Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

EXECUTIVE SUMMARY OF FIRST QUARTER 2023 FINANCIAL RESULTS

Aon plc is a leading global professional services firm providing a broad range of risk, health, and wealth solutions. Through our experience, global reach, and comprehensive analytics, we are better able to help clients meet rapidly changing, increasingly complex, and interconnected challenges. We are committed to accelerating innovation to address unmet and evolving client needs, so that our clients are better informed, better advised, and able to make better decisions to protect and grow their business. Management is focused on strengthening Aon and uniting the firm with one portfolio of capability enabled by data and analytics and one operating model to deliver additional insight, connectivity, and efficiency.

Financial Results

The following is a summary of our first quarter of 2023 financial results.

• Revenue increased $201 million, or 5% to $3.9 billion compared to the prior year period reflecting organic revenue growth of 7% and a 1% favorable impact from fiduciary investment income, partially offset by a 3% unfavorable impact from foreign currency translation.

• Total operating expenses in the first quarter increased 4% to $2.4 billion compared to the prior year period due primarily to an increase in expense associated with 7% organic revenue growth and investments in long-term growth, partially offset by a $67 million favorable impact from foreign currency translation.

• Operating margin increased to 38.1% from 37.2% in the prior year period. The increase was driven by an increase in operating expenses as listed above and organic revenue growth of 7%.

• Due to the factors set forth above, Net income increased $31 million to $1,079 million compared to the prior year period.

• Diluted earnings per share was $5.07 compared to $4.73 per share for the prior year period.

• Cash flows provided by operations for the first three months of 2023 decreased $20 million, or 4%, to $443 million compared to the prior year period, primarily due to higher cash tax payments, partially offset by strong operating income growth.

We focus on four key metrics not presented in accordance with U.S. GAAP that we communicate to shareholders: organic revenue growth, adjusted operating margin, adjusted diluted earnings per share, and free cash flow. These non-GAAP metrics should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements. The following is our measure of performance against these four metrics for the first quarter of 2023:

• Organic revenue growth is a non-GAAP measure defined under the caption “Review of Consolidated Results — Organic Revenue Growth.” Organic revenue growth was 7% for the first quarter of 2023, driven by ongoing strong retention and net new business generation.

• Adjusted operating margin, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Operating Margin,” was 38.7% for the first quarter of 2023 compared to 38.0% in the prior year period. The increase in adjusted operating margin primarily reflects organic revenue growth, partially offset by increased expenses and investments in long-term growth.

• Adjusted diluted earnings per share, a non-GAAP measure defined under the caption “Review of Consolidated Results — Adjusted Diluted Earnings per Share,” was $5.17 per share for the first quarter of 2023, compared to $4.83 per share for the respective prior year period.

• Free cash flow, a non-GAAP measure defined under the caption “Review of Consolidated Results — Free Cash Flow,” decreased in the first three months of 2023 by $73 million from the prior year period, to $367 million, reflecting a decrease in cash flows from operations and by a $53 million increase in capital expenditures.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE

For many companies, the management of ESG risks and opportunities has become increasingly important, and ESG-related challenges, such as extreme weather events, supply chain disruptions, cyber events, regulatory changes, ongoing public health impacts, and the increased focus on workforce resilience in various work environments, continue to create volatility and uncertainty for our clients. Aon offers a wide range of risk assessment, consulting and advisory solutions, many of which are significant parts of our core business offerings, designed to address and manage ESG issues for clients, and to enable our clients to create more sustainable value. We view ESG risks as a valuable opportunity for Aon to work together as one firm to address client needs and improve our impact on ESG matters.

REVIEW OF CONSOLIDATED RESULTS

Summary of Results

Our consolidated results are as follows (in millions):

						Three Months Ended March 31,
						2023						2022
Revenue
Total revenue						$	3,871					$	3,670
Expenses
Compensation and benefits						1,792						1,767
Information technology						139						123
Premises						75						72
Depreciation of fixed assets						38						38
Amortization and impairment of intangible assets						25						28
Other general expense						329						275
Total operating expenses						2,398						2,303
Operating income						1,473						1,367
Interest income						5						3
Interest expense						(111)						(91)
Other income (expense)						(25)						25
Income before income taxes						1,342						1,304
Income tax expense						263						256
Net income						1,079						1,048
Less: Net income attributable to noncontrolling interests						29						25
Net income attributable to Aon shareholders						$	1,050					$	1,023
Diluted net income per share attributable to Aon shareholders						$	5.07					$	4.73
Weighted average ordinary shares outstanding - diluted						207.1						216.4

Revenue

Total revenue increased $201 million, or 5%, to $3,871 million, compared to the prior year period, with organic revenue growth of 7%, driven by ongoing strong retention, net new business generation, and management of the renewal book portfolio, and a 1% favorable impact from fiduciary investment income, partially offset by a 3% unfavorable impact from foreign currency translation.

