Guarantee of Registered Securities

6 Months Ended

Jun. 30, 2012

Guarantee of Registered Securities

Guarantee of Registered Securities

18.  Guarantee of Registered Securities

As described in Note 15, in connection with the Redomestication, on April 2, 2012, Aon plc (“Parent Guarantor”) entered into various agreements pursuant to which it agreed to guarantee the obligations of Aon Corporation (“Subsidiary Issuer”) arising under issued and outstanding debt securities. Aon Corporation is a 100% indirectly owned subsidiary of Aon plc. The debt securities that are subject to Rule 3-10 of Regulation S-X are the 7.375% debt securities due December 2012, the 3.50% senior notes due September 2015, the 3.125% senior notes due May 2016, the 5.00% senior notes due September 2020, the 8.205% junior subordinated deferrable interest debentures due January 2027 and the 6.25% senior notes due September 2040. All guarantees of Aon plc are full and unconditional. There are no subsidiaries of Aon plc that are guarantors of the debt.

The following tables set forth condensed consolidating statements of financial position as of June 30, 2012 and December 31, 2011, condensed consolidating statements of income for the three and six months ended June 30, 2012 and 2011, condensed consolidating statements of comprehensive income for the three and six months ended June 30, 2012 and 2011, and condensed consolidating statements of cash flows for the six months ended June 30, 2012 and 2011 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 Guarantor 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.

Condensed Consolidating Statement of Income

	Three Months Ended June 30, 2012
							Other
	Parent			Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments			Consolidated
Revenue
Commissions, fees and other	$	—		$	—		$	2,813		$	—		$	2,813
Fiduciary investment income	—			—			8			—			8
Total revenue	—			—			2,821			—			2,821
Expenses
Compensation and benefits	57			—			1,582			—			1,639
Other general expenses	4			7			777			—			788
Total operating expenses	61			7			2,359			—			2,427
Operating (loss) income	(61		)	(7		)	462			—			394
Interest income	—			—			2			—			2
Interest expense	—			(40		)	(17		)	—			(57		)
Intercompany interest (expense) income	(3		)	47			(44		)	—			—
Other (expense) income	—			(5		)	17			—			12
(Loss) income from continuing operations before taxes	(64		)	(5		)	420			—			351
Income tax (benefit) expense	(16		)	(2		)	114			—			96
(Loss) income from continuing operations	(48		)	(3		)	306			—			255
Loss from discontinued operations before taxes	—			—			(1		)	—			(1		)
Income taxes	—			—			—			—			—
Loss from discontinued operations	—			—			(1		)	—			(1		)
Equity in earnings of subsidiaries, net of tax	294			268			265			(827		)	—
Net income	246			265			570			(827		)	254
Less: Net income attributable to noncontrolling interests	—			—			8			—			8
Net income attributable to Aon shareholders	$	246		$	265		$	562		$	(827	)	$	246

Condensed Consolidating Statement of Income

	Three Months Ended June 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments			Consolidated
Revenue
Commissions, fees and other	$	—	$	—		$	2,799		$	—		$	2,799
Fiduciary investment income	—		—			12			—			12
Total revenue	—		—			2,811			—			2,811
Expenses
Compensation and benefits	—		39			1,573			—			1,612
Other general expenses	—		—			759			—			759
Total operating expenses	—		39			2,332			—			2,371
Operating income	—		(39		)	479			—			440
Interest income	—		2			2			—			4
Interest expense	—		(39		)	(24		)	—			(63		)
Intercompany interest income (expense)	—		44			(44		)	—			—
Other expense	—		(25		)	(4		)	—			(29		)
(Loss) income from continuing operations before taxes	—		(57		)	409			—			352
Income tax (benefit) expense	—		(21		)	108			—			87
(Loss) income from continuing operations	—		(36		)	301			—			265
Income from discontinued operations before taxes	—		1			—			—			1
Income tax benefit	—		(1		)	—			—			(1		)
Income from discontinued operations	—		2			—			—			2
Equity in earnings of subsidiaries, net of tax	258		263			229			(750		)	—
Net income	258		229			530			(750		)	267
Less: Net income attributable to noncontrolling interests	—		—			9			—			9
Net income attributable to Aon shareholders	$	258	$	229		$	521		$	(750	)	$	258

