AON(US:AON)2025-07-25 20:14Part I - Financial Information Financial Statements The company presents its unaudited condensed consolidated financial statements for the periods ended June 30, 2025 Condensed Consolidated Statements of Income The company reports Q2 2025 revenue of $4.16 billion and six-month revenue of $8.88 billion Q2 2025 vs Q2 2024 Income Statement Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $4,155 | $3,760 | | Operating income | $859 | $656 | | Net income attributable to Aon shareholders | $579 | $524 | | Diluted net income per share | $2.66 | $2.46 | Six Months 2025 vs 2024 Income Statement Highlights (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $8,884 | $7,830 | | Operating income | $2,320 | $2,121 | | Net income attributable to Aon shareholders | $1,544 | $1,595 | | Diluted net income per share | $7.10 | $7.72 | Condensed Consolidated Statements of Comprehensive Income Comprehensive income reached $1.19 billion in Q2 2025, driven by positive foreign currency translation adjustments Comprehensive Income Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Aon shareholders | $579 | $524 | $1,544 | $1,595 | | Foreign currency translation adjustments | $604 | $(88) | $843 | $(220) | | Comprehensive income attributable to Aon shareholders | $1,192 | $450 | $2,446 | $1,490 | Condensed Consolidated Statements of Financial Position Total assets grew to $54.0 billion and total equity rose to $7.8 billion as of June 30, 2025 Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $54,010 | $48,965 | | Goodwill | $16,024 | $15,234 | | Total liabilities | $45,921 | $42,535 | | Long-term debt | $15,451 | $16,265 | | Total Aon shareholders' equity | $7,843 | $6,121 | Condensed Consolidated Statements of Shareholders' Equity Total equity increased to $8.0 billion in H1 2025, influenced by net income, repurchases, and dividends - Key changes in equity for the six months ended June 30, 2025 include net income adding $986 million (Q1) and $593 million (Q2), offset by share repurchases totaling $500 million and dividends of $308 million22 - In the prior year period (six months ended June 30, 2024), a major equity event was the issuance of 19.0 million shares valued at $5.88 billion as part of the NFP Transaction24 Condensed Consolidated Statements of Cash Flows Operating cash flow for H1 2025 was $936 million, with investing and financing activities reflecting the NFP transaction Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $936 | $822 | | Cash used for investing activities | $(268) | $(2,285) | | Cash provided by (used for) financing activities | $(373) | $2,264 | | Net increase in cash | $991 | $599 | Notes to Condensed Consolidated Financial Statements The notes detail accounting principles, the NFP transaction, restructuring, and legal contingencies - The financial statements are prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect reported amounts2830 - The company is monitoring new accounting guidance and stayed SEC rules on climate-related disclosures313234 - The company faces legal proceedings related to a 2016 plane crash and transactions involving Vesttoo Ltd, for which it recognized $197 million in anticipated legal expenses in Q4 2023112113 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 results, including 11% Q2 revenue growth and the NFP acquisition impact Executive Summary of Second Quarter 2025 Financial Results Q2 2025 revenue grew 11% to $4.2 billion, driven by 6% organic growth and the NFP acquisition Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $4.2B | $3.8B | +11% | | Organic Revenue Growth | 6% | N/A | N/A | | Operating Margin | 20.7% | 17.4% | +330 bps | | Adjusted Operating Margin | 28.2% | 27.4% | +80 bps | | Diluted EPS | $2.66 | $2.46 | +8.1% | | Adjusted Diluted EPS | $3.49 | $2.93 | +19.1% | - Free cash flow for the first six months of 2025 increased 13% to $816 million, driven by strong operating income growth and improved days sales outstanding134 Review of Consolidated Results Q2 2025 revenue rose 11% to $4.2 billion, with operating income increasing 31% to $859 million Q2 2025 Revenue Growth by Segment | Segment | Revenue (Q2 2025) | YoY Change | Organic Growth | | :--- | :--- | :--- | :--- | | Risk Capital | $2.9B | +8% | 6% | | Commercial Risk Solutions | $2.2B | +8% | 6% | | Reinsurance Solutions | $688M | +8% | 6% | | Human Capital | $1.3B | +15% | 5% (blended) | | Health Solutions | $772M | +17% | 6% | | Wealth Solutions | $519M | +12% | 3% | - Operating expenses increased mainly due to NFP's inclusion, higher intangible amortization from the NFP deal ($73M increase), and costs tied to organic growth144148149150 - Other income decreased to $56 million from $236 million in Q2 2024, primarily because the prior year period included a significant gain from the sale of a business156 Non-GAAP Metrics The company reconciles GAAP results to non-GAAP metrics like adjusted operating income and free cash flow Reconciliation to Adjusted Operating Income (Q2 2025, in millions) | Description | Amount | | :--- | :--- | | U.S. GAAP Operating Income | $859 | | Amortization and impairment | $201 | | Change in fair value of contingent consideration | $(10) | | Accelerating Aon United Program expenses | $94 | | Transaction and integration costs | $27 | | Adjusted Operating Income | $1,171 | Reconciliation to Adjusted Diluted EPS (Q2 2025) | Description | Per Share Amount | | :--- | :--- | | U.S. GAAP Diluted EPS | $2.66 | | Adjustments (net of tax) | $0.83 | | Adjusted Diluted EPS | $3.49 | Free Cash Flow Reconciliation (Six Months Ended June 30, in millions) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $936 | $822 | | Capital expenditures | $(120) | $(101) | | Free Cash Flow | $816 | $721 | Liquidity and Financial Condition The company maintains adequate liquidity through cash from operations and $2.0 billion in available credit facilities - Primary uses of liquidity include operating expenses, acquisitions, share repurchases ($500M in H1 2025), dividends, and restructuring charges189206 - The company has two primary committed credit facilities totaling $2.0 billion, which were undrawn as of June 30, 2025, and was in compliance with all financial covenants215216 - The Accelerating Aon United Program is expected to incur cumulative costs of $1.0 billion and generate annualized savings of approximately $350 million by the end of 2026198 Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risks from foreign exchange and interest rates, which it manages with derivatives - The company's primary foreign exchange exposures are against the U.S. dollar, including the euro, British pound, and Canadian dollar236 - For the six months ended June 30, 2025, currency fluctuations had an unfavorable impact of $0.13 on both net income per diluted share and adjusted diluted earnings per share239 - Fiduciary investment income is sensitive to changes in short-term interest rates, and the company monitors and hedges this exposure as appropriate240 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - An evaluation confirmed that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level241 - No material changes occurred during the quarter ended June 30, 2025, that affected the company's internal control over financial reporting242 Part II - Other Information Legal Proceedings The company details legal matters, including litigation from a 2016 plane crash and Vesttoo Ltd. transactions - The company refers to Note 15 for details on claims, lawsuits, and other contingencies245 Risk Factors This section refers to the detailed risk factors disclosed in the company's 2024 Annual Report on Form 10-K - For a discussion of risk factors, the report refers to Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024246 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 0.7 million shares in Q2 2025 and has $1.8 billion remaining in its repurchase program Q2 2025 Share Repurchase Activity | Period | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 224,498 | $371.20 | | May 2025 | — | $— | | June 2025 | 467,548 | $356.47 | | Total Q2 | 692,046 | $361.25 | - The maximum remaining value of shares that may be purchased under the program is approximately $1.82 billion as of June 30, 2025247 - There were no unregistered sales of equity securities in the second quarter of 2025249 Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and required certifications - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Interactive Data Files (101)257