Aon Plc · NYSE:AON
Aon — Investor Presentation (May 2015)
27 slides from Aon's investor presentation, May 2015
Slide 1: Aon plc Investor Relations Overview May 2015
Aon plc (NYSE: AON) Investor Relations Overview May 2015 0
Slide 2: Greg Case, Christa Davies, Scott Malchow
Greg Case Chief Executive Officer Christa Davies Chief Financial Officer Scott Malchow SVP, IR and Corporate FP&A 1
Slide 3: Safe Harbor Statement
Safe Harbor Statement This communication 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 Operating in Growing Markets • Strong Franchise Focused on Risk, Retirement and Health • Operating in Markets Growing Long-Term in Both Size and Complexity Section 2 Positioned the Firm and Made Progress Against Our Plan • Agenda bet • Agenda bullet • Agen
Slide 5: Industry-Leading Franchise Focused on Risk, Retirement and Health
Industry-Leading Franchise Focused on Risk, Retirement and Health Aon plc: Total 2014 Revenue of $12 Billion Total 2014 Revenue by Geography 69,000 employees across the firm APAC 10% +120 countries around the world EMEA U.S. 48% 19% +500 global offices U.K. Two industry-leading segments 13%
Slide 6: Operating in Markets Growing Long-Term in Both Size and Complexity
Operating in Markets Growing Long-Term in Both Size and Complexity Risk Global Non-Life P/C Written Premiums* ($ billions) Magnitude and scrutiny of risk is increasing around the $1,415 globe GDP growth drives insurable activity $1,046 Emerging markets – low penetration of insurance New risk
Slide 7: Agenda
Agenda Section 1 Industry-Leading Franchise Operating in Growing Markets • Agenda bullet • da bullet • Agenda bullet Section 2 Positioned the Firm and Made Progress Against Our Plan • Focused the Portfolio and Significantly Invested in Global Capabilities • Continued Progress Toward Long-Term Operat
Slide 8: Focused the Portfolio and Significantly Invested in Global Capabilities
Focused the Portfolio and Significantly Invested in Global Capabilities Sold off one-third of Aon to focus strictly on Significantly invested to position the firm for being a preeminent professional services firm long-term growth and increased operating leverage Exited low-margin, capital intensiv
Slide 9: Continued Progress Towards Long-Term Operating Margin Targets
Continued Progress Towards Long-Term Operating Margin Targets Risk Solutions Operating Margin* 26.0% Drivers Within Our Control: 1. Return on investments in data and analytics, 22.4% 22.5% 22.9% including Aon Broking and GRIP related initiatives 21.6% 21.6% 21.7% 2. Continued rollout of Revenue Engi
Slide 10: Delivered Strong Financial Results and Record Free Cash Flow
Delivered Strong Financial Results and Record Free Cash Flow Organic Revenue Operating Margin* 19.7% 19.6% 19.5% 4% 19.0% 19.0% 18.6% 3% 3% 3% 16.9% 2% 2% 2% 15.9% 14.1% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 -1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Earnings Per Share* Free Cash Flo
Slide 11: Total Return has Consistently Outperformed the Market and Peer Set
Total Return has Consistently Outperformed the Market and Peer Set Annualized Total Shareholder Returns* (CAGR %) Peers^ S&P Index AON 35% 31% Consistent outperformance with 30% double-digit total returns over the long-term 25% 23% 20% 20% 20% 16% 15% 15% 15% 14% 14% 13% 10% 8% 7% 8% 5% 5% 4% 0% 1-y
Slide 12: Agenda
Agenda Section 1 Industry-Leading Franchise Operating in Growing Markets • Agenda bullet • Agenda bullet • Agenda bullet Section 2 Positioned the Firm and Made Progress Against Our Plan • Agenda bullet • Agenda bulletAnda bullet Section 3 Substantial Opportunity for Further Value Creation • Signific
Slide 13: Significantly Increasing Free Cash Flow Generation
Significantly Increasing Free Cash Flow* Generation Free Cash Flow ($ millions) $2,300 Key Drivers: 1. Operational improvement as the firm makes progress towards its long-term operating margin $1,404 $1,386 targets $1,150 2. Declining required uses of cash for pensions and restructuring $777 $603 3.
