AON

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How AON rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

62%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

−174

words, now 14,056

New in FY2025

Any significant system or network disruption due to a breach in the security of our information technology systems could have a negative impact on our reputation, operations, sales, and operating results. • Improper disclosure of confidential, personal, or proprietary data could result in regulatory scrutiny, legal liability, or harm to our reputation. • Regulation in the areas of data privacy, data protection, data management, data transfer, data localization, artificial intelligence, and cybersecurity could increase our costs and affect or limit our business opportunities.
Economic downturns, volatility, or uncertainty in the broader economy or in specific markets (including as a result of endemics or pandemics, climate change, political unrest, actions by governments and central banks, or otherwise) have caused in the past and may in the future cause reductions in technology and discretionary spending by our clients, which may result in reductions in the growth of new business or reductions in existing business.
Downward fluctuations in the year-over-year insurance premiums charged by insurers to protect against the same risk, referred to in the industry as softening of the insurance market, has and could adversely affect these businesses as a significant portion of our revenue is determined as a percentage of premiums charged to our clients.
Also, error and omission claims against us, which we refer to as E&O claims, may increase in economic downturns or due to natural or human-caused disasters, also adversely affecting our business.
As a global professional services firm, we compete with a broad variety of firms, including global, national, regional, and local insurance companies that market and service their own products, other financial services providers, brokers, and investment managers, independent firms, and consulting organizations affiliated with accounting, information systems, technology, and human resources consulting firms.
Alliances or mergers among competitors could also affect our business.
Competitors may be able to innovate faster and respond better to evolving client demand and industry conditions, or may price their products in a more attractive manner.
Further, new and non- traditional competitors (including “InsurTech” firms utilizing artificial intelligence or other advanced technologies), our clients’ increasing ability and determination to self-insure, and capital market alternatives to traditional insurance and reinsurance markets create an even more dynamic, competitive, and innovative market environment that could affect our business.
If we are unsuccessful in innovating, if we cannot innovate as quickly as our competitors, if we are not able to make sufficient investment in innovation, if new or existing competitors develop more cost-effective or efficient technologies or cause disintermediation (including through the use of artificial intelligence or other emerging technologies), or if our ideas are not accepted in the marketplace, it could have a material adverse effect on our ability to obtain and complete client engagements or on our financial condition and results of operations.
Our competitors have developed or are developing competing data and analytics tools, and their success in this space may impact our ability to differentiate our own data and analytics tools.
Innovations in software, cloud computing, data and analytics, generative and agentic artificial intelligence, or other technologies that alter how our services are delivered could significantly undermine our investment in the business if we are slow to innovate or unable to take advantage of these developments.
Such risks include without limitation the investment of significant time and resources; the possibility that these efforts will not be successful or result in reputational damage to us; the possibility that the marketplace does not accept our products or services or that we are unable to retain clients that adopt our new products or services; the risk that our governance process and controls in these new areas may not be effective or consistent with legal, regulatory, or client requirements or expectations and the risk of new or additional liabilities associated with these efforts, including potential E&O or other claims.
For example, we continue to invest in artificial intelligence, particularly in generative artificial intelligence tools, and maintain governance and oversight measures regarding its use.
Certain use cases of artificial intelligence in our business processes could pose strategic, operational, legal, ethical, regulatory or reputational risks where there may be incorrect outputs or bias in those systems or processes, potential infringement of intellectual property rights, exposure of proprietary or personal information, heightened cybersecurity risks and challenges in safely deploying, governing or controlling artificial intelligence systems or where there is inadequate human oversight.
Clients have claimed and may in the future claim they have suffered losses due to reliance on our consulting advice, analysis, or reporting, which poses risks of liability exposure and costs of defense and increased insurance premiums.
Damage to our reputation, including as a result of negative perceptions or publicity regarding a particular business partner, class of business, environmental matters, climate change, workforce make-up, pay equity, harassment, social justice, cybersecurity, data privacy and data protection, use of artificial intelligence or innovative technology, or our inability to meet commitments or client and stakeholder expectations with respect to such matters, could affect the confidence of our clients, rating agencies, regulators, stockholders, employees and third parties in transactions that are important to our business adversely affecting our business, financial condition, and operating results.
The potential for changes in premium rates is significant, due to pricing cyclicality in the insurance and reinsurance markets.