Commercial Risk Solutions organic revenue growth of 6% reflects strong growth across most major geographies driven by strong retention, net new business generation, and management of the renewal book portfolio. Growth in retail brokerage was highlighted by double-digit growth in EMEA, Latin America, and the Pacific driven by continued strength in core P&C. U.S. retail brokerage grew modestly after growing double-digits in the prior year period and reflecting the impact of the external M&A and IPO markets on M&A services. Results also reflect strong growth globally in the affinity business across both consumer and business solutions, including growth in the travel and events practice and Digital Client Solutions. On average globally, exposures and pricing were positive, resulting in a modestly positive market impact.

Reinsurance Solutions organic revenue growth of 9% reflects strong growth in treaty, driven by strong retention and continued net new business generation, as well as double-digit growth in both the Strategy and Technology Group and facultative placements. Market impact was modestly positive on results in the quarter. The majority of revenue in our treaty portfolio is recurring in nature and is recorded in connection with the major renewal periods that take place throughout the first half of the year.

Health Solutions organic revenue growth of 8% reflects growth globally in core health and benefits brokerage, driven by strong retention, net new business generation, and management of the renewal book portfolio. Strength in the core was highlighted by double-digit growth in Asia Pacific, U.K., and Latin America. Results also reflect double-digit growth in Human Capital, driven by data and advisory solutions.

Wealth Solutions organic revenue growth of 6% reflects growth in Retirement, driven by higher advisory demand and project-related work related to pension de-risking and ongoing impacts of regulatory changes. In Investments, a decrease in AUM-based delegated investment management revenue due to equity market and interest rate movements was partially offset by higher advisory demand and project-related work.

Compensation and Benefits

Compensation and benefits expense increased $25 million, or 1%, compared to the prior year period due primarily to an increase in expense associated with 7% organic revenue growth, partially offset by a $55 million favorable impact from foreign currency translation.

Information Technology

Information technology expenses, which represent costs associated with supporting and maintaining our infrastructure, increased $16 million, or 13%, compared to the prior year period due primarily to ongoing investments in Aon Business Services-enabled technology platforms to drive long-term growth and continued investment in core infrastructure and security.

Premises

Premises expenses, which represent the cost of occupying offices in various locations throughout the world, increased $3 million, or 4%, in the first quarter of 2023 compared to the prior year period.

Depreciation of Fixed Assets

Depreciation of fixed assets primarily relates to software, leasehold improvements, furniture, fixtures, and equipment, computer equipment, buildings, and automobiles. Depreciation of fixed assets was flat in the first quarter of 2023 compared to the prior year period.

Amortization and Impairment of Intangible Assets

Amortization and impairment of intangible assets primarily relates to finite-lived customer-related and contract-based assets as well as technology and other assets. Amortization and impairment of intangible assets decreased $3 million, or 11%, compared to the prior year period.

Other General Expense

Other general expense in the first quarter of 2023 increased $54 million, or 20%, compared to the prior year period due primarily to an increase in expense associated with 7% organic revenue growth, including an increase in business travel expense, especially compared to the prior year period as business travel was suppressed by COVID-19.

Interest Income

Interest income represents income, net of expense, earned on operating cash balances and other income-producing investments. It does not include interest earned on funds held on behalf of clients. During the first quarter of 2023, interest income increased $2 million to $5 million compared to the prior year period.

Interest Expense

Interest expense, which represents the cost of our debt obligations, increased $20 million to $111 million compared to the prior year period, reflecting an increase in total debt and higher interest rates.

Other Income (Expense)

Other expense was $25 million for the first quarter of 2023, compared to Other income of $25 million for the first quarter of 2022. Other expense for the first quarter of 2023 primarily reflects the unfavorable impact of exchange rates on the remeasurement of assets and liabilities in non-functional currencies and non-cash net periodic pension cost. Other income for the first quarter of 2022 primarily reflects a gain from the sale of a business in Wealth Solutions.

