Aon Plc · NYSE:AON
Aon — Investor Presentation (February 2011)
27 slides from Aon's investor presentation, Feb 15, 2011
Slide 1: Aon Corporation February 2011
Aon Corporation (NYSE: AON) February 2011
Slide 2: Presenters
Greg Case Chief Executive Officer Christa Davies Chief Financial Officer Scott Malchow Vice President, Investor Relations
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation 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. These
Slide 4: Agenda
Agenda Section 1 Industry-Leading Franchise Focused on Risk and People #1 in Risk Solutions and #1 in HR Solutions Largest Globally Owned Network of Resources and Capabilities Operating in Markets Growing Long-Term in both Size and Complexity Section 2 What We Have Achieved Over the Last 5 Years Sec
Slide 5: Industry-Leading Franchise Focused on Risk and People
Industry-Leading Franchise Focused on Risk and People #1 Advisor on Risk Solutions #1 Primary Insurance Brokerage #1 Reinsurance Brokerage #1 Captive Management Leader in Affinity Programs #1 Advisor on HR Solutions * Total revenue reflects the acquisition of Hewitt as if acquired on Jan. 1, 2010 Ma
Slide 6: Largest Global Network of Resources and Capabilities
Largest Global Network of Resources and Capabilities Aon presence in over 120 countries with more than 500 offices Risk Solutions Place more than $71 billion of premium flow Unparalleled market insight and data Strongest technology platform Deepest analytic expertise Integrated capital markets solut
Slide 7: Operating in Markets Growing Long-Term
Operating in Markets Growing Long-Term Source: AXCO Insurance Information Services ^Source: IDC, Global HR Management Services Forecast, Apr 2010 Global Non-Life P/C Written Premiums ($ billions)* and Complexity in Size Magnitude and scrutiny of risk is increasing GDP growth drives insurable activit
Slide 8: Agenda
Agenda Section 1 Industry-Leading Franchise Focused on Risk and People Section 2 What We Have Achieved Over the Last 5 Years Focused the Portfolio Significantly Invested in Global Capabilities Delivered on Key Financial Metrics Section 3 What We Will Do Over the Next 5 Years
Slide 9: Focused the Portfolio
Focused the Portfolio Significantly Invested in Global Capabilities Delivered on Key Financial Metrics 100% 100% Underwriting HR Solutions Risk Solutions 32% 13% 55% 17% 83% Exited low-margin, capital intensive insurance underwriting Focused the portfolio towards higher-margin, capital light profess
Slide 10: Significantly Invested in Global Capabilities
Focused the Portfolio Significantly Invested in Global Capabilities Delivered on Key Financial Metrics What We Have Achieved Over the Last 5 Years Delivery Technology Systems Brand Analytics Talent Training Content Insights Revenue Engine
Slide 11: Delivered on Key Financial Metrics
Focused Significantly Invested Delivered on Key the Portfolio in Global Capabilities Financial Metrics What We Have Achieved Over the Last 5 Years Organic Revenue Operating Margin* EPS – Cont. Ops* +18% CAGR + 410 bps * See Appendix for Non GAAP reconciliation 17.6% 18.1% 16.6% 15.5% 13.5% '06 '07 '
Slide 12: Agenda
Agenda Section 1 Industry-Leading Franchise Focused on Risk and People Section 2 What We Have Achieved Over the Last 5 Years Section 3 What We Will Do Over the Next 5 Years United Aon to Drive Sustainable Long-Term Growth Fully Integrate Hewitt and Deliver Operational Excellence Continue to Deliver
Slide 13: United Aon to Drive Sustainable Long-Term Growth
United Aon to Drive Sustainable Long-Term Growth 2006 Salesforce.com One revenue platform Revenue Engine Pipeline management, customer feedback, productivity Market Analytics Global premium flow insights Client Promise One approach to clients 2008 2009 2010 2007 2011 Risk Analytics Industry-leading
Slide 14: Integrate Hewitt and Deliver Operational Excellence
Integrate Hewitt and Deliver Operational Excellence $78 $314 $576 $658 * Cumulative savings in 2011, not net of reinvestment, are $122 mil for Aon Benfield and $536 mil for 2007 Program $4 $229- 242 $318- 335 $355 Expect to deliver $355 million of annual savings in 2013: including $280 million relat
