Aon plc (AON) Earnings

Management highlights

### Strategic Positioning & Market Demand - Rising global complexity from geopolitical uncertainty, uneven economic growth, increasingly sophisticated cyber threats, and climate-related risk challenges, combined with profound workforce transformation, has increased client demand for integrated, data-driven risk, capital, and workforce solutions. - Aon's Aon United strategy, which integrates risk capital and human capital capabilities supported by Aon Business Services (ABS) and ongoing AI investments, creates a structural competitive advantage to capture this growing demand. ### Technology & AI Innovation - Aon expanded its AI-enabled Aon Claims Copilot platform across North America, APAC, and EMEA during the quarter, unifying global claims management data on a single platform to deliver consistent client experiences and data-driven risk insights. Over the past decade, Aon's claims advocacy has helped clients recover more than $10 billion from overturned coverage declinations. - Other AI-enabled client solutions include the Radford-McLagan compensation database and proprietary AI sensitivity tool for AI workforce impact assessment, and AonActivate, a data-led AI platform for personalized total rewards and benefits delivery. - AI accelerates Aon's existing long-term strategy, rather than representing a new strategic direction. Aon's years of investment in unified data infrastructure and practitioner enablement positions it to leverage generative AI for both productivity improvements and revenue growth, with a hybrid approach that taps external partners to accelerate Aon's proven strategy. ### Key Growth Initiatives - Aon has seen surging demand for integrated risk solutions for digital infrastructure and data centers. It recently expanded the capacity of its data center lifecycle insurance program to $5 billion, and can currently support up to $13-$15 billion in capacity for single facilities, with plans to bring in non-traditional capital (pension, sovereign, private equity) to support larger projects up to $40-$50 billion. This opportunity extends across the entire value chain, from construction to ongoing operations and financing. - Aon is expanding its middle market platform via a programmatic tuck-in acquisition strategy, deploying over $350 million in capital year-to-date to enhance MGU/MGA capabilities. The ABS platform is also accelerating NFP growth in the middle market segment. - Aon is seeing growing demand from private equity and other capital providers for differentiated insights, creating opportunities to connect institutional capital to client risk needs, expand Aon's addressable market, and provide investors access to uncorrelated return streams. ### Operational Execution - New business contributed 10 percentage points to organic growth in Q2 2026, marking the 9th consecutive quarter of 9-11 percentage point contribution from new business. Revenue-generating headcount is up 3% year-to-date, and the 2024-2025 hire cohorts contributed ~100 bps to Q2 organic growth, with contribution rising as productivity ramps. - Client retention remains strong at the mid-90s level, with 40 bps improvement in commercial risk and 20 bps improvement in reinsurance driven by enhanced enterprise client engagement and ABS-enabled service improvements. Net market impact from rate and exposure changes was modestly positive, in-line with the expected 0-2 percentage point range. - The AAU restructuring program delivered $25 million in savings in Q2 2026, and remains on track to hit $100 million in total 2026 savings, advancing toward a $450 million total savings target by 2027. ABS-driven scale advantages and AI-enabled productivity improvements generate operating leverage that funds growth investments while expanding margins. ### Capital Allocation - Aon maintained a disciplined balanced capital allocation model, prioritizing growth investments and shareholder returns. In Q2 2026, $29 million was allocated to targeted tuck-in acquisitions aligned with strategic priorities. $775 million was returned to shareholders, including $600 million in share repurchases. - Aon exceeded its full-year 2026 share repurchase target of $1 billion in the first half, opportunistically accelerating repurchases as management believes Aon's share price trades well below intrinsic value. The company retains full strategic flexibility to allocate capital to either high-return accretive M&A or incremental shareholder returns going forward.

Guidance

Management reaffirmed its full year 2026 guidance, with no upward or downward revisions to prior targets: - Mid-single digit or greater overall organic revenue growth - 70 to 80 basis points of full year adjusted operating margin expansion - Strong adjusted earnings per share growth - Double-digit full year free cash flow growth - A full year effective tax rate of 19.5% to 20.5% - $100 million of total restructuring savings in 2026 - 4% to 8% full year expansion of revenue-generating headcount - Net market impact from pricing changes is expected to remain in the 0 to 2 percentage point range for the full year, consistent with prior expectations