In addition to movements in premium rates, our ability to generate premium-based commission revenue has been and could in the future be challenged by: • the growing availability of alternative methods for clients to meet their risk-protection needs, including a greater willingness on the part of corporations to “self-insure,” the use of so-called “captive” insurers, and the development of capital markets-based solutions and other alternative capital sources for traditional insurance and reinsurance needs that increase market capacity, increase competition, and put pressure on premiums; • decreases in available underwriting capacity for insurance and reinsurance; • fluctuation in the need for, or relevancy of, insurance; • the level of compensation, as a percentage of premium, that insurance carriers are willing to compensate brokers for placement activity; • the growing desire of clients to move away from variable commission rates and instead compensate brokers based upon flat fees, which can negatively impact us as fees are not consistently indexed for inflation and therefore, may not offer the same financial performance; • competition from insurers seeking to sell their products directly to consumers, including online sales, without the involvement of an insurance broker; and • the growing number of technology-enabled competitors offering new risk-transfer solutions that eliminate the traditional broker-client relationship in both insurance and reinsurance markets.
As we adapt to changes in our business and the market, adapt to the regulatory environment, enter into new engagements, acquire additional businesses, and take on new employees in new locations, we may not be able to manage our large, changing workforce, effectively control our costs, or improve our efficiency.
Appro ximatel y 51.8% of o ur consolidated revenue is non-U.S., attributed on the basis of where the services are performed, and where products are sold, and the exposures created can have significant currency volatility.
Operating funds available for corporate use were $2.8 billion at December 31, 2025 and are reported in Cash and cash equivalents and Short-term investments.
Of the total balance, $180 million was restricted to its use as of December 31, 2025.
Funds held on behalf of clients and insurers were $7.4 billion at December 31, 2025 and are reported in Fiduciary assets.
As of December 31, 2025, these long-term investments had a carrying value of $192 million.
As of December 31, 2025, we had total consolidated debt outstanding of approxim ately $15.2 billion.
As of December 31, 2025, we had two primary committed credit facilities outstanding.
The credit facilities are intended to support our commercial paper obligations and our general working capital needs.
In addition, each of our committed credit facilities included 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 adjusted consolidated EBITDA, tested quarterly.
This in turn may impact our flexibility to respond to changing business and economic conditions, thereby placing us at a relative disadvantage compared to competitors that have less indebtedness, or fewer or less onerous covenants associated with such indebtedness, and making us more vulnerable to general adverse economic and industry conditions.
If we cannot service our indebtedness or continue to meet the terms of our financial covenants, we may have to take actions such as selling assets, seeking additional equity, or reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances, any of which could impede the implementation of our business strategy or prevent us from entering into transactions that would otherwise benefit our business.
Our senior debt ratings at December 31, 2025 were A- with a stable outlook (S&P), BBB+ with a stable outlook (Fitch), and Baa2 with a positive outlook (Moody’s).
There remains significant uncertainty as to how Pillar Two applies to Aon in prior years and how its application might change in the future.
We may be unable to mitigate the adverse impacts resulting from any changes in tax laws and regulations, including any changes in the interpretation of such tax authorities, or from audits and other matters.
Changes in law, regulatory actions, or other circumstances could restrict the ability of our subsidiaries to pay dividends or otherwise make payments to us.
Furthermore, our subsidiaries may be unable to make timely payments to us when needed, which could impair our ability to meet our obligations, pay dividends, repurchase shares, or fund other aspects of our operations and corporate expenses.
E&O claims include, for example, the failure of our employees or sub-agents, whether negligently or intentionally, to place coverage correctly or notify carriers of claims on behalf of clients, to provide insurance carriers with complete and accurate information relating to the risks being insured, or the failure to give error-free consulting, financial, investment or other advice.
Our businesses are subject to extensive legal and regulatory oversight throughout the world, including the Irish Companies Act, the U.S. securities laws, rules, and regulations, the rules and regulations promulgated by the FCA and a variety of other laws, rules, and regulations addressing, among other things, licensing, data privacy, data management and data protection, artificial intelligence, trade sanctions laws, restrictions and export controls, anti-money laundering, wage-and-hour standards, employment and labor relations, antitrust and competition, anti-corruption, currency, reserves, government contracting, and the amount of local investment with respect to our operations in certain countries.
In addition to the complexity of the laws and regulations themselves, the development of new laws and regulations or changes in application or interpretation of current laws and regulations or conflict between them also increases our legal and regulatory compliance complexity and risk.
Changes in laws and regulations could mandate significant and costly changes to the way we implement our services and solutions, impose additional licensure requirements or costs to our operations, workforce and services, or cause us to cease offering certain services or solutions.
Regulatory developments that could result in changes that adversely affect us or cause us to change our business or operations include: additional requirements related to the use of artificial intelligence, and the use, access, privacy, protection, management, localization and transfer of data in jurisdictions in which we operate that may increase our costs of compliance and potentially reduce the manner in which we can use data; changes in tax regulations in the jurisdictions in which we operate; regulatory actions or changes that require us to change our compensation model; or additional regulations or other governmental action in jurisdictions in which we operate.

and 47 more.

