Aon Plc · NYSE:AON
Aon — Goldman Sachs Conference December 2013
28 slides from Aon's conference presentation, Dec 10, 2013
Slide 1: Aon plc
Aon plc (NYSE: AON) December 2013
Slide 2: Presenters
Greg Case Chief Executive Officer Christa Davies Chief Financial Officer Scott Malchow Senior Vice President, Investor Relations/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 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 7 Yea
Slide 5: Industry-Leading Franchise Focused on Risk and People
Industry-Leading Franchise Focused on Risk and People #1 Advisor on Risk Solutions Total 2012 Revenue #1 Primary Insurance Brokerage $11.5 billion #1 Reinsurance Brokerage #1 Employee Benefits Brokerage Leader in Captive Management Leader in Affinity Programs HR Risk #1 Advisor on HR Solut
Slide 6: Largest Global Network of Resources and Capabilities
Largest Global Network of Resources and Capabilities Total 2012 Revenue by Geography APAC 10% EMEA U.S. 20% 46% U.K. Americas 14% (excl. U.S.) 10% Aon presence in over 120 countries with more than 500 offices Risk Solutions HR Solutions Place more than $104 billion of premium flow World-class br
Slide 7: Operating in Markets Growing Long-Term
Operating in Markets Growing Long-Term… …in Size ... and Complexity Global Non-Life P/C Written Premiums ($ billion)* $1,3221,365 Magnitude and scrutiny of risk is increasing 1,164 1,210 1,171 1,209 around the globe 1,092 1,006 1,048 922 798 GDP growth drives insurable activity $711 Emerging m
Slide 8: Agenda
Agenda Section 1 Industry-Leading Franchise Focused on Risk and People Section 2 What We Have Achieved Over the Last 7 Years • Focused the Portfolio • Significantly Invested in Global Capabilities • Delivered on Key Financial Metrics Section 3 What We Will Do Over the Next Several Years 7
Slide 9: What We Have Achieved Over the Last 7 Years: Focused the Portfolio
What We Have Achieved Over the Last 7 Years… Focused the 100% 100% 100% Portfolio 17% Underwriting 32% 34% HR Solutions 13% Significantly Invested in Global 83% Risk Solutions 55% 66% Capabilities 2004 2009 2012 Delivered on Key Financial Metrics Exited low-margin, capital intensive insurance unde
Slide 10: What We Have Achieved Over the Last 7 Years: Global Capabilities
What We Have Achieved Over the Last 7 Years… Focused the Delivery Technology Innovation Portfolio Significantly Health Care Invested in Exchanges Global Systems Analytics Talent Capabilities Delivered on Key Revenue Financial Metrics Engine Insights Content Brand 9
Slide 11: What We Have Achieved Over the Last 7 Years: Key Financial Metrics
What We Have Achieved Over the Last 7 Years… 1 2 Focused the Organic Revenue Operating Margin* 4% Portfolio 19.7% 19.6% 3% 19.0%18.6% 16.9% 15.9% Significantly 2% 2% 2% 14.1% Invested in Global Capabilities 0% 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 Delivered on -1% Key
Slide 12: Agenda
Agenda Section 1 Industry-Leading Franchise Focused on Risk and People Section 2 What We Have Achieved Over the Last 7 Years Section 3 What We Will Do Over the Next Several Years • Unite Aon to Drive Sustainable Long-Term Growth • Continue to Deliver on Long-Term Operating Margin Targets • Effective
Slide 13: United Aon to Drive Sustainable Long-Term Growth
United Aon to Drive Sustainable Long-Term Growth From: Aon United To: • 425+ acquisitions over Risk Solutions + HR Solutions • United Aon capable of the last 25 years delivering the best of the Client Promise firm to any client One approach to clients seamlessly around the globe Market Analytics Glo
Slide 14: Long-Term Operating Margin Targets
Long-Term Operating Margin Targets Risk Solutions* 1. Deliver $7 million of remaining restructuring 26% savings by the end of 2013 and $23 million by 22.4% 21.7% the end of 2014 21.6% 21.6% 2. Continued rollout of Revenue Engine 18.2% 18.7% internationally 16.6% 3. Aon Broking and GRIP related initi
Slide 15: Solid Balance Sheet with Strong Free Cash Flow Growth