Segment performance

All four of Aon PLC's solution segments delivered 5% organic revenue growth in Q2 2026, resulting in a broad-based growth profile: 1. **Commercial Risk**: Organic revenue growth of 5%, with 6% growth through the first half of 2026. Core P&C business in EMEA and North America drove growth, and the construction sub-segment delivered its fifth consecutive quarter of double-digit growth driven by a strong data center pipeline. M&A services were a year-over-year headwind due to an elevated comparable quarter in Q2 2025, but announced transaction volumes are up over 60% supporting a stronger second half pipeline. MGA and MGU platforms saw continued demand for specialized underwriting solutions. 2. **Reinsurance**: Organic revenue growth of 5%, despite 15-20% lower market rates. Strong new treaty business and new client logos offset rate declines, while facultative placements performed well globally. Double-digit growth in the strategy and technology group reflected rising client demand for analytics and alternative capital solutions, and the segment also saw continued contributions from data center development efforts. 3. **Health Solutions**: Organic revenue growth of 5%, driven by strength in the core health and benefits business, particularly strong global benefits demand in EMEA. Improved performance in talent solutions and contributions from NFP (especially in executive benefits) also supported growth, as rising employer healthcare costs and complex benefits needs boosted demand for Aon's health analytics capabilities. 4. **Wealth**: Organic revenue growth of 5%, driven by sustained demand for regulatory and valuation work across the UK and EMEA, and increased demand for US pension risk transfer solutions as plan sponsors resumed de-risking evaluation. Total company revenue increased 2% year-over-year to $4.2 billion, with 5% overall organic revenue growth. Adjusted operating income rose 5% to $1.2 billion, and adjusted operating margin expanded 70 bps to 28.9% for the quarter. Second quarter free cash flow was $483 million, with 4% free cash flow growth through the first half of 2026.

Risks & headwinds

- Geopolitical uncertainty, uneven economic growth, rising cyber threats, and climate-related risk create market volatility and increasing complexity that could impact client demand and operating results. - Intense competition for revenue-generating talent could challenge Aon's ability to hit its full year headcount expansion target, even as management remains confident in achieving the 4-8% target. - Softening pricing in property and reinsurance markets creates headwinds for revenue growth, though management notes this impact is offset by strong net new business growth and diversified micro-market performance. - Large-scale data center risk projects require capacity beyond traditional insurance market capital, creating execution risk as Aon works to attract non-traditional capital to the segment. - Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from projected outcomes, as noted in Aon's SEC filings.

Analyst Q&A

• Q: M&A services tempered Q2 commercial risk growth; what is the outlook for M&A for the rest of the year, and how does pricing moderation impact full year growth prospects? /

  A: While M&A services had a year-over-year headwind from an elevated Q2 2025 comparison, announced transaction volumes are up over 60%, building a much stronger second half pipeline that will make M&A a tailwind for H2 2026. All core commercial risk segments delivered mid-single digit or greater growth, with fifth consecutive double-digit growth in construction. Aon's growth is driven by client demand and business investment, not pricing cycles, and net market impact will remain in the expected 0-2 percentage point range. Management remains confident in the mid-single digit or greater full year organic growth target, with the integrated risk capital model driving strength even in a lower rate environment.

• Q: What structural changes have made Aon's reinsurance business more resilient to current property pricing declines, and what is Aon's approach to AI strategy relative to peers? /

  A: 15 years of investment in Aon United's integrated risk capital model, supported by the ABS data and analytics engine, has created structural resilience that enables growth even during pricing downturns. Aon's integrated, data-driven approach lets it serve large, complex clients (such as hyperscaler data center projects) in ways competitors cannot, with record first half activity in insurance-linked securities. For AI, Aon's approach leverages its existing long-term investments in unified data and practitioner enablement; AI is an accelerant for Aon's proven strategy, not a new strategy. Aon partners with external providers where it adds value, and focuses AI on revenue-generating client solutions as well as productivity.

• Q: What is the maximum available underwriting capacity for large data center projects, and is this primarily fee-based versus commission-based business? /

  A: Aon's current industry-leading facility can support up to $13-$15 billion per single data center facility, and the company has already expanded its overall program capacity to $5 billion with 30 participating carriers. Given the size of the largest projects (up to $40-$50 billion), additional non-traditional capital from pension funds, sovereign wealth funds, and private equity will be required, and Aon is already positioned to attract this capital via its proprietary analytics. The opportunity is value-based across the entire data center value chain, with compensation aligned to the value Aon delivers across both advisory/fee and commission-based placement work.

• Q: Aon exceeded its full year 2026 share repurchase target in the first half; can current buyback momentum be maintained? Also, how durable is EMEA commercial risk growth? /

  A: Aon entered 2026 with over $7 billion in available capital capacity, and current buyback momentum can absolutely be maintained. The company maintains strategic flexibility: if attractive accretive M&A opportunities emerge it will allocate capital to those, but any excess cash not used for acquisitions will be returned to shareholders via additional repurchases. For EMEA, while GDP growth is uneven, regulatory and geopolitical uncertainty increases demand for Aon's risk solutions. Aon's diversified international portfolio (including strong growth in LATAM from rising foreign direct investment) delivers resilient growth, with EMEA continuing to be a strong contributor.

• Q: Revenue-generating headcount is up 3% year-to-date, below the 4-8% full year target; can Aon accelerate hiring to hit the full year target, and what is the impact of competitive talent markets? /

  A: Competition for top talent is intense, but Aon maintains its 4-8% full year target, prioritizing high-quality hires in growth areas over just hitting a quantity target. Aon's strong client momentum and integrated platform make it attractive to top practitioners, and management is confident it can accelerate hiring in the second half to hit the full year target. Quality of hires is prioritized over raw growth, and even 4% high-quality growth is preferable to lower-quality 7-8% growth.