Slide 14: Financial Flexibility with Full Access to Growing Free Cash Flow
Financial Flexibility with Full Access to Growing Free Cash Flow Aon has significant financial flexibility with access to cash generated around the globe Compared to select industry peers or other US-based global firms, Aon does not have large pools of trapped international cash balances Cash ge
Slide 15: Effectively Allocate Capital to Maximize Total Shareholder Return
Effectively Allocate Capital to Maximize Total Shareholder Return Aon deploys cash based on Return on Invested Capital (ROIC) on a cash on cash basis ROIC is the focus of how the firm allocates capital in order to maximize shareholder returns Historically, share repurchase has provided the highe
Slide 16: Substantial Upside for Shareholders Looking Forward
Substantial Upside for Shareholders Looking Forward +$2.3B Free Cash Flow for the full year 2017 Divided by future share count possibility in 2017 = Free Cash Flow / share FCF/share x current cash multiple (5 to 6% yield) = significant upside over three year period 15
Slide 17: Strong Balance Sheet with Opportunity for Additional Leverage
Strong Balance Sheet with Opportunity for Additional Leverage Aon is committed to our current credit metrics and ratings: Debt to EBITDA ratio is used to evaluate opportunity for additional leverage o Range on a GAAP-basis is 2.0 – 2.5x Moody’s methodology adjusts for pension liability and 6x re
Slide 18: Summary: significant shareholder value creation
Summary Industry-leading positions operating in markets growing in size and complexity Operating margin improvement with increased operating leverage in the business Significant upside to an improving global economy, interest rates and insurance pricing Historical track record of delivering
Slide 19: Appendix
Appendix AION 18 Empower Results®
Slide 20: Appendix
Appendix Appendix A Reconciliation of Non-GAAP Measures – Operating Margin Appendix B Reconciliation of Non-GAAP Measures – Earnings Per Share Appendix C Reconciliation of Non-GAAP Measures – Free Cash Flow Appendix D Annualized Total Shareholder Returns (CAGR %) 19
Slide 21: Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin
Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin Full Year ended December 31, 2006 Full Year ended December 31, 2007 Full Year ended December 31, 2008 Full Year ended December 31, 2009 Risk HR Risk HR Risk HR Risk HR (millions) Solutions Solutions Unallocated Continuing Solutions S
Slide 22: Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin
Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin Full Year ended December 31, 2010 Full Year ended December 31, 2011 Full Year ended December 31, 2012 Full Year ended December 31, 2013 Risk HR Risk HR Risk HR Risk HR (millions) Solutions Solutions Unallocated Continuing Solutions S
Slide 23: Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin
Appendix A: Reconciliation of Non-GAAP Measures – Operating Margin Full Year ended December 31, 2014 Risk HR (millions) Solutions Solutions Unallocated Continuing GAAP Disclosures As Reported Total revenue 7,834 4,264 (53) 12,045 Compensation and benefits 4,396 2,518 Other general expenses 1,790 1,2
Slide 24: Appendix B: Reconciliation of Non-GAAP Measures – EPS
Appendix B: Reconciliation of Non-GAAP Measures – EPS (millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014 Consolidated operating income - as reported 758 990 900 1,047 1,244 1,596 1,596 1,671 1,966 Restructuring 159 85 254 412 172 113 101 174 - Pension adjustment - - - - 49 - - - - Hewitt relate
Slide 25: Appendix C: Reconciliation of Non-GAAP Measures – Free Cash Flow
Appendix C: Reconciliation of Non-GAAP Measures – Free Cash Flow (millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014 Cash Provided by Operations $968 $1,263 $968 $500 $783 $1,018 $1,419 $1,633 $1,642 Less: Capital Expenditures (152) (170) (103) (140) (180) (241) (269) (229) (256) Free Cash Flow*
Slide 26: Appendix D: Annualized Total Shareholder Returns (CAGR %)
Appendix D: Annualized Total Shareholder Returns (CAGR %) Total Returns* Indexed to Current; % CAGR AON MMC WSH AJG BRO S&P 1 Year 14.1% 20.6% 2.7% 3.4% 6.2% 13.7% 2 Years 31.2% 30.1% 17.1% 18.3% 14.4% 22.7% 5 Years 20.1% 21.4% 11.8% 16.6% 13.4% 15.4% 8 Years 13.3% 8.4% 1.9% 6.4% 2.1% 7.0% 10 Years
Slide 27: Investor Relations
Investor Relations Scott Malchow +44.207.086.0100 scott.malchow@aon.com Erika Shouldice +1.312.381.5957 erika.shouldice@aon.com Steven Krall +1.312.381.3353 steven.krall@aon.com 26