Income before Income Taxes

Due to the factors discussed above, Income before income taxes for the first quarter of 2023 was $1,342 million, a 3% increase from $1,304 million in the first quarter of 2022.

Income Taxes

The effective tax rate on Net income was 19.6% for the first quarters of 2023 and 2022.

For the three months ended March 31, 2023 and March 31, 2022, the tax rate was primarily driven by the geographical distribution of income and certain discrete items, primarily the favorable impact of share-based payments.

Net Income Attributable to Aon Shareholders

Net income attributable to Aon shareholders for the first quarter of 2023 increased to $1,050 million, or $5.07 per diluted share, from $1,023 million, or $4.73 per diluted share, in the prior year period.

Non-GAAP Metrics

In our discussion of consolidated results, we sometimes refer to certain non-GAAP supplemental information derived from consolidated financial information specifically related to organic revenue growth, adjusted operating margin, adjusted diluted earnings per share, adjusted net income attributable to Aon shareholders, adjusted net income per share, other income (expense), as adjusted, adjusted effective tax rate, free cash flow, and the impact of foreign exchange rate fluctuations on operating results. Management believes that these measures are important to make meaningful period-to-period comparisons and that this supplemental information is helpful to investors. Management also uses these measures to assess operating performance and performance for compensation. This non-GAAP supplemental information should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements.

Organic Revenue Growth

We use supplemental information related to organic revenue growth to help us and our investors evaluate business growth from existing operations. Organic revenue growth is a non-GAAP measure that includes the impact of certain intercompany activity and excludes the impact of changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures, transfers between revenue lines, and gains or losses on derivatives accounted for as hedges. This supplemental information related to organic revenue growth represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements. Industry peers provide similar supplemental information about their revenue performance, although they may not make identical adjustments. A reconciliation of this non-GAAP measure to the reported Total revenue is as follows (in millions, except percentages):

						Three Months Ended March 31,
						2023						2022						% Change						Less: Currency Impact (1)						Less: Fiduciary Investment Income (2)						Less: Acquisitions, Divestitures & Other						Organic Revenue Growth (3)
Revenue
Commercial Risk Solutions						$	1,778					$	1,719					3		%				(3)		%				2		%				(2)		%				6		%
Reinsurance Solutions						1,077						976						10						(2)						2						1						9
Health Solutions						671						638						5						(3)						—						—						8
Wealth Solutions						350						345						1						(4)						—						(1)						6
Eliminations						(5)						(8)						N/A						N/A						N/A						N/A						N/A
Total revenue						$	3,871					$	3,670					5		%				(3)		%				1		%				—		%				7		%

(1)Currency impact represents the effect on prior year period results if they were translated at current period foreign exchange rates.

(2)Fiduciary investment income for the three months ended March 31, 2023 and 2022, was $52 million and $2 million, respectively.

(3)Organic revenue growth includes the impact of certain intercompany activity and excludes the impact of changes in foreign exchange rates, fiduciary investment income, acquisitions, divestitures, transfers between revenue lines, and gains or losses on derivatives accounted for as hedges.

Adjusted Operating Margin

We use adjusted operating margin as a non-GAAP measure of our core operating performance. Adjusted operating margin excludes the impact of certain items, as listed below, because management does not believe these expenses are the best indicators of our core operating performance. This supplemental information related to adjusted operating margin represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements.

A reconciliation of this non-GAAP measure to the reported operating margin is as follows (in millions, except percentages):

						Three Months Ended March 31,
						2023						2022
Revenue						$	3,871					$	3,670
Operating income - as reported						$	1,473					$	1,367
Amortization and impairment of intangible assets						25						28
Operating income - as adjusted						$	1,498					$	1,395
Operating margin - as reported						38.1		%				37.2		%
Operating margin - as adjusted						38.7		%				38.0		%

Adjusted Diluted Earnings per Share

We use adjusted diluted earnings per share as a non-GAAP measure of our core operating performance. Adjusted diluted earnings per share excludes the impact of certain items, as listed below, because management does not believe these expenses are the best indicators of our core operating performance. This supplemental information related to adjusted diluted earnings per share represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements. A reconciliation of this non-GAAP measure to reported diluted earnings per share is as follows (in millions, except per share data and percentages):