Slide 15: Continue to Deliver on Long-Term Operating Margin Targets
Continue to Deliver on Long-Term Operating Margin Targets Risk Solutions HR Solutions Remaining restructuring savings and other operational improvements Rollout of revenue engine Aon Broking and GRIP initiatives Increases in short-term interest rates Improved GDP or insurance pricing Primary Drivers
Slide 16: Effectively Allocate Capital - Strong Free Cash Flow
Effectively Allocate Capital - Strong Free Cash Flow Share Repurchase Repurchased 112 mil or $4.6 bil from 2005-2010 at an avg. price of roughly $41 per share $2.015 bil remaining authorization Pension Contributions Expect to contribute approximately $400 mil Expect non-cash pension expense in the i
Slide 17: Summary of Opportunities and Challenges
Summary of Opportunities and Challenges Greater client demands and needs in core markets Aon well positioned #1 in Risk Solutions and #1 in HR Solutions Industry-leading network of global resources and capabilities Driving margin improvement while making significant investments in our future A cultu
Slide 18: Appendix
Appendix
Slide 19: Reconciliation of Organic Revenue
Appendix – Page 1 Reconciliation of Organic Revenue (millions) Dec. 31, 2010 Dec. 31, 2009 Commissions, Fees and Other Risk Solutions Segment: Retail brokerage Americas 2,377 $ 2,249 $ 6 % 2 % 4 % - % United Kingdom 629 650 (3) (1) - (2) Europe, Middle East & Africa 1,400 1,392 1 (2) 3 - Asia Pacifi
Slide 20: Reconciliation of Organic Revenue
Appendix – Page 2 Reconciliation of Organic Revenue (millions) Dec. 31, 2008 Dec. 31, 2007 Commissions, Fees and Other Risk and Insurance Brokerage Services: Americas 2,280 $ 2,259 $ 1 % - % - % 1 % United Kingdom 742 768 (3) (4) 1 - Europe, Middle East & Africa 1,521 1,341 13 7 2 4 Asia Pacific 492
Slide 21: Reconciliation of Organic Revenue
Appendix – Page 3 Reconciliation of Organic Revenue (1) Includes the impact of investment income, reimbursable expenses and unusual items (2) Organic revenue growth excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items (3) Certain amo
Slide 22: Reconciliation of Operating Income & EPS
Appendix – Page 4 Reconciliation of Operating Income & EPS¹ (millions) Risk Solutions HR Solutions Unallocated Income & Expense Total Revenue 6,305 $ 1,267 $ 23 $ 7,595 $ Operating income (loss) - as reported 900 $ 203 $ (82) $ 1,021 $ Restructuring charges 377 35 - 412 Pension curtailment (54) (20)
Slide 23: Reconciliation of Operating Income & EPS
Appendix – Page 5 Reconciliation of Operating Income & EPS¹ (1) Certain noteworthy items impacting operating income in 2010 and 2009 are described in this schedule. The items shown with the caption "as adjusted" are non-GAAP measures. (2) The effective tax rate for continuing operations is 32.8% and
Slide 24: Reconciliation of Operating Income & EPS
Appendix – Page 6 Reconciliation of Operating Income & EPS¹ 1) Certain noteworthy items impacting operating income in 2008 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures. 2)Tax rate from continuing operations is 27.6% for the twelve months ended
Slide 25: Reconciliation of Operating Income & EPS
Appendix – Page 7 Reconciliation of Operating Income & EPS¹ 1) Certain noteworthy items impacting operating income in 2007 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures. 2) Tax rate from continuing operations is 31.4% for the twelve months ended
Slide 26: Reconciliation of Operating Income & EPS
Appendix – Page 8 Reconciliation of Operating Income & EPS¹ 1) Certain noteworthy items impacting operating income in 2006 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures. 2) Tax rate from continuing operations is 32.5% for the twelve months ended
Slide 27: Reconciliation of EBITDA
Appendix – Page 9 Reconciliation of EBITDA¹ 1) Certain noteworthy items impacting operating income from 2008-2010 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP measures. EBITDA Reconciliation 2008 2009 2010 Hewitt Associates* Operating Income 293 $ Depre