Aon plc. Third Quarter 2017 Results October 27, 2017

Transcription

1 An plc Third Quarter 2017 Results Octber 27, 2017

2 Greg Case Chief Executive Officer Christa Davies Chief Financial Officer 1

3 Safe Harbr Statement This cmmunicatin cntain certain statements related t future results, r states ur intentins, beliefs and expectatins r predictins fr the future which are frward-lking statements as that term is defined in the Private Securities Litigatin Refrm Act f Frward-lking statements relate t expectatins r frecasts f future events. They use wrds such as "anticipate," "believe," "estimate," "expect," "frecast," "prject," "intend," "plan," "prbably," "ptential," "lking frward" and ther similar terms, and future r cnditinal tense verbs like "culd," "may," "might," "shuld," "will" and "wuld." Yu can als identify frward-lking statements by the fact that they d nt relate strictly t histrical r current facts. Fr example, An plc ( An ) may use frward-lking statements when addressing tpics such as: market and industry cnditins, including cmpetitive and pricing trends; changes in its business strategies and methds f generating revenue; the develpment and perfrmance f its services and prducts; changes in the cmpsitin r level f its revenues; its cst structure and the utcme f cst-saving r restructuring initiatives; the utcme f cntingencies; dividend plicy; the expected impact f acquisitins and dispsitins; pensin bligatins; cash flw and liquidity; expected effective tax rate; future actins by regulatrs; and the impact f changes in accunting rules. These frward-lking statements are subject t certain risks and uncertainties that culd cause actual results t differ materially frm either histrical r anticipated results depending n a variety f factrs. The fllwing factrs, amng thers, culd cause actual results t differ frm thse set frth in the frward lking statements: general ecnmic and plitical cnditins in different cuntries in which An des business arund the wrld; changes in the cmpetitive envirnment; fluctuatins in exchange and interest rates that culd influence revenue and expense; changes in glbal equity and fixed incme markets that culd affect the return n invested assets; changes in the funding status f An's varius defined benefit pensin plans and the impact f any increased pensin funding resulting frm thse changes; the level f An s debt limiting financial flexibility; rating agency actins that culd affect An's ability t brrw funds; the effect f the change in glbal headquarters and jurisdictin f incrpratin, including differences in the anticipated benefits; changes in estimates r assumptins n ur financial statements; limits n An s subsidiaries t make dividend and ther payments t An; the impact f lawsuits and ther cntingent liabilities and lss cntingencies arising frm errrs and missins and ther claims against An; the impact f, and ptential challenges in cmplying with, legislatin and regulatin in the jurisdictins in which An perates, particularly given the glbal scpe f An s businesses and the pssibility f cnflicting regulatry requirements acrss jurisdictins in which An des business; the impact f any investigatins brught by regulatry authrities in the U.S., U.K. and ther cuntries; the impact f any inquiries relating t cmpliance with the U.S. Freign Crrupt Practices Act and nn-u.s. anti-crruptin laws and with U.S. and nn-u.s. trade sanctins regimes; failure t prtect intellectual prperty rights r allegatins that we infringe n the intellectual prperty rights f thers; the effects f English law n ur perating flexibility and the enfrcement f judgments against An; the failure t retain and attract qualified persnnel; internatinal risks assciated with An s glbal peratins; the effect r natural r man-made disasters; the ptential f a system r netwrk breach r disruptin resulting in peratinal interruptin r imprper disclsure f persnal data; An s ability t develp and implement new technlgy; the damage t ur reputatin amng clients, markets r third parties; the actins taken by third parties that prefrm aspects f ur business peratins and client services; the extent t which An manages certain risks created in cnnectin with the varius services, including fiduciary and investments and ther advisry services and business prcess utsurcing services, amng thers, that An currently prvides, r will prvide in the future, t clients; An s ability t grw, develp and integrate cmpanies that it acquires r new lines f business; changes in cmmercial prperty and casualty markets, cmmercial premium rates r methds f cmpensatin; changes in the health care system r ur relatinships with insurance carriers; An s ability t implement initiatives intended t yield cst savings, and the ability t achieve thse cst savings; risks and uncertainties in cnnectin with the sale f ur benefits administratin and business prcess utsurcing business; and ur ability t realize the expected benefits frm ur restructuring plan. Any r all f An s frward-lking statements may turn ut t be inaccurate, and there are n guarantees abut An s perfrmance. The factrs identified abve are nt exhaustive. An and its subsidiaries perate in a dynamic business envirnment in which new risks may emerge frequently. Further infrmatin cncerning An and its businesses, including factrs that ptentially culd materially affect An's financial results, is cntained in An's filings with the SEC. See An s Annual Reprt n Frm 10-K fr the year ended December 31, 2016 and its Quarterly Reprts n Frm 10-Q fr the quarters ended March 31,2017, June 30, 2017, and September 30, 2017 fr a further discussin f these and ther risks and uncertainties applicable t An s businesses. These factrs may be revised r supplemented in subsequent reprts. An is under n bligatin, and expressly disclaims any bligatin, t update r alter any frward-lking statement that it may make frm time t time, whether as a result f new infrmatin, future events r therwise. Explanatin f Nn-GAAP Measures This cmmunicatin includes supplemental infrmatin related t rganic revenue, free cash flw, adjusted perating margin, adjusted earnings per share, and adjusted effective tax rate that exclude the effects f intangible asset amrtizatin, capital expenditures, transactin csts and certain ther ntewrthy items that affected results fr the cmparable perids. Organic revenue excludes frm reprted revenues the impact f freign exchange, acquisitins, divestitures, transfers between business units, reimbursable expenses and unusual items. The impact f freign exchange is determined by translating last year's revenue, expense r net incme at this year's freign exchange rates. Free cash flw is cash flw frm perating activity less capital expenditures. The effective tax rate, as adjusted, excludes the applicable tax impact assciated with expenses fr legacy litigatin. Recnciliatins f nn-gaap measures t their mst directly cmparable GAAP measures are prvided in the attached appendices. Supplemental rganic revenue infrmatin and additinal measures that exclude the effects f the restructuring charges and certain ther items d nt affect net incme r any ther GAAP reprted amunts. Management believes that these nn-gaap measures are imprtant t make meaningful perid-t-perid cmparisns and that this supplemental infrmatin is helpful t investrs. Nn-GAAP measures shuld be viewed in additin t, nt in lieu f, the Cmpany s Cnslidated Financial Statements. Industry peers prvide similar supplemental infrmatin regarding their perfrmance, althugh they may nt make identical adjustments. 2