						Three Months Ended March 31, 2023
																		Non-GAAP
						U.S. GAAP						Adjustments						Adjusted
Operating income						$	1,473					$	25					$	1,498
Interest income						5						—						5
Interest expense						(111)						—						(111)
Other income (expense)						(25)						—						(25)
Income before income taxes						1,342						25						1,367
Income tax expense (1)						263						5						268
Net income						1,079						20						1,099
Less: Net income attributable to noncontrolling interests						29						—						29
Net income attributable to Aon shareholders						$	1,050					$	20					$	1,070
Diluted net income per share attributable to Aon shareholders						$	5.07					$	0.10					$	5.17
Weighted average ordinary shares outstanding - diluted						207.1						—						207.1
Effective tax rates (1)						19.6		%										19.6		%

						Three Months Ended March 31, 2022
																		Non-GAAP
						U.S. GAAP						Adjustments						Adjusted
Operating income						$	1,367					$	28					$	1,395
Interest income						3						—						3
Interest expense						(91)						—						(91)
Other income						25						—						25
Income before income taxes						1,304						28						1,332
Income tax expense (1)						256						6						262
Net income						1,048						22						1,070
Less: Net income attributable to noncontrolling interests						25						—						25
Net income attributable to Aon shareholders						$	1,023					$	22					$	1,045
Diluted net income per share attributable to Aon shareholders						$	4.73					$	0.10					$	4.83
Weighted average ordinary shares outstanding - diluted						216.4						—						216.4
Effective tax rates (1)						19.6		%										19.7		%

(1)Adjusted items are generally taxed at the estimated annual effective tax rate.

Free Cash Flow

We use free cash flow, defined as cash flow provided by operations less capital expenditures, as a non-GAAP measure of our core operating performance and cash-generating capabilities of our business operations. This supplemental information related to free cash flow represents a measure not in accordance with U.S. GAAP and should be viewed in addition to, not instead of, our Condensed Consolidated Financial Statements. The use of this non-GAAP measure does not imply or represent the residual cash flow for discretionary expenditures. A reconciliation of this non-GAAP measure to the reported Cash provided by operating activities is as follows (in millions):

						Three Months Ended March 31,
						2023						2022
Cash provided by operating activities						$	443					$	463
Capital expenditures						(76)						(23)
Free cash flow						$	367					$	440

Impact of Foreign Exchange Rate Fluctuations

Because we conduct business in over 120 countries and sovereignties, foreign exchange rate fluctuations may have a significant impact on our business. Foreign exchange rate movements may be significant and may distort true period-to-period comparisons of changes in revenue or pretax income. Therefore, to give financial statement users meaningful information about our operations, we have provided an illustration of the impact of foreign currency exchange rates on our financial results. The methodology used to calculate this impact isolates the impact of the change in currencies between periods by translating the prior year quarter’s revenue, expenses, and net income using the current quarter’s foreign exchange rates.

Currency fluctuations had an unfavorable impact of $0.14 on net income per diluted share during the three months ended March 31, 2023 if prior year period results were translated at current period foreign exchange rates. Currency fluctuations had an unfavorable impact of $0.19 on net income per diluted share during the three months ended March 31, 2022 if 2021 results were translated at 2022 rates.

Currency fluctuations had an unfavorable impact of $0.14 on adjusted diluted earnings per share during the three months ended March 31, 2023 if prior year period results were translated at current period foreign exchange rates. Currency fluctuations had an unfavorable impact of $0.19 on adjusted diluted earnings per share during the three months ended March 31, 2022 if 2021 results were translated at 2022 rates. These translations are performed for comparative and illustrative purposes only and do not impact the accounting policies or practices for amounts included in our Condensed Consolidated Financial Statements.

LIQUIDITY AND FINANCIAL CONDITION

Liquidity

Executive Summary

We believe that our balance sheet and strong cash flow provide us with adequate liquidity. Our primary sources of liquidity in the near-term include cash flows provided by operations and available cash reserves; primary sources of liquidity in the long-term include cash flows provided by operations, debt capacity available under our credit facilities, and capital markets. Our primary uses of liquidity are operating expenses and investments, capital expenditures, acquisitions, share repurchases, pension obligations, and shareholder dividends. We believe that cash flows from operations, available credit facilities, available cash reserves, and the capital markets will be sufficient to meet our liquidity needs, including principal and interest payments on debt obligations, capital expenditures, pension contributions, and anticipated working capital requirements in the next twelve months and over the long-term.

Cash on our balance sheet includes funds available for general corporate purposes, as well as amounts restricted as to their use. Funds held on behalf of clients in a fiduciary capacity are segregated and shown together with uncollected insurance premiums in Fiduciary assets in our Condensed Consolidated Statements of Financial Position, with a corresponding amount in Fiduciary liabilities.

