|
18. Segment Information
Aon classifies its businesses into two operating segments: Risk Solutions and HR Solutions. Unallocated income and expenses, when combined with the operating segments and after the elimination of intersegment revenues and expenses, equal to the amounts in the Condensed Consolidated Financial Statements.
Operating segments have been determined using a management approach, which is consistent with the basis and manner in which Aon’s chief operating decision-maker uses financial information for the purposes of allocating resources and evaluating performance. Aon evaluates performance based on stand-alone operating segment operating income and generally accounts for inter-segment revenue as if the revenue were from third parties and at what management believes are current market prices.
Risk Solutions acts as an advisor and insurance and reinsurance broker, helping clients manage their risks, via consultation, as well as negotiation and placement of insurance risk with insurance carriers through Aon’s global distribution network.
HR Solutions partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance by designing, implementing, communicating and administering a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.
Aon’s total revenue is as follows (in millions):
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Risk Solutions |
|
$ |
1,617 |
|
$ |
1,484 |
|
$ |
4,994 |
|
$ |
4,658 |
|
|
HR Solutions |
|
1,112 |
|
321 |
|
3,319 |
|
960 |
|
|
Intersegment elimination |
|
(6 |
) |
(4 |
) |
(20 |
) |
(15 |
) |
|
Total revenue |
|
$ |
2,723 |
|
$ |
1,801 |
|
$ |
8,293 |
|
$ |
5,603 |
|
Commissions, fees and other revenues by product are as follows (in millions):
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Retail brokerage |
|
$ |
1,237 |
|
$ |
1,108 |
|
$ |
3,837 |
|
$ |
3,508 |
|
|
Reinsurance brokerage |
|
365 |
|
361 |
|
1,119 |
|
1,108 |
|
|
Total Risk Solutions Segment |
|
1,602 |
|
1,469 |
|
4,956 |
|
4,616 |
|
|
Consulting services |
|
555 |
|
268 |
|
1,670 |
|
808 |
|
|
Outsourcing |
|
561 |
|
53 |
|
1,667 |
|
151 |
|
|
Intrasegment |
|
(4 |
) |
— |
|
(18 |
) |
— |
|
|
Total HR Solutions Segment |
|
1,112 |
|
321 |
|
3,319 |
|
959 |
|
|
Intersegment |
|
(6 |
) |
(4 |
) |
(20 |
) |
(15 |
) |
|
Total commissions, fees and other revenue |
|
$ |
2,708 |
|
$ |
1,786 |
|
$ |
8,255 |
|
$ |
5,560 |
|
Fiduciary investment income by segment is as follows (in millions):
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Risk Solutions |
|
$ |
15 |
|
$ |
15 |
|
$ |
38 |
|
$ |
42 |
|
|
HR Solutions |
|
— |
|
— |
|
— |
|
1 |
|
|
Total fiduciary investment income |
|
$ |
15 |
|
$ |
15 |
|
$ |
38 |
|
$ |
43 |
|
A reconciliation of segment operating income before tax to income from continuing operations before income taxes is as follows (in millions):
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Risk Solutions |
|
$ |
308 |
|
$ |
258 |
|
$ |
969 |
|
$ |
820 |
|
|
HR Solutions |
|
77 |
|
54 |
|
315 |
|
148 |
|
|
Unallocated expenses |
|
(44 |
) |
(49 |
) |
(113 |
) |
(164 |
) |
|
Operating income from continuing operations before income taxes |
|
341 |
|
263 |
|
1,171 |
|
804 |
|
|
Interest income |
|
4 |
|
4 |
|
14 |
|
9 |
|
|
Interest expense |
|
(60 |
) |
(50 |
) |
(186 |
) |
(117 |
) |
|
Other (expense) income |
|
7 |
|
(9 |
) |
1 |
|
3 |
|
|
Income from continuing operations before income taxes |
|
$ |
292 |
|
$ |
208 |
|
$ |
1,000 |
|
$ |
699 |
|
Unallocated expenses include administrative or other costs not attributable to the operating segments, such as corporate governance costs and the costs associated with corporate investments. Interest income represents income earned primarily on operating cash balances and certain income producing securities. Interest expense represents the cost of worldwide debt obligations.
Other income (expense) consists of equity earnings, realized gains or losses on the sale of investments, gains or losses on the disposal of businesses, and also includes the loss on extinguishment of debt. |