4 Accelerating a Prven Strategy t Unite Firm and Imprve Grwth Prfile An is a leading glbal prfessinal services firm prviding Risk, Retirement and Health slutins Using prprietary data and analytics t empwer results fr clients by reducing vlatility and imprving perating perfrmance Divestiture f utsurcing businesses represents natural acceleratin f a prven strategy Cnsistent with jurney twards ffering advice and slutins; further aligns the prtfli arund clients highest pririties Prvides apprximately $3 billin f incremental capital t accelerate investment in emerging client needs Reinfrces return n invested capital (ROIC) decisin-making prcess and emphasis n free cash flw Accelerating rganic revenue 1 grwth driven by investment in highgrwth, high-margin areas f ur prtfli Organic revenue grwth f +3% YTD 2017 and YTD 2016 versus +2% YTD 2015 Uniting the firm t drive scial impact, address client needs and maximize sharehlder value One perating mdel t deliver additinal insight, cnnectivity and efficiency One prtfli f capabilities enabled by insights frm prprietary data and analytics YTD Organic Revenue Grwth 3% 3% 2% YTD'15 YTD'16 YTD'17 1 Reflects perfrmance frm cntinuing peratins. Organic revenue is a nn-gaap measure. A recnciliatin f rganic revenue t revenue, the crrespnding U.S. GAAP measure can be fund in Appendix A f this presentatin 3

