Termination fee

  
for general corporate purposes.On January 13, 2021, Aon Global Limited, a limited company organized under the laws of England and Wales and a wholly owned subsidiary of the Company, issued an irrevocable notice of redemption to holders of its 2.80% Senior Notes for the redemption of all $400 million outstanding aggregate principal amount of the notes, which were set to mature in March 2021 and classified as Short-term debt and current portion of long-term debt as of December 31, 2020. The redemption date was on February 16, 2021 and resulted in an insignificant loss due to extinguishment.Revolving Credit FacilitiesAs of September 30, 2022, Aon had two primary committed credit facilities outstanding: its $1.0 billion multi-currency U.S. credit facility expiring in September 2026 and its $750 million multi-currency U.S. credit facility expiring in October 2023. In aggregate, these two facilities provide approximately $1.8 billion in available credit. Effective October 19, 2022, the expiration date of the $750 million multi-currency U.S. credit facility was extended one year to October 2024. Each of these primary committed credit facilities includes customary representations, warranties, and covenants, including financial covenants that require Aon to maintain specified ratios of adjusted consolidated EBITDA to consolidated interest expense and consolidated debt to adjusted consolidated EBITDA, in each case, tested quarterly. At September 30, 2022, Aon did not have borrowings under either of these primary committed credit facilities, and was in compliance with the financial covenants and all other covenants contained therein during the rolling 12 months ended September 30, 2022.Commercial PaperAon Corporation has established a U.S. commercial paper program (the “U.S. Program”) and Aon Global Holdings plc has established a European multi-currency commercial paper program (the “European Program” and, together with the U.S. Program, the “Commercial Paper Programs”). Commercial paper may be issued in aggregate principal amounts of up to $1.0 billion under the U.S. Program and €625 million ($601 million at September 30, 2022 exchange rates) under the European Program, not to exceed the amount of the Company’s committed credit facilities, which was approximately $1.8 billion at September 30, 2022. The U.S. Program is fully and unconditionally guaranteed by Aon plc, Aon Global Limited, and Aon Global Holdings plc and the European Program is fully and unconditionally guaranteed by Aon plc, Aon Global Limited, and Aon Corporation.Commercial paper outstanding, which is included in Short-term debt and current portion of long-term debt in the Condensed Consolidated Statements of Financial Position, is as follows (in millions):

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
|  | September 30, 2022 | December 31, 2021 |
| Commercial paper outstanding | $ | 211  |  | $ | 665  |  |

The weighted average commercial paper outstanding and its related interest rates are as follows (in millions, except percentages):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Three Months Ended September 30, | Nine Months Ended September 30, |
|  |  | 2022 |  | 2021 | 2022 |  | 2021 |
| Weighted average commercial paper outstanding |  | $ | 483  |  |  | $ | 386  |  | $ | 476  |  |  | $ | 157  |  |
| Weighted average interest rate of commercial paper outstanding |  | 1.66  | % |  | 0.09  | % | 0.69  | % |  | 0.11  | % |

9. Income TaxesThe effective tax rate on Net income was 18.0% and 19.1% for the three and nine months ended September 30, 2022, respectively. The effective tax rate on Net income (loss) was (2.6)% and 51.4% for the three and nine months ended September 30, 2021, respectively. For the three and nine months ended September 30, 2022, the quarter-to-date tax rate was primarily driven by the geographical distribution of income and certain discrete items. The year-to-date tax rate was primarily driven by the geographical distribution of income and certain discrete items, primarily the favorable impacts of share-based payments.For the three and nine months ended September 30, 2021, the quarter-to-date tax rate was primarily driven by the impact of the $1 billion payment made in connection with the termination of the proposed combination with WTW (the “Termination Fee”). The year-to-date tax rate was primarily driven by the Termination Fee, the U.K. tax rate increase, and the tax benefit of share-based payments. The U.K. enacted legislation on June 10, 2021, which increased the corporate income tax rate from 19% to 25% with effect from April 1, 2023, and the Company remeasured its U.K. deferred tax assets and liabilities accordingly.18
