AON(AON) - 2024 Q4 - Annual Report

Revenue Growth - Total revenue increased by $2.3 billion, or 17$15.7 billion in 2024, driven by acquired revenues from NFP and 6% organic revenue growth[183] - Risk Capital revenue rose by $1.0 billion, or 10$10.5 billion, while Human Capital revenue increased by $1.3 billion, or 35$5.2 billion in 2024[183] - Organic revenue growth was 6% in 2024, compared to 7% in the prior year, driven by net new business and strong retention[183] - Total revenue increased by $897 million, or 7$13.4 billion in 2023, driven by 7% organic revenue growth[216] - Commercial Risk Solutions revenue increased by $328 million, or 5$7.0 billion in 2023, with organic revenue growth of 5%[218] - Health Solutions revenue increased by $209 million, or 9$2.4 billion in 2023, reflecting organic revenue growth of 10%[220] Operating Performance - Operating expenses increased by $2.3 billion, or 24$11.9 billion, primarily due to the inclusion of NFP's operating expenses and restructuring charges[183] - Operating margin decreased to 24.4% in 2024 from 28.3% in 2023, influenced by increased operating expenses and the addition of NFP[183] - Adjusted operating income for 2024 is projected to be $4,939 million, up from$4,223 million in 2023, reflecting a growth of 17%[245] - Adjusted operating margin improved to 34.6% in 2024 from 34.2% in 2023, indicating enhanced operational efficiency[233] Net Income and Earnings - Net income was $2.7 billion in 2024, an increase of$92 million, or 4%, from 2023[183] - Adjusted diluted earnings per share was $15.60 in 2024, an increase of$1.46 per share, or 10%, from $14.14 per share in 2023[182] - Net income attributable to Aon shareholders increased by$90 million to $2.7 billion, or$12.49 per diluted share, in 2024[213] - Diluted net income per share attributable to Aon shareholders increased to $15.60 in 2024 from$14.14 in 2023[245] Cash Flow and Investments - Free cash flow decreased by $366 million, or 11$2.8 billion in 2024, reflecting a decrease in cash flows from operations[184] - Cash flows used for investing activities increased to $2.8 billion in 2024 from$188 million in 2023, primarily driven by business acquisitions and capital expenditures[266] - The company completed the acquisition of 22 businesses in 2024 for a cash consideration of $3.5 billion, compared to three acquisitions in 2023 for$35 million[268] - The company disposed of five businesses in 2024, generating a cash inflow of $700 million, compared to two businesses in 2023 for$5 million[269] - Capital expenditures amounted to $218 million in 2024, down from$252 million in 2023, focusing on office facilities and technology projects[270] Debt and Financing - Interest income rose to $67 million in 2024, an increase of$36 million, or 116%, primarily from the investment of $5 billion in term debt proceeds used for the acquisition of NFP[206] - Interest expense increased by$304 million, or 63%, to $788 million in 2024, mainly due to a rise in total debt outstanding for the NFP acquisition[207] - Aon North America, Inc. drew a$2 billion delayed draw term loan to finance the acquisition of NFP, with a remaining balance of $1.1 billion as of December 31, 2024[274] - Aon plc incurred$6 million in debt extinguishment charges related to the NFP Transaction in 2024[276] - As of December 31, 2024, the company has long-term debt with a fair market value of $15.3 billion, which is$957 million less than its carrying value[356] Pension and Other Comprehensive Income - Pension contributions were $58 million in 2024, up from$50 million in 2023, with an expected increase to approximately $88 million in 2025[261] - Aon has accumulated other comprehensive losses of$1.276 billion for U.S. pension plans as of December 31, 2024[316] - The market-related value of U.S. pension plan assets was $1.7 billion as of December 31, 2024[317] - The fair value of U.S. pension plan assets was recorded at$1.4 billion as of December 31, 2024[317] Foreign Exchange and Risk Management - Approximately 45% of expected foreign exchange exposures for U.K. subsidiaries have been hedged for the years ending December 31, 2025 and 2026[352] - The company uses over-the-counter options and forward contracts to manage foreign exchange risk, particularly with the U.S. dollar against several currencies[351] - A hypothetical translation of prior year results at current year exchange rates would have an unfavorable $0.11 impact on diluted earnings per share for the year ended December 31, 2024[354] Other Financial Metrics - The effective tax rate for 2024 was 20.1$191 million in transaction and integration costs related to the acquisition of NFP in 2024[236] - Legal settlement expenses of $197 million were recognized in Q4 2023, primarily related to transactions involving Vesttoo Ltd.[241] - The share repurchase program has a total authorization of$27.5 billion, with $1,000 million repurchased in 2024 at an average price of$325.56 per share[272]