts included in the Consolidated Financial Statements. This amount in the year ended December 31, 2012 , which was historically included in Income (loss) from discontinued operations, has been reclassified to conform with current presentation. The amount reclassified was a $1 million loss for the year ended December 31, 2012 , from Income (loss) from discontinued operations to Other income.

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 29, 2016	/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 29, 2016	/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, 2016 (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 29, 2016	

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, 2016 (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 29, 2016