Aon PLC Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Kligerman - TD Cowen - Analyst : So Edmund just mentioned the one year kind of anniversary of having acquired NFP. It sounds like things are going really well there. Now that you've got this year under your belt, how are you feeling? Can you give us a little color on the M&A pipeline? I know in the slides, it mentions that it's robust. I mean, any statistics. Could you do a big acquisition if you feel that there's the right one out there? I mean, how are you thinking about M&A for NFP as we move into 2025?

Question: Andrew Kligerman - TD Cowen - Analyst : Got it. Thanks. And then with respect to Commercial Risk Solutions, a really solid 5%-plus organic revenue growth. I think you mentioned that the market impact was flat in the release. Could you give a little color around the backdrop of how pricing influenced the 5%-plus, how exposures influenced the 5%-plus? It seems one of your competitors reported a deceleration in that area in organic growth and investors felt a little concerned. So I'd like to get a little sense of what these different market impacts are more granularly and then why you feel so confident that you continue to do. And I know it's for the whole organization but more focused on CRS. Why you think you can do 5% or mid-single or better?

Question: Andrew Kligerman - TD Cowen - Analyst : Sure.

Question: Andrew Kligerman - TD Cowen - Analyst : Yeah, that was perfect.

Question: Andrew Kligerman - TD Cowen - Analyst : Great to hear and very helpful.

Question: Elyse Greenspan - Wells Fargo Securities, LLC - Analyst : Thanks. My first question is on Reinsurance. I know, Edmund, you mentioned a multiyear extension that I think had a negative impact in the quarter. I was hoping to get more details and quantification there. And then I think you pointed to some softer conditions in the second quarter. So I guess, the expectation Q2 could be similar to Q1, and then things pick up in the back half. I was hoping to kind of flush both of those things out relative to Reinsurance.

Question: Elyse Greenspan - Wells Fargo Securities, LLC - Analyst : Thanks. And then my follow-up question is on free cash flow. I just wanted to, A, confirm right, that it's double-digit growth rate on -- I think it's on the reported $2.8 billion from ['24]. So I guess, the NFP contribution will help Aon debt to the double digits. I just want to make sure that I'm thinking about the free cash flow growth off of the right base and what the message is. And is there any seasonality to the back three quarters that we need to think about in terms of hitting that double-digit target for the full year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:30PM, AON.N - Q1 2025 Aon PLC Earnings Call

Question: Elyse Greenspan - Wells Fargo Securities, LLC - Analyst : Thank you.

Question: David Motemaden - Evercore ISI - Analyst : I believe -- I think it was Edmund. You'd spoken about some of the hires. And I know you guys added, I think it was 4% new hires and certain revenue-producing roles last year. And it sounded like we haven't really gotten the contribution from those new hires in the first quarter here. It doesn't sound like it's really going to come next quarter, but you're really pointing to the second half. So I'm wondering if you could just elaborate on some of the head count growth and the productivity enhancement as we think about the cadence of the organic growth within Commercial Risk.

Question: David Motemaden - Evercore ISI - Analyst : Got it. Thanks. And then maybe just another question, more of a numbers question, just on the margin. So I guess I'm just wondering (inaudible) with the NFP deal and sort of resetting the base. Can we get sort of the combined margin base for, I guess, as we should think about it for the first quarter, just given 2024 and how much sort of core margin improvement or lack thereof there would have been this quarter sort of on a combined basis? I know, Edmund, you had called out the 85 basis points from cost saves, but I was hoping to just get a little bit more color there as we think about the ramp up over the next several quarters.

Question: David Motemaden - Evercore ISI - Analyst : Great. Thank you for that color.

Question: Paul Newsome - Piper Sandler Companies - Analyst : Just want to revisit a couple of the major topics here. The first one, and I apologize if I missed it, was the NFP, was it accretive to organic growth in the quarter? And I guess, as sort of a better question, did it have a bigger impact in the Retirement Benefits businesses versus Commercial because if I recall that its business was weighted more towards the Health business than it was in the P&C business?

Question: Paul Newsome - Piper Sandler Companies - Analyst : Great. And then revisiting pricing a little bit, one of the questions in the quarter for the industry has been what appears to be differentiating behavior between large account commercial and small and mid. And I'm just curious if you have any thoughts upon that, if that was indeed what you're seeing as well within your book and if you think that that's a potential continuing trend in the future.

Question: Paul Newsome - Piper Sandler Companies - Analyst : Great. Thank you for the (inaudible) answers, and always appreciate the help.

Question: Meyer Shields - Keefe, Bruyette & Woods North America - Analyst : Great. Thanks so much. I appreciate the outlook in terms of tougher comp for Wealth Solutions in the second quarter and I guess, the back half of the year. I was hoping you could add a little color in terms of the specific businesses and underlying factors that were so strong in the first quarter of this year. But what is it that actually drove the investments growth?

Question: Meyer Shields - Keefe, Bruyette & Woods North America - Analyst : Okay. Thank you. That's very helpful. If I can switch gears, you talked about the individual, I guess, multiyear extension within Reinsurance. And Greg, you described that as a really good deal for the client, which is what you should be doing. Does that mean that we should expect other such deals, not necessarily with this client but others?

Question: Jimmy Bhullar - JPMorgan - Analyst : So a question for Greg. I know you affirmed your guidance, but obviously, there's been a lot of volatility in the macro and geopolitical environment. So just wondering where, if any, there are changes in your expectations for your various businesses versus early in 2025? I know there's a lot of optimism about capital markets activity picking up. That hasn't happened, and now inflation's is higher. But just if you could touch on your major businesses and where maybe you're more optimistic, where you're seeing some headwinds?

Question: Jimmy Bhullar - JPMorgan - Analyst : Got it. And then just on the performance of the NFP business, if you could just comment on how it's tracked versus what you would have expected because if we look at the contribution to revenues from acquisitions and dispositions, both in RIS and in Health, it was lower this quarter than it's been the last few quarters, and NFP is obviously a big number there. But any comments on the performance of the acquired business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 25, 2025 / 12:30PM, AON.N - Q1 2025 Aon PLC Earnings Call

Question: Jimmy Bhullar - JPMorgan - Analyst : Thank you.

Question: Cave Montazeri - Deutsche Bank - Analyst : Thank you. First question is on the Investor Day, the first one in 20 years. I'm just wondering, is there something specific that you think -- the street is under-appreciating, maybe in terms of like the power of the Aon United platform, your ABS capabilities, or the 3x3 plan? Or is it a new approach to communication and maybe we should expect more regular Investor Days going forward?

Question: Cave Montazeri - Deutsche Bank - Analyst : Yeah, looking forward to it. My follow-up question should be an easy one. Edmund, the second-quarter EPS guidance that you gave us, 15% to 18% EPS growth, is the baseline the $2.93 reported? Or is there any adjustments we need to make to the starting point?

Question: Cave Montazeri - Deutsche Bank - Analyst : Appreciate this. Thank you.