Condensed Consolidating Statement of Income

	Six Months Ended June 30, 2012
							Other
	Parent			Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments			Consolidated
Revenue
Commissions, fees and other	$	—		$	—		$	5,642		$	—		$	5,642
Fiduciary investment income	—			1			19			—			20
Total revenue	—			1			5,661			—			5,662
Expenses
Compensation and benefits	57			66			3,177			—			3,300
Other general expenses	3			22			1,541			—			1,566
Total operating expenses	60			88			4,718			—			4,866
Operating (loss) income	(60		)	(87		)	943			—			796
Interest income	—			—			5			—			5
Interest expense	—			(80		)	(36		)	—			(116		)
Intercompany interest (expense) income	(3		)	93			(90		)	—			—
Other income	—			3			9			—			12
(Loss) income from continuing operations before taxes	(63		)	(71		)	831			—			697
Income tax (benefit) expense	(16		)	(27		)	236			—			193
(Loss) income from continuing operations	(47		)	(44		)	595			—			504
Loss from discontinued operations before taxes	—			—			(1		)	—			(1		)
Income taxes	—			—			—			—			—
Loss from discontinued operations	—			—			(1		)	—			(1		)
Equity in earnings of subsidiaries, net of tax	531			517			473			(1,521		)	—
Net income	484			473			1,067			(1,521		)	503
Less: Net income attributable to noncontrolling interest	—			—			19			—			19
Net income attributable to Aon shareholders	$	484		$	473		$	1,048		$	(1,521	)	$	484

Condensed Consolidating Statement of Income

	Six Months Ended June 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments			Consolidated
Revenue
Commissions, fees and other	$	—	$	—		$	5,547		$	—		$	5,547
Fiduciary investment income	—		1			22			—			23
Total revenue	—		1			5,569			—			5,570
Expenses
Compensation and Benefits	—		100			3,109			—			3,209
Other general expenses	—		—			1,523			—			1,523
Total operating expenses	—		100			4,632			—			4,732
Operating (loss) income	—		(99		)	937			—			838
Interest income	—		4			6			—			10
Interest expense	—		(91		)	(35		)	—			(126		)
Intercompany interest income (expense)	—		88			(88		)	—			—
Other (expense) income	—		(27		)	13			—			(14		)
(Loss) income from continuing operations before taxes	—		(125		)	833			—			708
Income tax (benefit) expense	—		(46		)	236			—			190
(Loss) income from continuing operations	—		(79		)	597			—			518
Income from discontinued operations before taxes	—		5			—			—			5
Income tax expense	—		1			—			—			1
Income from discontinued operations	—		4			—			—			4
Equity in earnings of subsidiaries, net of tax	504		510			435			(1,449		)	—
Net income	504		435			1,032			(1,449		)	522
Less: Net income attributable to noncontrolling interests	—		—			18			—			18
Net income attributable to Aon shareholders	$	504	$	435		$	1,014		$	(1,449	)	$	504

Condensed Consolidating Statement of Comprehensive Income

	Three Months Ended June 30, 2012
							Other
	Parent			Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments			Consolidated
Net income	$	246		$	265		$	570		$	(827	)	$	254
Less: Net income attributable to noncontrolling interests	—			—			8			—			8
Net income attributable to Aon shareholders	$	246		$	265		$	562		$	(827	)	$	246
Other comprehensive loss, net of tax:
Change in fair value of derivatives	—			—			(17		)	—			(17		)
Foreign currency translation adjustments	—			(1		)	(196		)	—			(197		)
Post-retirement benefit obligation	—			5			13			—			18
Total other comprehensive income (loss)	—			4			(200		)	—			(196		)
Equity in other comprehensive (loss) income of subsidiaries, net of tax	(193		)	(197		)	(193		)	583			—
Less: Other comprehensive loss attributable to noncontrolling interests	—			—			(3		)	—			(3		)
Total other comprehensive loss attributable to Aon shareholders	(193		)	(193		)	(390		)	583			(193		)
Comprehensive income (loss) attributable to Aon shareholders	$	53		$	72		$	172		$	(244	)	$	53

Condensed Consolidating Statement of Comprehensive Income

	Three Months Ended June 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments			Consolidated
Net income	$	258	$	229		$	530		$	(750	)	$	267
Less: Net income attributable to noncontrolling interests	—		—			9			—			9
Net income attributable to Aon shareholders	$	258	$	229		$	521		$	(750	)	$	258
Other comprehensive income, net of tax:
Change in fair value of derivatives	—		—			(1		)	—			(1		)
Foreign currency translation adjustments	—		(7		)	9			—			2
Post-retirement benefit obligation	—		2			13			—			15
Total other comprehensive (loss) income	—		(5		)	21			—			16
Equity in other comprehensive income (loss) of subsidiaries, net of tax	16		21			16			(53		)	—
Less: Other comprehensive income attributable to noncontrolling interests	—		—			—			—			—
Total other comprehensive income attributable to Aon shareholders	16		16			37			(53		)	16
Comprehensive income attributable to Aon Shareholders	$	274	$	245		$	558		$	(803	)	$	274