Solid Balance Sheet with Strong Free Cash Flow Growth Balance Sheet Cash Flow from Operations ($ mil) ($ mil) $1,419 Reflects significantly improved working capital 2011 2012 performance despite a $1,018 higher rate of organic growth Cash $272 $291 Includes $186 million increase in total pension
Slide 16: Increasing Free Cash Flow
Increasing Free Cash Flow Uses of Cash ($mil) 2012 2013 2014 2015 2016 2017 2018 Pension Contributions¹ $638 $548 $463 $396 $355 $318 $231 - Pension Expense (non-cash) $53 ↓ ↓ ↓ ↓ ↓ ↓ Restructuring – Cash $143 $159 $78 $31 $15 $10 $8 Capital Expenditures $269 $274 $280 $285 $291 $297 $303 Estimated
Slide 17: Total Return has Consistently Outperformed Peers
Total Return has Consistently Outperformed Peers Annualized Total Returns (CAGR %) Peers S&P Index AON 50% 46% 45% 40% Consistent outperformance with double-digit total returns over the 35% 33% long-term 31% 30% 30% 25% 21% 20% 19% 17% 15% 14% 15% 13% 11% 10% 7% 8% 5% 4% 3% 0% 1-year 2-years 5-years
Slide 18: Summary – Continued Long-Term Value Creation
Summary – Continued Long-Term Value Creation Positioned for sustainable long-term growth Significant leverage to an improving global economy and insurance pricing Investing in colleagues and capabilities around the globe to better serve clients Opportunity for long-term operating margin impr
Slide 19: Appendix
Appendix » AON
Slide 20: Appendix A: Reconciliation of Non-GAAP Measures 2006-2011
Appendix A: Reconciliation of Non-GAAP Measures 2006-2011 Full Year ended December 31, 2006 Full Year ended December 31, 2007 Full Year ended December 31, 2008 Full Year ended December 31, 2009 Full Year ended December 31, 2010 Full Year ended December 31, 2011 Risk HR Risk HR Risk HR Risk HR Risk H
Slide 21: Appendix A: Reconciliation of Non-GAAP Measures 2012
Appendix A: Reconciliation of Non-GAAP Measures 2012 Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings Per Share (Unaudited) (1) Twelve Months Ended December 31, 2012 Unallocated Risk HR Income & (millions) Solutions Solutions Expense Total Revenue $ 7,632 $ 3,925 $ (43) $
Slide 22: Appendix A: Reconciliation of Non-GAAP Measures - Free Cash Flow
Appendix A: Reconciliation of Non-GAAP Measures - Free Cash Flow 21
Slide 23: Appendix B: Aon GRIP – Evolution
Appendix B: Aon GRIP – Evolution The Global Risk Insight Platform (GRIP) is the world’s leading proprietary database of insurance placements. It is completely unique and proprietary to Aon 2008 Development and initial US pilot 2009 Deployment across 19 countries 2010 Inception of Analytical tool
Slide 24: Appendix B: Aon GRIP – Today
Appendix B: Aon GRIP – Today World’s largest proprietary database of insurance placement data Insights into: US $94 billion premium 1.8 million+ opportunities to quote 79,000 clients across 1,000 industries in 165 countries 58 lines of coverage Supported by over 60 colleagues in Aon’s
Slide 25: Appendix C: Health Care Exchange Investment
Appendix C: Health Care Exchange Investment • Cost pressure, health care reform, and population health concerns have made this a critical time in health care. The decisions employers make today will have a profound impact on the future of their organizations • An exchange is a competitive marketplac
Slide 26: Appendix C: Market Opportunity and Aon’s Solutions
Appendix C: Market Opportunity and Aon’s Solutions Retiree Exchange (Navigators) Aon Hewitt Corporate Exchange • Navigators is Aon’s exchange for post-65 • Aon Hewitt’s Corporate Exchange is a solution retirees who are purchasing plans to for large market clients (5,000+ active supplement their Medi
Slide 27: Appendix D: Annualized Total Returns (CAGR %)
Appendix D: Annualized Total Returns (CAGR %) Total Returns Indexed to Current; % CAGR AON MMC WSH AJG BRO S&P 1 Year 46.1% 37.9% 35.3% 35.9% 21.7% 31.2% 2 Years 30.0% 23.2% 11.2% 24.3% 7.4% 21.0% 5 Years 15.2% 14.3% 13.1% 16.0% 6.0% 17.1% 8 Years 10.9% 6.1% 2.5% 6.2% 1.3% 6.9% 10 Years 14.3% 0.6% 3
Slide 28: Investor Relations
Investor Relations Scott Malchow scott.malchow@aon.com Office: +44 (0) 20 7086 0100 Erika Shouldice erika.shouldice@aon.com Office: 312-381-5957