Gone since FY2024

Any significant system or network disruption due to a breach in the security of our information technology systems could have a negative impact on our reputation, operations, sales, and operating results. • Improper disclosure of confidential, personal, or proprietary data could result in regulatory scrutiny, legal liability, or harm to our reputation.
Risks Related to the Acquisition of NFP • We may not be able to integrate the NFP business successfully or manage the combined business effectively, and many of the anticipated synergies and other benefits may not be realized or may not be realized within the expected time frame. • We have incurred and may continue to incur significant integration-related costs in connection with the acquisition of NFP.
Economic downturns, volatility, or uncertainty in the broader economy or in specific markets (including as a result of endemics or pandemics, climate change, political unrest, actions by central banks, or otherwise) have caused in the past and may in the future cause reductions in technology and discretionary spending by our clients, which may result in reductions in the growth of new business or reductions in existing business.
Downward fluctuations in the year-over-year insurance premiums charged by insurers to protect against the same risk, referred to in the industry as softening of the insurance market, could adversely affect these businesses as a significant portion of the revenue is determined as a percentage of premiums charged to our clients.
Also, error and omission claims against us, which we refer to as E&O claims, may increase in economic downturns or due to other natural or human-caused disasters, also adversely affecting our business.
As a global professional services firm, we compete with a broad variety of firms, including global, national, regional, and local insurance companies that market and service their own products, other financial services providers, brokers, and investment managers, independent firms, and consulting organizations affiliated with accounting, information systems, technology and human resources consulting.
Alliances or mergers among competitors could affect our business.
Competitors may be able to innovate faster and respond better to evolving client demand and industry conditions, or may price their products in a manner that clients find more attractive than Aon’s offerings.
Further, new and non- traditional competitors, our clients’ increasing ability and determination to self-insure, and capital market alternatives to traditional insurance and reinsurance markets cause additional forms of competition and innovation that could affect our business.
If we are unsuccessful in innovating, if we cannot innovate as quickly as our competitors, if we are not able to make sufficient investment in innovation, if our competitors develop more cost-effective technologies (including through the use of artificial intelligence or other emerging technologies), or if our ideas are not accepted in the marketplace, it could have a material adverse effect on our ability to obtain and complete client engagements.
Our competitors have or are developing competing data and analytics tools, and their success in this space may impact our ability to differentiate our own data and analytics tools.
Innovations in software, cloud computing, data and analytics, generative artificial intelligence, or other technologies that alter how our services are delivered could significantly undermine our investment in the business if we are slow to innovate or unable to take advantage of these developments.
Such risks include the investment of significant time and resources; the possibility that these efforts will not be successful and could result in reputational damage to us; the possibility that the marketplace does not accept our products or services or that we are unable to retain clients that adopt our new products or services; and the risk of new or additional liabilities associated with these efforts, including potential E&O or other claims.
For example, we continue to invest in artificial intelligence, particularly in generative artificial intelligence tools, and have developed governance and oversight measures regarding its use.
Certain use cases of artificial intelligence in our business processes could pose operational, legal or reputational risks where there may be incorrect outputs or bias in those systems or processes, or where there is inadequate human oversight.
A client may claim it suffered losses due to reliance on our consulting advice, analysis, or reporting, which poses risks of liability exposure and costs of defense and increased insurance premiums.
Damage to our reputation, including as a result of negative perceptions or publicity regarding a class of business, environmental matters, climate change, workforce make-up, pay equity, harassment, social justice, cyber security, data privacy and data protection, use of artificial intelligence or innovative technology, or our inability to meet commitments or client and stakeholder expectations with respect to such matters, could affect the confidence of our clients, rating agencies, regulators, stockholders, employees and third parties in transactions that are important to our business adversely affecting our business, financial condition, and operating results.
The potential for changes in premium rates is significant, due to pricing cyclicality in the commercial insurance and reinsurance markets.
