Aon Plc Q4 FY2024 earnings call

• Completed year one of the 3x3 Plan with strong execution, leading to winning more clients, expanding relationships, and improved retention. • 2024 financial results: organic revenue growth 6%, total revenue 17%, operating income up 17%, adjusted EPS up 10%, strong free cash flow. • 3x3 Plan pillars: Risk Capital and Human Capital (e.g., innovative reinsurance and benefits solutions), Aon client leadership (strengthening enterprise client relationships), and Aon Business Services (accelerating service delivery and innovation with tools like risk analyzers). • Acquired NFP, expanding presence in the middle market, with strong producer retention and accretive financial results. • Paid down $2.1 billion in debt and returned $1.6 billion to shareholders.

For the full year 2024, organic revenue grew 6%, total revenue 17%. In the fourth quarter, organic revenue growth was 6%. Commercial Risk: Organic revenue growth 6% in Q4, broad-based with strength in North American core P&C, International businesses, and construction; double-digit growth in M&A services. Reinsurance: Organic revenue growth 6% in Q4 '24, driven by strategy and technology group, strong treaty placements, and increased insurance-linked securities. Health Solutions: Grew 5% in Q4 '24, with core health and benefits, NFP executive and pharmacy benefits partially offset by lower talent solutions revenue. Wealth Solutions: Delivered 8% organic revenue growth in Q4, driven by pension risk transfer consulting, regulatory work, and NFP.

• 2025 guidance: mid-single-digit or greater organic revenue growth, continued margin expansion, strong adjusted EPS growth, double-digit free cash flow growth. • Drivers of organic revenue growth: winning recurring new business, high retention, net market impact of rate and exposure, and revenue synergies in NFP. • Margin expansion drivers: net impact of NFP, interest rate impact on investment income, restructuring savings, and operating leverage. • EPS growth supported by organic revenue growth, margin expansion, and FX impact considerations. • Double-digit free cash flow growth expected, with focus on capital allocation balancing growth investments and shareholder returns.

• Market volatility and complexity affecting client decision-making. • FX rate fluctuations impacting financial results. • Uncertainty around tax policy changes, particularly related to OECD Pillar Two agreements. • Potential impact of reinsurance rate movements on business performance.

Q: On NFP, how does the $45 million to $60 million targeted acquired EBITDA in 2025 stack up to past years, and how integrated is the platform for potential future M&A?

A: Eric Andersen mentioned the integration is on track, with the independent and connected strategy enabling utilization of Aon network, industry/product specialization, and cross risk capital, exceeding expectations and positioning for growth in 2025.

Q: On commercial risk, does the setup for Q1 seem seasonally stronger?

A: Edmund Reese stated there's nothing specific about Q1 seasonality to highlight, with FX impact and interest rate on fiduciary income being key factors, but overall confident in mid-single-digit growth.

Q: On financial guidance and EPS growth, what makes strong EPS growth mean?

A: Edmund Reese explained detailed guidance includes organic revenue growth, margin expansion components, and consideration of non-operating items like FX impact and OIE, with confidence in hitting adjusted EPS growth targets.

Q: On long-term share buybacks, is there a change from past strategy?

A: Greg Case and Edmund Reese stated capital allocation remains focused on free cash flow generation, balancing growth investments, M&A, and shareholder returns, with no change in overall orientation towards capital allocation based on return on invested capital.