5 Q3 Key Metrics 4

6 Key Metrics 1 Strng Operatinal Perfrmance Q3 16 Q3 17 Organic Revenue +4% +2% Operating Margin 18.6% 20.3% Year-ver-Year +170 bps Earnings Per Share $1.09 $1.29 Year-ver-Year +18% YTD 16 YTD 17 Organic Revenue +3% +3% Operating Margin 20.0% 21.7% Year-ver-Year +170 bps Earnings Per Share $3.59 $4.19 Year-ver-Year +17% Free Cash Flw $1,045M $164M Year-ver-Year -84% Q3 Organic Revenue Grwth: Highlighted by +7% grwth in Reinsurance Slutins and +5% grwth in Retirement Slutins Q3 Operating Margin: Primarily driven by expense savings frm restructuring initiatives, as well as cre peratinal imprvement frm return n investments and increased perating leverage Includes a -40 basis pint unfavrable impact frm transactin related csts assciated with recent acquisitins Includes a -20 basis pint unfavrable impact frm lwer nn-cash pensin incme Q3 Earnings Per Share: Duble-digit earnings grwth primarily driven by strng peratinal imprvement and effective capital management Includes a +$0.01 favrable impact fr FX translatin Repurchased 5.4 millin shares fr apprximately $750 millin YTD Free Cash Flw: Cash flw frm peratins decreased $863 millin primarily driven by cash tax payments assciated t the divested businesses, $199 millin f cash restructuring charges and $45 millin f transactin csts related t the divestiture, partially ffset by peratinal imprvement Free cash flw decreased $881 millin reflecting a decline in cash flw frm peratins and a $18 millin increase in capital expenditures, including investments in ur perating mdel 1 Reflects perfrmance frm cntinuing peratins. The results presented n this page are nn-gaap measures that are recnciled t their crrespnding U.S. GAAP measures in the Appendices f this presentatin. 5

7 Q3 Grwth and Investment 6

8 Organic Revenue 1 Grwth Driven by Areas f Cntinued Investment Q3 16 Q3 17 Cmmercial Risk Slutins +4% -1% Reinsurance Slutins 0% +7% Retirement Slutins +4% +5% Health Slutins +7% +2% Data & Analytic Services +5% +3% Ttal An +4% +2% YTD 16 YTD 17 Cmmercial Risk Slutins +3% +1% Reinsurance Slutins 0% +5% Retirement Slutins +3% +3% Health Slutins +4% +7% Data & Analytic Services +6% +4% Ttal An +3% +3% Cmmercial Risk Slutins: Mdest decline acrss the Americas in U.S. retail and Latin America due t certain unfavrable timing, partially ffset by slid grwth acrss the EMEA and Pacific regins Reinsurance Slutins: Grwth acrss every majr prduct line, with particular strength in treaty placements driven by recrd new business generatin, partially ffset by a mdest unfavrable market impact in the Americas Retirement Slutins: Strng grwth in investment cnsulting, primarily fr delegated investment management, as well as grwth in the talent practice fr cmpensatin survey and benchmarking services Health Slutins: Slid grwth in health & benefits brkerage, particularly in the U.S. and Latin America, partially ffset by a decline in prject-related wrk in the healthcare exchange business Data & Analytic Services: Strng grwth in Affinity, with particular strength in the U.S. 1 Reflects perfrmance frm cntinuing peratins. Organic revenue is a nn-gaap measure that is recnciled t its crrespnding U.S. GAAP measure, in Appendix A f this presentatin. 7

9 Strategically Investing in High-Grwth, High-Margin Areas f Client Need Clients are navigating in an increasingly vlatile wrld where ecnmic, demgraphic and geplitical landscapes, cmbined with the expnential pace f technlgy change, all cnverge t create a challenging new reality fr businesses An has a strng track recrd f develping innvative, firstt-market slutins t help slve prblems and create differentiated value in respnse t specific client needs Strategically investing rganically and thrugh M&A in the highest grwth, highest margin businesses acrss ur prtfli, r in attractive gegraphies, driven by a ROIC decisin-making prcess; including: Data & analytics Cyber Affinity Health and elective benefits brkerage Healthcare exchanges Delegated investment management Exchange Slutins Psitining the firm fr lng-term grwth and imprved perating leverage 8

