Aon PLC Q3 2024 Earnings Call Transcript

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

Question: Andrew Kligerman - TD Cowen - Analyst : Hey, good morning. So very exciting to see the growth in commercial risk solutions. And Edmund mentioned that you brought in talent in construction, energy, health, enterprise. So maybe you could give a little color on those hirings. Are these high-level producers? Any sense of -- are they a net add to your producer staffing? And is there more to go in terms of hiring and net positive hiring?

Question: Andrew Kligerman - TD Cowen - Analyst : Yeah, that's really compelling. And also, as I looked at health solutions -- and you called out double-digit growth in EMEA, Asia, the Pacific, and Latin America -- are these markets just not as mature for Aon? Is this a big opportunity that we can expect continued, potentially, even double-digit growth in the out-years?

Question: Andrew Kligerman - TD Cowen - Analyst : Very helpful. Thank you.

Question: Alex Scott - Barclays - Analyst : Hey, good morning. First one I had is on free cash flow. It looks like some of the growth progress was coming in quicker than we would have expected. And I just wanted to see, is there anything abnormal in there or anything we should think about timing-wise headed into the end of the year?

Question: Alex Scott - Barclays - Analyst : Got it. And then the other thing I wanted to ask about is net new business. I mean, that sounded like a pretty strong result. Can you talk about some of the places you've seen the most success there, if we kind of dive down into the different businesses?

Question: Alex Scott - Barclays - Analyst : Got it. Very helpful. Thank you.

Question: Elyse Greenspan - Wells Fargo Securities, LLC - Analyst : Hi, thanks. Good morning. My first question was on just the M&A and SPAC activity. I know you guys called out that there was double-digit growth within that business and commercial risk in the quarter. Where are we, I guess, compared to peak levels? And as those markets start to rebound, do you have a sense of how that could incrementally benefit commercial risk from here?

Question: Elyse Greenspan - Wells Fargo Securities, LLC - Analyst : Thanks. And then my second question is on tax. Edmund, I know you said that we would get into the 2025 tax discussion on the year-end call. But can you just help us think through the positive and negative factors, I guess, that you're considering relative to tax and as you kind of think about the update that you're going to give us in a few months?

Question: Elyse Greenspan - Wells Fargo Securities, LLC - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 12:30PM, AON.N - Q3 2024 Aon PLC Earnings Call

Question: Mike Zaremski - BMO Capital Markets - Analyst : Hey, good morning. Thank you for the color on unpacking some of the high-level components of the 7% organic. Just curious, would you be able or willing to share -- as organic growth has accelerated a bit year to date, has it come more so from the new business 10 points or from exposure maybe was lower than 2 points previously? I kind of assume the retention -- I think if I do the math, I'm backing the 95%. That's kind of more stable, but I could be wrong. Any color there would be helpful.

Question: Mike Zaremski - BMO Capital Markets - Analyst : Okay, got it. That 2 points isn't too meaningfully different than kind of historical. Okay, got it.

Question: Mike Zaremski - BMO Capital Markets - Analyst : Okay. And maybe just switching gears, curious on the NFP acquisition, that clearly going well. At the time of the deal was announced, you did talk about potential for some fairly material revenue synergies. I think in some investors' minds, revenue synergies are a lot of hard work. Just curious if you think you'll be updating us on those going forward, or any comments you'd like to make about revenue synergies?

Question: Mike Zaremski - BMO Capital Markets - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 12:30PM, AON.N - Q3 2024 Aon PLC Earnings Call

Question: Jimmy Bhullar - JPMorgan - Analyst : Hi, good morning. First, just had a question on organic growth and the contribution of NFP. I think, Greg, you mentioned that growth would have been consistent with NFP. I think you said the same thing last quarter as well, which, I guess, is a positive for your legacy business. But I would have assumed with the economic economy being fairly strong and then NFP being part of a larger organization, that that business would be growing a little bit faster. But maybe you could sort of unpack that for us.

Question: Jimmy Bhullar - JPMorgan - Analyst : Okay. And then just following up on margins, you've had steady margin expansion over time. How should we think about margins improving going forward, especially if a fiduciary investment income becomes a headwind? There is an offset you mentioned from lower floating rate debt. But should we assume that margin expansion would slow, or would you control discretionary spending or other items as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 12:30PM, AON.N - Q3 2024 Aon PLC Earnings Call

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

Question: Grace Carter - BofA Global Research - Analyst : Hi, everyone. I think you all said that NFP was accretive to organic growth and commercial risk and wealth this quarter. Sorry if I missed this earlier, but would it be possible to quantify that impact?

Question: Grace Carter - BofA Global Research - Analyst : Thank you. And I guess, looking at health and wealth, could you remind us of the mix of offerings in those segments that might fall under the discretionary bucket versus the more defensive bucket, and whether the addition of NFP has noticeably impacted that mix going forward or not?

Question: Grace Carter - BofA Global Research - Analyst : Thank you.

Question: David Motemaden - Evercore ISI - Analyst : Thanks. Good morning. Edmund, I think you mentioned that you guys have acquired $26 million in terms of EBITDA through the middle market. So that's a little bit below the $45 million to $60 million that you guys have targeted for the year. Could you just comment on the achievability of that target?

Question: David Motemaden - Evercore ISI - Analyst : Great. That's helpful. And then, Edmund, I really appreciate the detail you gave in terms of net new as well as the market impact for the total company. Is there any way you could share that same detail for the commercial risk segment specifically?

Question: David Motemaden - Evercore ISI - Analyst : Great, thanks. Looking forward to it.

Question: Dean Criscitiello - Keefe, Bruyette & Woods North America - Analyst : Hi. You guys noted that aggregate pricing was flat this quarter. But I was curious if there were any differences between the middle market and larger accounts, and if you guys had any assumptions going forward on pricing.

Question: Dean Criscitiello - Keefe, Bruyette & Woods North America - Analyst : Thank you for that. And then my follow-up, I was curious as to -- if lower interest rates and the expectation for additional interest rate cuts have any implications on the growth outlook in either the health or the wealth segments?

Question: Dean Criscitiello - Keefe, Bruyette & Woods North America - Analyst : Thank you.

Question: Rob Cox - Goldman Sachs - Analyst : Hey, thanks. First question I had on reinsurance brokerage. Some of your peers have said that the market might be centering on more muted property cap reinsurance pricing changes into next year. And I'm not sure what your view is on reinsurance demand growth, but I know it was quite strong this year. So I'm curious how conducive you think the reinsurance brokerage environment might be into 2025.

Question: Rob Cox - Goldman Sachs - Analyst : That's really helpful. If I could follow up with a question on cap bonds. I appreciate you guys putting the 13% growth in cap bond issuance year to date in the press release. Could you help us think about the economics to Aon of cap bond placement versus traditional reinsurance brokerage?

Question: Rob Cox - Goldman Sachs - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 12:30PM, AON.N - Q3 2024 Aon PLC Earnings Call