Aon PLC Q4 2024 Earnings Call Transcript

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

Question: Andrew Kligerman - TD Securities - Analyst : Hey, good morning. So kind of NFP., it sounds like eight months in you've said the integration is on track. Edmund, you cited $45 million to $60 million in targeted acquired EBITDA this year. How does that $45 million to $60 million kind of stack up to in past years when NFP was independent? And I'm most curious about, how well integrated is the platform such that you could do another deal like if you if you are, how do I say if you felt in a nice opportunity we thought there would you be able to do it now? Or is this something that's going to take another 6 to 12 months before you're comfortable?

Question: Andrew Kligerman - TD Securities - Analyst : Got it. Thank you. And then my follow-up question is around reinsurance solutions. I mean that 6% organic growth was great because it was on really tough comps. And one of the areas you called out was the ILS market where you're number one. And I think on the call, maybe Edmund mentioned cat bonds. But it seems like ILS is really just proliferating. I mean you've got cyber bond now. How big of our business relative to the overall revenues of reinsurance is ILS? And could that be a big driver of continued better-than-expected organic growth?

Question: Andrew Kligerman - TD Securities - Analyst : Thanks much to the insights.

Question: David Motemaden - Evercore ISI. - Analyst : Good morning. I had a question on some of the components for that mid-single-digit or greater outlook on and thanks and then for some of those. I guess I'm wondering from 0 points to 2 points from the net market impact of rate and exposure, could you help me think through our retention improvement efforts that might be a tailwind to growth as well as what you guys have assumed for a rebound in M&A services versus where it was in 2024?

Question: David Motemaden - Evercore ISI. - Analyst : Great, thanks. And then maybe Edmund, you just following up there and you had commented that you're seeing strengthening retention in North America within commercial risks. Is that back or is that sort of at historic levels, below historic levels? Is there continued room for improvement there specifically? Just to get back to where we were historically or some elaboration on that point would be helpful.

Question: David Motemaden - Evercore ISI. - Analyst : Thank you.

Question: Elyse Greenspan - Wells Fargo - Analyst : Hi, thanks. Good morning. My first question on is on commercial risk and I guess the set up into the Q1, right, you've had a couple of brokers might that have flat, I guess seasonally softer Q1's and in their retail brokerage businesses. But I would think for you guys some of the items you mentioned Edmund like hiring coming online, et cetera, will help, but also you guys have an easier year-over-year comps. So do you think does the setup for Q1 theme seasonally stronger in commercial risk?

Question: Elyse Greenspan - Wells Fargo - Analyst : Thanks. I the $45 million to $60 million on EBITDA from an M&A from NFP's that you mentioned Edmund, is that included within your 2025 guidance?

Question: Elyse Greenspan - Wells Fargo - Analyst : And then one other point on -- sorry, go ahead.

Question: Elyse Greenspan - Wells Fargo - Analyst : On the $1 billion you guys gave the buyback for '25. And you said like you're kind of be within your leverage target at the end of the year. So we could or should we expect that maybe we could see a step-up in on share repurchase in '25, just given like you'll be done with leverage management actions post NFP.

Question: Elyse Greenspan - Wells Fargo - Analyst : Thank you.

Question: Jimmy Bhullar - JPMorgan - Analyst : Hi. First I just had a question on your financial guidance. It seems like you're fairly specific on organic growth and on cash flows, but somewhat to be gone EPS growth. So just trying to think about what strong EPS growth means. Does it mean double digits? Or if not, then just maybe highlight some of the key points that could make it be double digit or fall short of that?

Question: Jimmy Bhullar - JPMorgan - Analyst : And then maybe a follow up on your long-term strategy for share buybacks. Is there a change going forward than what you've done in the past, I guess in 2025, you are sort of going to be deleveraging. But beyond that, should we assume that you're going to be fairly consistent in terms of deploying capital towards buybacks? Or is the balance going to be more shifting 2m for M&A other users?

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

Question: Rob Cox - Goldman Sachs - Analyst : Hey, thanks. Good morning. And thanks for the comments on the construction and energy hires Edmund. Correct me if I'm wrong, I think you said 4% growth in specialty revenue-generating roles or something similar. I'm curious, how does that translate into the organic increase in talent for revenue-generating roles and overall risk capital? And if you could talk about how that compares to Aon history and sort of what you expect going forward.

Question: Rob Cox - Goldman Sachs - Analyst : Thanks. That's very helpful. And then as a follow-up, I wanted to switch to reinsurance. I know you guys called out the lower reinsurance rate impact in the quarter, but we're still able to strongly outgrow that. If I recall correctly, Aon is overweighted property reinsurance because of Benfield. Do you think reinsurance solutions can continue to grow it at similar levels as we get into the bigger revenue quarters that are kind of more driven by treaty renewals?

Question: Rob Cox - Goldman Sachs - Analyst : Great. Thanks for all the color.