In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission, remit the premiums to the respective insurance underwriters. We also collect claims or refunds from underwriters on behalf of insureds, which are then returned to the insureds. Unremitted insurance premiums and claims are held by us in a fiduciary capacity. The levels of funds held on behalf of clients and liabilities can fluctuate significantly depending on when we collect the premiums, claims, and refunds, make payments to underwriters and insureds, and collect funds from clients and make payments on their behalf, and upon the impact of foreign currency movements. Funds held on behalf of clients, because of their nature, are generally invested in very liquid securities with highly rated, credit-worthy financial institutions. Fiduciary assets include funds held on behalf of clients comprised of cash and cash equivalents of $7.1 billion and $6.4 billion at March 31, 2023 and December 31, 2022, respectively, and fiduciary receivables of $9.6 billion and $9.5 billion at March 31, 2023 and December 31, 2022, respectively. While we earn investment income on the funds held in cash and money market funds, the funds cannot be used for general corporate purposes.

We maintain multicurrency cash pools with third-party banks in which various Aon entities participate. Individual Aon entities are permitted to overdraw on their individual accounts provided the overall global balance does not fall below zero. At March 31, 2023, non-U.S. cash balances of one or more entities may have been negative; however, the overall balance was positive.

The following table summarizes our Cash and cash equivalents, Short-term investments, and Fiduciary assets as of March 31, 2023 (in millions):

			Statement of Financial Position Classification
Asset Type			Cash and Cash Equivalents						Short-term Investments						Fiduciary Assets						Total
Certificates of deposit, bank deposits, or time deposits			$	1,119					$	—					$	3,928					$	5,047
Money market funds			—						172						3,139						3,311
Cash, Short-term investments, and funds held on behalf of clients			1,119						172						7,067						8,358
Fiduciary receivables			—						—						9,562						9,562
Total			$	1,119					$	172					$	16,629					$	17,920

Cash and cash equivalents and funds held on behalf of clients increased $1,110 million in 2023. A summary of our cash flows provided by and used for operating, investing, and financing activities is as follows (in millions):

						Three Months Ended March 31,
						2023						2022
Cash provided by operating activities						$	443					$	463
Cash provided by (used for) investing activities						$	205					$	(263)
Cash provided by financing activities						$	404					$	500
Effect of exchange rates on cash and cash equivalents and funds held on behalf of clients						$	58					$	(50)

Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2023 decreased $20 million, or 4%, from the prior year period to $443 million. This amount represents Net income reported, generally adjusted for the following primary drivers including gains from sales of businesses, losses from sales of businesses, share-based compensation expense, depreciation expense, amortization and impairments, and other non-cash income and expenses. Adjustments also include changes in working capital that relate primarily to the timing of payments of accounts payable and accrued liabilities and collection of receivables.

Pension Contributions

Pension contributions were $23 million for the three months ended March 31, 2023, as compared to $29 million for the three months ended March 31, 2022. For the remainder of 2023, we expect to contribute approximately $38 million in cash to our pension plans, including contributions to non-U.S. pension plans, which are subject to changes in foreign exchange rates.

Investing Activities

Cash flow provided by investing activities was $205 million during the three months ended March 31, 2023, an increase of $468 million compared to $263 million of Cash flow used for investing activities in the prior year period. Generally, the primary drivers of cash flow provided by investing activities are sales of businesses, sales of short-term investments, and proceeds from investments. Generally, the primary drivers of cash flow used for investing activities are acquisition of businesses, purchases of short-term investments, capital expenditures, and payments for investments. The gains and losses corresponding to cash flows provided by proceeds from investments and used for payments for investments are primarily recognized in Other income (expense) in our Condensed Consolidated Statements of Income.

Short-term Investments

Short-term investments decreased $280 million as compared to December 31, 2022. As disclosed in Note 13 “Fair Value Measurements and Financial Instruments” of our Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report, the majority of our investments carried at fair value are money market funds. These money market funds are held throughout the world with various financial institutions. We are not aware of any market liquidity issues that would materially impact the fair value of these investments.

Acquisitions and Dispositions of Businesses

During the first three months of 2023, we completed no acquisitions and the impact to the Condensed Consolidated Statements of Cash Flows related to acquisitions completed in 2022 was $2 million. During the first three months of 2023, we completed no dispositions and the impact to the Condensed Consolidated Statements of Cash Flows related to dispositions completed in 2022 was $1 million.

