Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income from continuing operations before income tax

Income before income tax and the provision for income tax consist of the following (in millions):

Years ended December 31	2013			2012			2011
Income before income taxes:
U.K.	$	96		$	36		$	222
U.S.	349			468			305
Other	1,093			876			861
Total	$	1,538		$	1,380		$	1,388
Income tax (benefit) expense:
Current:
U.K.	$	(18	)	$	(10	)	$	13
U.S. federal	111			170			(17		)
U.S. state and local	52			57			35
Other	259			238			204
Total current	$	404		$	455		$	235
Deferred:
U.K.	$	43		$	46		$	32
U.S. federal	(48		)	(83		)	109
U.S. state and local	10			(10		)	14
Other	(19		)	(48		)	(12		)
Total deferred	$	(14	)	$	(95	)	$	143
Total income tax expense	$	390		$	360		$	378

Reconciliation of the income tax provisions based on the U.S. statutory corporate tax rate to the provisions reflected in the Consolidated Financial Statements

The reconciliation to the provisions reflected in the Consolidated Financial Statements is as follows:

Years ended December 31	2013	2012	2011
Statutory tax rate	23.0%	24.0%	35.0%
U.S. state income taxes, net of U.S. federal benefit	2.6	2.2	2.3
Taxes on international operations (1)	(4.4)	0.6	(11.5)
Nondeductible expenses	1.4	2.0	3.5
Adjustments to prior year tax requirements	(1.6)	0.4	(1.1)
Deferred tax adjustments, including statutory rate changes	1.4	0.7	0.9
Deferred tax adjustments, international earnings	3.3	—	—
Adjustments to valuation allowances	(1.7)	(5.6)	(1.7)
Other — net	1.4	1.8	(0.1)
Effective tax rate	25.4%	26.1%	27.3%

(1) The Company determines the adjustment for taxes on international operations based on the difference between the statutory tax rate applicable to earnings in each foreign jurisdiction and the enacted rate of 23%, 24% and 35% at December 31, 2013, 2012 and 2011, respectively.

Components of Aon's deferred tax assets and liabilities

The components of the Company's deferred tax assets and liabilities are as follows (in millions):

As of December 31	2013			2012
Deferred tax assets:
Employee benefit plans	$	623		$	917
Net operating/capital loss and tax credit carryforwards	354			368
Other accrued expenses	142			47
Investment basis differences	50			13
Other	58			77
Total	1,227			1,422
Valuation allowance on deferred tax assets	(127		)	(154		)
Total	$	1,100		$	1,268
Deferred tax liabilities:
Intangibles and property, plant and equipment	$	(1,074	)	$	(1,128	)
Unremitted earnings	(51		)	—
Deferred revenue	(27		)	(30		)
Other accrued expenses	(39		)	(62		)
Unrealized investment gains	—			(5		)
Unrealized foreign exchange gains	(27		)	(8		)
Other	(64		)	(29		)
Total	$	(1,282	)	$	(1,262	)
Net deferred tax asset (liability)	$	(182	)	$	6

Deferred income taxes (assets and liabilities netted by jurisdiction) as classified in the Consolidated Statements of Financial Position

Deferred income taxes (assets and liabilities have been netted by jurisdiction) have been classified in the Consolidated Statements of Financial Position as follows (in millions):

As of December 31,	2013			2012
Deferred tax assets — current (1)	$	93		$	44
Deferred tax assets — non-current	193			285
Deferred tax liabilities — current (1)	(48		)	(17		)
Deferred tax liabilities — non-current	(420		)	(306		)
Net deferred tax asset (liability)	$	(182	)	$	6

(1) Included in Other current assets and Other current liabilities.

Reconciliation of the beginning and ending amount of unrecognized tax benefits

The following is a reconciliation of the Company's beginning and ending amount of uncertain tax positions (in millions):

	2013			2012
Balance at January 1	$	156		$	118
Additions based on tax positions related to the current year	22			21
Additions for tax positions of prior years	69			45
Reductions for tax positions of prior years	(70		)	(1		)
Settlements	(10		)	(22		)
Lapse of statute of limitations	(3		)	(5		)
Balance at December 31	$	164		$	156