10 Q3 Financial Summary 9

11 EPS 1 Duble-Digit Earnings Grwth frm Cntinuing Operatins Duble-digit grwth in earnings per share driven by rganic revenue grwth, strng peratinal imprvement and effective capital management, partially ffset by a higher effective tax rate Repurchased 5.4 millin rdinary shares fr apprximately $750 millin in the third quarter Includes a $0.01 favrable impact frm freign currency translatin Q3 EPS frm Cntinuing Operatins YTD EPS frm Cntinuing Operatins $1.09 $1.29 $3.59 $4.19 Q Q YTD'2016 YTD' EPS frm cntinuing peratins and EPS attributable t An sharehlders are nn-gaap measures that are recnciled t their crrespnding U.S. GAAP measures in Appendix B f this presentatin. 10

12 Operating Margin 1 Driving Savings and Operatinal Imprvements Operating Incme ($ millins) $476 $410 Q Q Operating Margin (%) 20.3% 18.6% Q Q Mdest rganic revenue grwth n average, with strng grwth in areas f cntinued investment acrss the prtfli Includes $55 millin, r +240 basis pints, f savings related t restructuring and ther peratinal imprvement initiatives, befre reinvestment Cre underlying imprvement driven by return n investments and increased perating leverage Includes a $10 millin, r -40 basis pints, f transactin related csts assciated t recent acquisitins Includes a $5 millin, r -20 basis pints, unfavrable impact frm lwer nn-cash pensin incme cmpared t the prir year quarter 1 Reflects perfrmance frm cntinuing peratins. Operating incme and perating margin are nn-gaap measures that are recnciled t their crrespnding U.S. GAAP measures in Appendix B f this presentatin. 11

13 Investing in One Operating Mdel Creating a next generatin glbal business services mdel that allws fr better scalability, flexibility and enhanced clleague and client experience Driving ne perating mdel acrss the firm t create additinal perating leverage and deliver additinal insight, cnnectin and efficiency: Infrmatin Technlgy create greater insight frm data center ptimizatin, applicatin management and strategic vendr cnslidatin Real Estate create greater cnnectin thrugh real estate prtfli ptimizatin Peple create efficient scalability f peratins and activity, including the use f centers f excellence and third-party prviders Expect t invest an estimated $900 millin in ttal cash 1, f the $3 billin ttal utsurcing divestiture prceeds, ver a three year perid ( ) $700 millin f cash charges 1 ; expect t incur $350 millin in 2017, $250 millin in 2018, and $100 millin in 2019 $200 millin f capital expenditure investment; expect t incur $30 millin in 2017, $100 millin in 2018, and $70 millin in $2019 Expect t deliver $400 millin f estimated savings in 2019, befre any ptential reinvestment $150 millin in 2017, $300 millin in 2018, and $400 millin in 2019 Leaving incremental capital f apprximately $2.1 billin ($3 billin prceeds less $900 millin f cash charges) t invest in high-grwth, high-margin areas acrss ur prtfli and t return t sharehlders 1 Excludes $50 millin f nn-cash charges included in asset impairments and lease cnslidatins. 12

14 Incurred 53% f Prgram Charges with 73% f Savings Left t Achieve In the third quarter, we incurred $102 millin f restructuring related charges and a ttal f $401 millin charges year-t-date, primarily relating t wrkfrce reductin, representing 53% f the ttal prgram estimate The cash impact year-t-date is an utflw f $199 millin We recgnized $55 millin f savings in the third quarter and a ttal f $109 millin year-t-date, befre any reinvestment, representing 73% f the expected savings in 2017 and 27% f expected ttal savings ($ millins) Q3 17 Ttal Since Inceptin Ttal Prgram 1 % f Plan Cmpleted Wrkfrce Reductin $52 $257 $303 85% IT Ratinalizatin $12 $22 $146 15% Lease Cnslidatin $4 $8 $80 10% Asset Impairments $2 $26 $40 65% Other Assciated Csts $32 $88 $181 49% Ttal Restructuring Charges 2 $102 $401 $750 53% Capital Expenditures $200 Ttal Savings $55 $109 $400 27% 1 Represents management s estimates as f Octber 26, 2017, which are subject t change if and when underlying factrs may change. 2 Includes $50 millin f nn-cash charges included in asset impairments and lease cnslidatins. 13