During the first three months of 2022, we completed one acquisition and two businesses were sold. The pretax gains recognized related to the dispositions were $25 million for the three months ended March 31, 2022.

Capital Expenditures

Our additions to fixed assets, including capitalized software, amounted to $76 million and $23 million for the three months ended March 31, 2023 and 2022, respectively, primarily relate to the refurbishing and modernizing of office facilities, software development costs, and computer equipment purchases. In the current period, we initiated certain technology projects to drive long-term growth and real estate projects to align with our Smart Working strategy.

Financing Activities

Cash flow provided by financing activities during the three months ended March 31, 2023 was $404 million, a decrease of $96 million compared to $500 million of Cash flow provided by financing activities in the prior year period. Generally, the primary drivers of cash flow used for financing activities are repayments of debt, share repurchases, cash paid for employee taxes on withholding shares, dividends paid to shareholders, transactions with noncontrolling interests, and other financing activities, such as collection of or payments for deferred consideration in connection with prior year business acquisitions and divestitures. Generally, the primary drivers of cash flow provided by financing activities are issuances of debt, changes in net fiduciary liabilities, and proceeds from issuance of shares.

Share Repurchase Program

We have a share repurchase program authorized by our Board of Directors. The Repurchase Program was established in April 2012 with $5.0 billion in authorized repurchases, and was increased by $5.0 billion in authorized repurchases in each of November 2014, June 2017, and November 2020, and by $7.5 billion in February 2022 for a total of $27.5 billion in repurchase authorizations.

The following table summarizes our share repurchase activity (in millions, except per share data):

			Three Months Ended March 31,
			2023						2022
Shares repurchased			1.8						2.8
Average price per share			$	305.31					$	294.47
Repurchase costs recorded to accumulated deficit			$	550					$	828

At March 31, 2023, the remaining authorized amount for share repurchase under the Repurchase Program was approximately $5.5 billion. Under the Repurchase Program, the Company has repurchased a total of 162.5 million shares for an aggregate cost of approximately $22.0 billion. For further information regarding the Repurchase Program, see Part II, Item 2 of this report.

Borrowings

Total debt at March 31, 2023 was $11.4 billion, an increase of $0.6 billion compared to December 31, 2022. Further, commercial paper activity during the three months ended March 31, 2023 and 2022 is as follows (in millions):

						Three Months Ended March 31,
						2023						2022
Total issuances (1)						$	870					$	1,656
Total repayments						(1,043)						(2,208)
Net repayments						$	(173)					$	(552)

(1)The proceeds of the commercial paper issuances are generally used for short-term working capital needs.

On February 28, 2023, Aon Corporation and Aon Global Holdings plc co-issued $750 million 5.35% Senior Notes due in February 2033. The Company intends to use the net proceeds from the offering for general corporate purposes.

In November 2022, Aon Global Limited’s $350 million 4.00% Senior Notes due November 2023 were classified as Short-term debt and current portion of long-term debt in the Condensed Consolidated Statement of Financial Position as the date of maturity is in less than one year.

In November 2022, Aon Corporation’s $500 million 2.20% Senior Notes matured and were repaid in full.

On September 12, 2022, Aon Corporation and Aon Global Holdings plc co-issued $500 million of 5.00% Senior Notes due September 2032. The Company intends to use the net proceeds from the offering for general corporate purposes.

On February 28, 2022, Aon Corporation and Aon Global Holdings plc co-issued $600 million of 2.85% Senior Notes due May 2027 and $900 million of 3.90% Senior Notes due February 2052. The Company intends to use the net proceeds from the offering for general corporate purposes.

Other Liquidity Matters

Distributable Profits

We are required under Irish law to have available “distributable profits” to make share repurchases or pay dividends to shareholders. Distributable profits are created through the earnings of the Irish parent company and, among other methods, through intercompany dividends or a reduction in share capital approved by the High Court of Ireland. Distributable profits are not linked to a U.S. GAAP reported amount (e.g. Accumulated Deficit). As of March 31, 2023 and December 31, 2022, we had distributable profits in excess of $30.0 billion and $29.0 billion, respectively. We believe that we will have sufficient distributable profits for the foreseeable future.