Condensed Consolidating Statement of Comprehensive Income

	Six Months Ended June 30, 2012
(millions)	Parent Guarantor			Subsidiary Issuer			Other Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Net income	$	484		$	473		$	1,067		$	(1,521	)	$	503
Less: Net income attributable to noncontrolling interests	—			—			19			—			19
Net income attributable to Aon shareholders	$	484		$	473		$	1,048		$	(1,521	)	$	484
Other comprehensive loss, net of tax:
Change in fair value of derivatives	—			1			(11		)	—			(10		)
Foreign currency translation adjustments	—			—			(93		)	—			(93		)
Post-retirement benefit obligation	—			7			32			—			39
Total other comprehensive income (loss)	—			8			(72		)	—			(64		)
Equity in other comprehensive (loss) income of subsidiaries, net of tax	(62		)	(70		)	(62		)	194			—
Less: Other comprehensive loss attributable to noncontrolling interests	—			—			(2		)	—			(2		)
Total other comprehensive loss attributable to Aon shareholders	(62		)	(62		)	(132		)	194			(62		)
Comprehensive income attributable to Aon shareholders	$	422		$	411		$	916		$	(1,327	)	$	422

Condensed Consolidating Statement of Comprehensive Income

	Six Months Ended June 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments			Consolidated
Net income	$	504	$	435		$	1,032		$	(1,449	)	$	522
Less: Net income attributable to noncontrolling interests	—		—			18			—			18
Net income attributable to Aon shareholders	$	504	$	435		$	1,014		$	(1,449	)	$	504
Other comprehensive income, net of tax:
Change in fair value of derivatives	—		(1		)	(4		)	—			(5		)
Foreign currency translation adjustments	—		(9		)	206			—			197
Post-retirement benefit obligation	—		3			24			—			27
Total other comprehensive (loss) income	—		(7		)	226			—			219
Equity in other comprehensive income (loss) of subsidiaries, net of tax	219		223			216			(658		)	—
Less: Other comprehensive income attributable to noncontrolling interests	—		—			—			—			—
Total other comprehensive income attributable to Aon shareholders	219		216			442			(658		)	219
Comprehensive income attributable to Aon shareholders	$	723	$	651		$	1,456		$	(2,107	)	$	723

Condensed Consolidating Statement of Financial Position

	June 30, 2012
					Other
	Parent		Subsidiary		Non-Guarantor		Consolidating
(millions)	Guarantor		Issuer		Subsidiaries		Adjustments			Consolidated
ASSETS
Cash and cash equivalents	$	19	$	80	$	187	$	—		$	286
Short-term investments	—		111		405		—			516
Receivables, net	1		3		3,071		—			3,075
Fiduciary assets	—		—		12,736		—			12,736
Intercompany receivables	21		1,296		1,826		(3,143		)	—
Other current assets	—		90		353		—			443
Total Current Assets	41		1,580		18,578		(3,143		)	17,056
Goodwill	—		—		8,713		—			8,713
Intangible assets, net	—		—		3,106		—			3,106
Fixed assets, net	—		—		797		—			797
Investments	—		41		159		—			200
Intercompany receivables	—		2,226		2,171		(4,397		)	—
Other non-current assets	—		704		231		—			935
Investment in subsidiary	10,704		9,966		8,013		(28,683		)	—
TOTAL ASSETS	$	10,745	$	14,517	$	41,768	$	(36,223	)	$	30,807
LIABILITIES AND EQUITY
Fiduciary liabilities	$	—	$	—	$	12,736	$	—		$	12,736
Short-term debt and current portion of long-term debt	—		372		20		—			392
Accounts payable and accrued liabilities	5		75		1,259		—			1,339
Intercompany payables	30		1,123		1,331		(2,484		)	—
Other current liabilities	1		47		685		—			733
Total Current Liabilities	36		1,617		16,031		(2,484		)	15,200
Long-term debt	—		3,041		1,057		—			4,098
Pension and other post employment liabilities	—		1,322		645		—			1,967
Intercompany payables	2,400		360		2,296		(5,056		)	—
Other non-current liabilities	157		164		1,011		—			1,332
TOTAL LIABILITIES	2,593		6,504		21,040		(7,540		)	22,597
TOTAL AON SHAREHOLDERS’ EQUITY	8,152		8,013		20,670		(28,683		)	8,152
Noncontrolling interests	—		—		58		—			58
TOTAL EQUITY	8,152		8,013		20,728		(28,683		)	8,210
TOTAL LIABILITIES AND EQUITY	$	10,745	$	14,517	$	41,768	$	(36,223	)	$	30,807