15 Nn-Operating Segment Financials ($ millins) Q3 16 Q3 17 Interest Incme $1 $10 Interest Expense ($70) ($70) Other (Expense) Incme $10 ($5) Effective Tax Rate % 17.5% Nn-Cntrlling Interest ($7) ($7) Actual Cmmn Shares Outstanding at n/a Interest Incme increased $9 millin due t additinal incme earned n the balance f prceeds frm the sale f the utsurcing businesses Other Expense f $5 millin includes $15 millin f net lsses due t the unfavrable impact f exchange rates n the remeasurement f assets and liabilities in nn-functinal currencies, partially ffset by $10 millin f gains primarily related t certain lng-term investments Adjusted effective tax rate in the prir year quarter benefitted frm a net favrable impact f certain discrete items Actual cmmn shares utstanding n September 30 th were millin, and there were apprximately 5 millin additinal dilutive equivalents. The Cmpany repurchased 5.4 millin rdinary shares fr apprximately $750 millin in the third quarter. Estimated Q4 17 beginning dilutive share cunt is ~256 millin subject t share price mvement, share issuance and share repurchase 1 Represents the nn-gaap effective tax rate. See Appendices f this presentatin fr a recnciliatin f nn-gaap numbers. 14

16 Strng Balance Sheet and Financial Flexibility Supprting Investments Balance Sheet ($ millins) Jun Sep Cash Flw frm Operatins 1 ($ millins) Free Cash Flw 2 ($ millins) Cash $684 $749 $1,152 $1,045 Shrt-term Investments $2,746 $1,640 $289 $164 YTD 2016 YTD 2017 YTD 2016 YTD 2017 Ttal Debt $5,923 $5,967 Sharehlders Equity $5,487 $5,175 Debt t EBITDA 3 3.2x 3.3x Cash flw frm peratins decreased $863 millin driven primarily by cash tax payments assciated with the divested business, $199 millin f cash restructuring charges and $45 millin f transactin csts related t the divestiture, partially ffset by peratinal imprvement Free cash flw decreased $881 millin, reflecting a decline in cash flw frm peratins and an $18 millin increase in capital expenditures, including investments in ur perating mdel We expect Debt t EBITDA t return t the 2-2.5x range n a U.S. GAAP-basis by 2018 driven by perating imprvement 1 Reflects perfrmance frm cntinuing peratins. 2 Reflects perfrmance frm cntinuing peratins. Free cash flw is nn-gaap measure that is recnciled t its crrespnding U.S. GAAP measure in Appendix A f this presentatin. 3 Debt t EBITDA is calculated based n U.S. GAAP EBITDA fr cntinuing peratins. 15