Credit Facilities

We expect cash generated by operations for 2023 to be sufficient to service our debt and contractual obligations, finance capital expenditures, and continue to pay dividends to our shareholders. Although cash from operations is expected to be sufficient to service these activities, we have the ability to access the commercial paper markets or borrow under our credit facilities to accommodate any timing differences in cash flows. Additionally, under current market conditions, we believe that we could access capital markets to obtain debt financing for longer-term funding, if needed.

As of March 31, 2023, we had two primary committed credit facilities outstanding: our $1.0 billion multi-currency U.S. credit facility expiring in September 2026 and our $750 million multi-currency U.S. credit facility expiring in October 2024. In aggregate, these two facilities provide approximately $1.8 billion in available credit.

Each of these primary committed credit facilities includes customary representations, warranties, and covenants, including financial covenants that require us to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to consolidated adjusted EBITDA, tested quarterly. At March 31, 2023, we did not have borrowings under either facility, and we were in compliance with the financial covenants and all other covenants contained therein during the rolling 12 months ended March 31, 2023.

Shelf Registration Statement

On May 12, 2020, we filed a shelf registration statement with the SEC, registering the offer and sale from time to time of an indeterminate amount of, among other securities, debt securities, preference shares, class A ordinary shares and convertible securities. Our ability to access the market as a source of liquidity is dependent on investor demand, market conditions, and other factors. We expect to file a new shelf registration statement in the second quarter of 2023.

Rating Agency Ratings

The major rating agencies’ ratings of our debt at April 28, 2023 appear in the table below.

			Ratings
			Senior Long-term Debt						Commercial Paper						Outlook
Standard & Poor’s			A-						A-2						Stable
Moody’s Investor Services			Baa2						P-2						Stable
Fitch, Inc.			BBB+						F-2						Stable

Letters of Credit and Other Guarantees

We have entered into a number of arrangements whereby our performance on certain obligations is guaranteed by a third party through the issuance of a letter of credit. We had total LOCs outstanding of approximately $72 million at March 31, 2023, compared to $74 million at December 31, 2022. These LOCs cover the beneficiaries related to certain of our U.S. and Canadian non-qualified pension plan schemes and secure deductible retentions for our own workers compensation program. We also have obtained LOCs to cover contingent payments for taxes and other business obligations to third parties, and other guarantees for miscellaneous purposes at our international subsidiaries.

We have certain contractual contingent guarantees for premium payments owed by clients to certain insurance companies. The maximum exposure with respect to such contractual contingent guarantees was approximately $114 million at March 31, 2023, compared to $173 million at December 31, 2022.

Guarantee of Registered Securities

In connection with the Ireland Reorganization, Aon plc and Aon Global Holdings plc entered into various agreements pursuant to which they agreed to guarantee the obligations of Aon Corporation arising under issued and outstanding debt securities, which were previously guaranteed solely by Aon Global Limited and the obligations of Aon Global Limited arising under issued and outstanding debt securities, which were previously guaranteed solely by Aon Corporation. Those agreements included: (1) Second Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, and Aon Global Holdings plc and the Trustee (amending and restating the Amended and Restated Indenture, dated April 2, 2012, among Aon Corporation, Aon Global Limited and the Trustee); (2) Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Indenture, dated December 12, 2012, among Aon Corporation, Aon Global Limited plc and the Trustee); (3) Second Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Amended and Restated Indenture, dated May 20, 2015, among

Aon Corporation, Aon Global Limited and the Trustee); (4) Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Indenture, dated November 13, 2015, among Aon Corporation, Aon Global Limited and the Trustee); and (5) Amended and Restated Indenture, dated April 1, 2020, among Aon Corporation, Aon Global Limited, Aon plc, Aon Global Holdings plc and the Trustee (amending and restating the Indenture, dated December 3, 2018, among Aon Corporation, Aon Global Limited and the Trustee).

After the Ireland Reorganization, newly issued and outstanding debt securities by Aon Corporation are guaranteed by Aon Global Limited, Aon plc, and Aon Global Holdings plc, and include the following (collectively, the “Aon Corporation Notes”):

Aon Corporation Notes
8.205% Junior Subordinated Notes due January 2027
4.50% Senior Notes due December 2028
3.75% Senior Notes due May 2029
2.80% Senior Notes due May 2030
6.25% Senior Notes due September 2040

All guarantees of Aon plc, Aon Global Limited, and Aon Global Holdings plc of the Aon Corporation Notes are joint and several as well as full and unconditional. Senior Notes rank pari passu in right of payment with all other present and future unsecured debt which is not expressed to be subordinate or junior in rank to any other unsecured debt of Aon Corporation. There are no subsidiaries other than those listed above that guarantee the Aon Corporation Notes.