Condensed Consolidating Statement of Financial Position

	Dec. 31, 2011
						Other
	Parent		Subsidiary			Non-Guarantor		Consolidating
(millions)	Guarantor		Issuer			Subsidiaries		Adjustments			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	(21	)	$	293	$	—		$	272
Short-term investments	—		321			464		—			785
Receivables, net	—		2			3,181		—			3,183
Fiduciary assets	—		—			10,838		—			10,838
Intercompany receivables	3		610			539		(1,152		)	—
Other current assets	—		57			374		(4		)	427
Total Current Assets	3		969			15,689		(1,156		)	15,505
Goodwill	—		—			8,770		—			8,770
Intangible assets, net	—		—			3,276		—			3,276
Fixed assets, net	—		—			783		—			783
Investments	—		39			200		—			239
Intercompany receivables	—		2,133			2,202		(4,335		)	—
Other non-current assets	—		900			79		—			979
Investment in subsidiary	10,183		9,269			7,714		(27,166		)	—
TOTAL ASSETS	$	10,186	$	13,310		$	38,713	$	(32,657	)	$	29,552
LIABILITIES AND EQUITY
Fiduciary liabilities	$	—	$	—		$	10,838	$	—		$	10,838
Short-term debt and current portion of long-term debt	—		318			19		—			337
Accounts payable and accrued liabilities	—		78			1,758		(4		)	1,832
Intercompany payables	—		206			609		(815		)	—
Other current liabilities	—		5			748		—			753
Total Current Liabilities	—		607			13,972		(819		)	13,760
Long-term debt	—		3,063			1,092		—			4,155
Pension and other post employment liabilities	—		1,407			785		—			2,192
Intercompany payables	2,108		378			2,186		(4,672		)	—
Other non-current liabilities	—		141			1,183		—			1,325
TOTAL LIABILITIES	2,108		5,596			19,219		(5,491		)	21,432
TOTAL AON SHAREHOLDERS’ EQUITY	8,078		7,714			19,452		(27,166		)	8,078
Noncontrolling interests	—		—			42		—			42
TOTAL EQUITY	8,078		7,714			19,494		(27,166		)	8,120
											—
TOTAL LIABILITIES AND EQUITY	$	10,186	$	13,310		$	38,713	$	(32,657	)	$	29,552

Condensed Consolidating Statement of Cash Flows

	Six Months Ended June 30, 2012
	Parent			Subsidiary			Other Non-Guarantor			Consolidating
(millions)	Guarantor			Issuer			Subsidiaries			Adjustments		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	$	(19	)	$	(99	)	$	387		$	—	$	269
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of long-term investments	—			—			51			—		51
Purchase of long-term investments	—			(7		)	—			—		(7		)
Net sales of short-term investments - non-fiduciary	—			211			48					259
Acquisition of businesses, net of cash acquired	—			(55		)	(27		)	—		(82		)
Proceeds from sale of businesses	—			—			1			—		1
Capital expenditures	—			—			(129		)	—		(129		)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—			149			(56		)	—		93
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury	(250		)	(100		)	—			—		(350		)
Advances from (to) affiliates	325			118			(443		)	—		—
Issuance of shares for employee benefit plans	15			49			—			—		64
Issuance of debt	—			332			—			—		332
Repayment of debt	—			(298		)	(7		)	—		(305		)
Cash dividends to shareholders	(52		)	(50		)	—			—		(102		)
Purchase of shares from noncontrolling interests	—			—			1			—		1
Dividends paid to noncontrolling interests	—			—			(6		)	—		(6		)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	38			51			(455		)	—		(366		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—			—			18			—		18
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	19			101			(106		)	—		14
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	—			(21		)	293			—		272
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	19		$	80		$	187		$	—	$	286

Condensed Consolidating Statement of Cash Flows

	Six Months Ended June 30, 2011
						Other
	Parent		Subsidiary			Non-Guarantor			Consolidating
(millions)	Guarantor		Issuer			Subsidiaries			Adjustments		Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES	$	—	$	(42	)	$	461		$	—	$	419
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of long-term investments	—		51			45			—		96
Purchase of long-term investments	—		(20		)	—			—		(20		)
Net sales of short-term investments - non-fiduciary			283			7					290
Acquisition of businesses, net of cash acquired	—		(3		)	(92		)	—		(95		)
Proceeds from sale of businesses	—		4			4			—		8
Capital expenditures	—		—			(99		)	—		(99		)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES	—		315			(135		)	—		180
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury	—		(653		)	—			—		(653		)
Advances from (to) affiliates	—		324			(324		)	—		—
Issuance of shares for employee benefit plans	—		162			—			—		162
Issuance of debt	—		1,090			379			—		1,469
Repayment of debt	—		(1,115		)	(389		)	—		(1,504		)
Cash dividends to shareholders	—		(100		)	—			—		(100		)
Purchase of shares from noncontrolling interests	—		—			—			—		—
Dividends paid to noncontrolling interests	—		—			(6		)	—		(6		)
CASH USED FOR FINANCING ACTIVITIES	—		(292		)	(340		)	—		(632		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	—		—			(13		)	—		(13		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	—		(19		)	(27		)	—		(46		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	—		14			332			—		346
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	—	$	(5	)	$	305		$	—	$	300