17 Psitined fr Substantial Free Cash Flw Generatin Over Lng-Term 11.7% 17.1% % Return n Invested Capital 1 (%) Reached recrd free cash flw f $2.1 billin in 2016 Free Cash Flw Margin 2 (%) 18.1% Disciplined capital management apprach t maximize return n invested capital 1 Return n Invested Capital (ROIC) is a nn-gaap measure calculated as adjusted net perating prfit after tax (NOPAT) divided by average invested capital (shrt-term debt, + lngterm debt + ttal equity) and represents hw well the Cmpany is allcating its capital t generate returns. The metric fr the histrical perids shwn abve was calculated using financial results fr ttal cnslidated An and therefre includes discntinued peratins in cnnectin with the sale certain utsurcing businesses cmpleted n May 1, 2017, which will nt be included n a ging frward basis. A recnciliatin can be fund in Appendix D. 2 Free Cash Flw Margin is a nn-gaap measure calculated as Free Cash Flw (defined as Cash Flw frm Operatins less Capital Expenditures) / Ttal Revenue and represents the Cmpany s cnversin rate f revenue int liquidity. The metric fr the histrical perids shwn abve was calculated using financial results fr ttal cnslidated An and therefre includes discntinued peratins in cnnectin with the sale certain utsurcing businesses cmpleted n May 1, 2017, which will nt be 16 included n a ging frward basis. A recnciliatin can be fund in Appendix E. Increased ROIC, up +540 basis pints t 17.1% in 2016 Taken significant steps t maximize the translatin f a dllar f revenue int the highest amunt f free cash flw Increased free cash flw margin +990 basis pints t 18.1% in 2016 Three primary areas that we expect t cntribute t free cash flw generatin ging frward: Operatinal imprvement as the firm cntinues t deliver grwth and imprve return n invested capital Wrking capital imprvements as the firm fcuses n clsing the gap between receivables and payables Lwer cash tax payments reflecting a lwer effective tax rate ver time In the near-term, we expect t exceed $7.97 earnings per share in 2018 Over the lng-term, we expect t deliver cntinued duble-digit cmpunded annual grwth in free cash flw

18 Appendix 17

19 Cmmercial Risk Slutins Retail Brkerage: Our dedicated teams f risk experts utilize the industry s mst cmprehensive data and analytics capabilities t prvide clients with distinctive risk advice that empwers results fr their rganizatins Thrugh ur specialty-fcused rganizatinal structure, clleagues in 120 cuntries arund the wrld dive deep int their areas f expertise t develp unparalleled insights arund industry verticals and lines f business t best deliver value t clients in tday s cmplex and integrated risk envirnment Glbal Risk Cnsulting: Wrld leading prvider f risk cnsulting services supprting clients in better understanding and managing their risk prfile thrugh identifying and quantifying the risks they face by assisting them with the selectin and implementatin f the apprpriate risk transfer, risk retentin, and risk mitigatin slutins, and by ensuring the cntinuity f their peratins thrugh claims cnsulting Cyber Slutins: One f the industry s premier resurces in cyber risk management; ur strategic fcus extends t identifying and prtecting critical digital assets supprted by best-in-class transactinal capabilities, enhanced cverage expertise, deep carrier relatinships, and incident respnse expertise Captives: Leading glbal captive insurance slutins prvider; managing +1,100 insurance entities wrldwide including captives, prtected segregated and incrprated cell facilities, as well as entities that supprt Insurance Linked Securities and specialist insurance and reinsurance cmpanies Place ver $60B f bund premium each year Retentin rates +90% n average in Retail Brkerage #1 primary insurance brkerage Q1'14 Q2'14 Q3'14 Q4' Q1'15 Q2'15 Q3'15 Q4' Q1'16 Q2'16 Q3'16 Q4' Ttal Revenue ($M) $1,107 $1,135 $998 $1,138 $4,378 $1,014 $1,027 $883 $1,105 $4,029 $961 $990 $884 $1,094 $3,929 Organic Grwth 1 (%) 1% 1% 0% 2% 1% 3% 2% 0% 7% 3% 3% 2% 4% 0% 2% 1 Organic revenue is a nn-gaap measure that is recnciled t its crrespnding U.S. GAAP measure fr the abve histrical perids in the schedules n pages f the first quarter 2017 press release. 18