In addition to movements in premium rates, our ability to generate premium-based commission revenue may be challenged by: • the growing availability of alternative methods for clients to meet their risk-protection needs, including a greater willingness on the part of corporations to “self-insure,” the use of so-called “captive” insurers, and the development of capital markets-based solutions and other alternative capital sources for traditional insurance and reinsurance needs that increase market capacity, increase competition, and put pressure on premiums; • decreases in available underwriting capacity for insurance and reinsurance; • fluctuation in the need for, or relevancy of, insurance; • the level of compensation, as a percentage of premium, that insurance carriers are willing to compensate brokers for placement activity; • the growing desire of clients to move away from variable commission rates and instead compensate brokers based upon flat fees, which can negatively impact us as fees are not consistently indexed for inflation and therefore, may not offer the same financial performance; • competition from insurers seeking to sell their products directly to consumers, including online sales, without the involvement of an insurance broker; and • the growing number of technology-enabled competitors offering new risk-transfer solutions that eliminate the traditional broker-client relationship in both commercial insurance and reinsurance markets.
As we adapt to changes in our business and the market, adapt to the regulatory environment, enter into new engagements, acquire additional businesses, and take on new employees in new locations, we may not be able to manage our large, diverse and changing workforce, effectively control our costs, or improve our efficiency.
Appro ximately 51.2% of o ur consolidated revenue is non-U.S., attributed on the basis of where the services are performed, and where products are sold, and the exposures created can have significant currency volatility.
Operating funds available for corporate use were $1.3 billion at December 31, 2024 and are reported in Cash and cash equivalents and Short-term investments.
Of the total balance, $123 million was restricted to its use as of December 31, 2024.
Funds held on behalf of clients and insurers were $7.2 billion at December 31, 2024 and are reported in Fiduciary assets.
As of December 31, 2024, these long-term investments had a carrying value of $90 million.
As of December 31, 2024, we had total consolidated debt outstanding of approxim ately $17.0 billion.
As of December 31, 2024, we had two primary committed credit facilities outstanding, as well as a delayed draw term loan.
The credit facilities are intended to support our commercial paper obligations and our general working capital needs, and the delayed draw term loan was drawn upon in full in April 2024 to support the acquisition of NFP.
In addition, each of our committed credit facilities and the term loan included 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 adjusted consolidated EBITDA, tested quarterly.
This in turn may have the impact of reducing our flexibility to respond to changing business and economic conditions, thereby placing us at a relative disadvantage compared to competitors that have less indebtedness, or fewer or less onerous covenants associated with such indebtedness, and making us more vulnerable to general adverse economic and industry conditions.
If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity, or reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances, any of which could impede the implementation of our business strategy or prevent us from entering into transactions that would otherwise benefit our business.
Our senior debt ratings at December 31, 2024 were A- with a negative outlook (S&P), BBB+ with a stable outlook (Fitch), and Baa2 with a stable outlook (Moody’s).
In the U.S., the Inflation Reduction Act introduced, among other changes, a 1% excise tax on certain stock redemptions by U.S. corporations (which the U.S.
Treasury indicated may also apply to certain stock redemptions of foreign corporations deemed funded by their U.S. affiliates).
There remains significant uncertainty as to how Pillar Two will ultimately apply to Aon.
There can be no assurance that we would be successful in attempting to mitigate the adverse impacts resulting from any changes in tax laws and regulations, including any changes in the interpretation of such tax authorities, or from audits and other matters.
No assurance can be given that there will not be further changes in law, regulatory actions, or other circumstances that could restrict the ability of our subsidiaries to pay dividends or otherwise make payments to us.
Furthermore, no assurance can be given that our subsidiaries may be able to make timely payments to us in order for us to meet our obligations.
E&O claims include, for example, the failure of our employees or sub-agents, whether negligently or intentionally, to place coverage correctly or notify carriers of claims on behalf of clients, to provide insurance carriers with complete and accurate information relating to the risks being insured, or the failure to give error-free consulting, financial, or investment advice.
Our businesses are subject to extensive legal and regulatory oversight throughout the world, including the Irish Companies Act, the U.S. securities laws, rules, and regulations, the rules and regulations promulgated by the FCA and a variety of other laws, rules, and regulations addressing, among other things, licensing, data privacy, management and protection, trade sanctions laws, restrictions and export controls, anti-money laundering, wage-and-hour standards, employment and labor relations, antitrust and competition, anti-corruption, currency, reserves, government contracting, and the amount of local investment with respect to our operations in certain countries.

and 59 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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