After the Ireland Reorganization, newly issued and outstanding debt securities by Aon Global Limited are guaranteed by Aon plc, Aon Global Holdings plc, and Aon Corporation, and include the following (collectively, the “Aon Global Limited Notes”):

Aon Global Limited Notes
4.00% Senior Notes due November 2023
3.50% Senior Notes due June 2024
3.875% Senior Notes due December 2025
2.875% Senior Notes due May 2026
4.25% Senior Notes due December 2042
4.45% Senior Notes due May 2043
4.60% Senior Notes due June 2044
4.75% Senior Notes due May 2045

All guarantees of Aon plc, Aon Global Holdings plc, and Aon Corporation of the Aon Global Limited Notes are joint and several as well as full and unconditional. Senior Notes rank pari passu in right of payment with all other present and future unsecured debt which is not expressed to be subordinate or junior in rank to any other unsecured debt of Aon Global Limited. There are no subsidiaries other than those listed above that guarantee the Aon Global Limited Notes.

Newly co-issued and outstanding debt securities by Aon Corporation and Aon Global Holdings plc (together, the “Co-Issuers”) are guaranteed by Aon plc and Aon Global Limited and include the following (collectively, the “Co-Issued Notes”):

Co-Issued Notes - Aon Corporation and Aon Global Holdings plc
2.85% Senior Notes due May 2027
2.05% Senior Notes due August 2031
2.60% Senior Notes due December 2031
5.00% Senior Notes due September 2032
5.35% Senior Notes due February 2033
2.90% Senior Notes due August 2051
3.90% Senior Notes due February 2052

All guarantees of Aon plc and Aon Global Limited of the Co-Issued Notes are joint and several as well as full and unconditional. Senior Notes rank pari passu in right of payment with all other present and future unsecured debt which is not expressed to be subordinate or junior in rank to any other unsecured debt of the Co-Issuers. There are no subsidiaries other than those listed above that guarantee the Co-Issued Notes.

Aon Corporation, Aon Global Limited, and Aon Global Holdings plc are indirect wholly owned subsidiaries of Aon plc. Aon plc, Aon Global Limited, Aon Global Holdings plc, and Aon Corporation together comprise the “Obligor group”. The following tables set forth summarized financial information for the Obligor group.

Adjustments are made to the tables to eliminate intercompany balances and transactions between the Obligor group. Intercompany balances and transactions between the Obligor group and non-guarantor subsidiaries are presented as separate line items within the summarized financial information. These balances are presented on a net presentation basis, rather than a gross basis, as this better reflects the nature of the intercompany positions and presents the funding or funded position that is to be received or owed. No balances or transactions of non-guarantor subsidiaries are presented in the summarized financial information, including investments of the Obligor group in non-guarantor subsidiaries.

			Obligor Group
			Summarized Statement of Income Information
						Three Months Ended
(millions)						March 31, 2023
Revenue						$	—
Operating loss						$	(32)
Expense from non-guarantor subsidiaries before income taxes						$	(194)
Net loss						$	(306)
Net loss attributable to Aon shareholders						$	(306)

			Obligor Group
			Summarized Statement of Financial Position Information
						As of			As of
(millions)						March 31, 2023			December 31, 2022
Receivables due from non-guarantor subsidiaries						$	2,595		$	1,300
Other current assets						124			317
Total current assets						$	2,719		$	1,617
Non-current receivables due from non-guarantor subsidiaries						$	486		$	483
Other non-current assets						1,126			1,060
Total non-current assets						$	1,612		$	1,543
Payables to non-guarantor subsidiaries						$	13,403		$	16,172
Other current liabilities						5,905			5,880
Total current liabilities						$	19,308		$	22,052
Non-current payables to non-guarantor subsidiaries						$	6,685		$	2,343
Other non-current liabilities						11,963			11,226
Total non-current liabilities						$	18,648		$	13,569

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes in our critical accounting policies, which include revenue recognition, pensions, goodwill and other intangible assets, contingencies, share-based payments, and income taxes, as discussed in our Annual Report on Form 10-K for the year ended December 31, 2022.

NEW ACCOUNTING PRONOUNCEMENTS

As described in Note 2 “Accounting Principles and Practices” to our Financial Statements contained in Part I, Item 1, all issued, but not yet effective, guidance has been deemed not applicable or not significant to the Financial Statements.