20 Reinsurance Slutins Treaty: Addresses underwriting and capital bjectives n a prtfli level, allwing ur clients t mre effectively manage the cmbinatin f premium grwth, return n capital and rating agency interests. This includes the develpment f mre cmpetitive, innvative and efficient risk transfer ptins. Facultative: Empwers clients t better understand, manage and transfer risk thrugh innvative facultative slutins and the mst efficient access t the glbal facultative markets Place ver $30B f bund premium each year #1 treaty and facultative brkerage Capital Markets: Glbal investment bank with expertise in M&A, capital raising, strategic advice, restructuring, recapitalizatin services, and insurance linked securities Wrks with insurers, reinsurers, investment firms, banks, and crpratins t manage cmplex cmmercial issues thrugh the prvisin f crprate finance advisry services, capital markets slutins, and innvative risk management prducts cnsecutive quarters f net new business in cre treaty Q1'14 Q2'14 Q3'14 Q4' Q1'15 Q2'15 Q3'15 Q4' Q1'16 Q2'16 Q3'16 Q4' Ttal Revenue ($M) $410 $361 $373 $335 $1,479 $377 $329 $329 $323 $1,358 $371 $332 $329 $329 $1,361 Organic Grwth 1 (%) 3% -4% -5% 3% -1% -2% -2% -5% 1% -2% 0% 0% 0% 1% 1% 1 Organic revenue is a nn-gaap measure that is recnciled t its crrespnding U.S. GAAP measure fr the abve histrical perids in the schedules n pages f the first quarter 2017 press release. 19

21 Retirement Slutins Retirement & Investment: The Retirement & Investment practice is dedicated t navigating the risk and pprtunities assciated with retirement and investing t ptimize perfrmance and financial security fr institutins and individuals Retirement Cnsulting specializes in prviding rganizatins acrss the glbe with strategic design cnsulting n their retirement prgrams, actuarial services, and risk management including pensin de-risking, gvernance, integrated pensin administratin and legal and cmpliance cnsulting Talent, Rewards & Perfrmance: We deliver advice and slutins that help clients accelerate business utcmes by imprving the perfrmance f their peple We supprt the full emplyee lifecycle frm assessment and selectin f the right talent, ptimized deplyment and engagement t the design, alignment and benchmarking f cmpensatin t business strategy and perfrmance utcmes Investment Cnsulting: Prvides public and private cmpanies and ther institutins with advice n develping and maintaining investment prgrams acrss a brad range f plan types, including defined benefit plans, defined cntributin plans, endwments and fundatins Our delegated investment slutins ffer nging management f investment prgrams and fiduciary respnsibilities either in a partial r full discretinary mdel fr multiple asset wners. We partner with clients t deliver ur scale and experience t help them effectively manage their investments, risk, gvernance and ptentially lwer csts As a glbal leader 1000 s f cmpanies trust An with their retirement plans $118B f assets under delegated management $4T f pensin assets under independent advisry Q1'14 Q2'14 Q3'14 Q4' Q1'15 Q2'15 Q3'15 Q4' Q1'16 Q2'16 Q3'16 Q4' Ttal Revenue ($M) $455 $461 $517 $512 $1,945 $438 $450 $509 $519 $1,916 $395 $405 $466 $441 $1,707 Organic Grwth 1 (%) 3% 3% 13% 4% 6% 2% 2% 4% 6% 3% 2% 3% 4% -2% 2% 1 Organic revenue is a nn-gaap measure that is recnciled t its crrespnding U.S. GAAP measure fr the abve histrical perids in the schedules n pages f the first quarter 2017 press release. 20

22 Health Slutins Health & Benefits Brkerage: Partners with emplyers t develp innvative, custmized benefits strategies t help manage risk, drive engagement, and prmte accuntability Healthcare Exchanges: Our private health exchange slutins help emplyers transfrm hw they spnsr, structure, and deliver health benefits by building and perating a cst-effective alternative t traditinal emplyee and retiree healthcare by seeking utcmes f reduced emplyer csts, risk and vlatility, alngside greater cverage and plan chices fr individual participants Place ver $30B f health premium with a full set f slutins Mre than 90% client satisfactin n An s health care exchanges #1 prvider f fully and self-insured health care exchanges Q1'14 Q2'14 Q3'14 Q4' Q1'15 Q2'15 Q3'15 Q4' Q1'16 Q2'16 Q3'16 Q4' Ttal Revenue ($M) $260 $249 $221 $376 $1,106 $283 $252 $233 $399 $1,167 $292 $281 $265 $532 $1,370 Organic Grwth 1 (%) 4% 5% 6% 29% 12% 10% 3% 11% 7% 8% 1% 7% 7% 30% 13% 1 Organic revenue is a nn-gaap measure that is recnciled t its crrespnding U.S. GAAP measure fr the abve histrical perids in the schedules n pages f the first quarter 2017 press release. 21

23 Data & Analytic Services Affinity: Specializes in develping, marketing and administering custmized insurance prgrams and specialty market slutins fr Affinity rganizatins and their members r affiliates An InPint: Draws n An s prprietary database (Glbal Risk Insight Platfrm) and is dedicated t making insurers mre cmpetitive thrugh prviding data, analytics, engagement and cnsulting ReView: Draws n An s prprietary database and brker market knwledge t prvide advisry services analysis and benchmarking t help reinsurers mre effectively meet the needs f cedents thrugh the develpment f mre cmpetitive, innvative and efficient risk transfer ptins +200 assciatins and rganizatins benefit frm An s Affinity slutins Glbal Risk Insight Platfrm captures $192B in bund premium Invest nearly $400M annually in data and analytics Q1'14 Q2'14 Q3'14 Q4' Q1'15 Q2'15 Q3'15 Q4' Q1'16 Q2'16 Q3'16 Q4' Ttal Revenue ($M) $241 $241 $256 $264 $1,002 $254 $258 $254 $255 $1,021 $259 $275 $260 $256 $1,050 Organic Grwth 1 (%) 10% 5% 6% 6% 7% 2% 2% 4% 2% 2% 5% 8% 5% 4% 6% 1 Organic revenue is a nn-gaap measure that is recnciled t its crrespnding U.S. GAAP measure fr the abve histrical perids in the schedules n pages f the first quarter 2017 press release. 22

24 Appendix A: Q3 Recnciliatin f Nn-GAAP Measures Organic Revenue and Free Cash Flw 23

25 Appendix B: Q3 Recnciliatin f Nn-GAAP Measures Operating Margin and Diluted Earnings per Share 24

26 Appendix C: Intangible Asset Amrtizatin Schedule 25

27 Appendix D: Recnciliatin f Return n Invested Capital (ROIC) Return n Invested Capital (ROIC) is a nn-gaap measure calculated as adjusted net perating prfit after tax (NOPAT) divided by average invested capital (shrt-term debt, + lng-term debt + ttal equity) and represents hw well the Cmpany is allcating its capital t generate returns. The metric fr the histrical perids shwn belw was calculated using financial results fr ttal cnslidated An and therefre includes discntinued peratins in cnnectin with the sale f certain utsurcing businesses cmpleted n May 1, 2017, which will nt be included n a ging frward basis. 26

28 Appendix E: Recnciliatin f Free Cash Flw Margin Free Cash Flw Margin is a nn-gaap measure calculated as Free Cash Flw (defined as Cash Flw frm Operatins less Capital Expenditures) / Ttal Revenue and represents the Cmpany s cnversin rate f revenue int liquidity. The metric fr the histrical perids shwn belw was calculated using financial results fr ttal cnslidated An and therefre includes discntinued peratins in cnnectin with the sale certain utsurcing businesses cmpleted n May 1, 2017, which will nt be included n a ging frward basis. FY'10 FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 Revenue - as reprted 8,512 11,287 11,514 11,815 12,045 11,682 11,627 Cash frm Operatins 876 1,112 1,534 1,753 1,812 2,009 2,326 Cap Ex (180) (241) (269) (229) (256) (290) (222) FCF $ 696 $ 871 $ 1,265 $ 1,524 $ 1,556 $ 1,719 $ 2,104 FCF Margin 8.2% 7.7% 11.0% 12.9% 12.9% 14.7% 18.1% 27

29 Investr Relatins Sctt Malchw Erika Shuldice Office: Adam Klauss Office: