Slide 1: Aon plc First Quarter 2023 Results
Aon plc First Quarter 2023 Results April 28, 2023
Slide 2: Presenters: Greg Case, Christa Davies, Eric Andersen
Greg Case Chief Executive Officer Christa Davies Chief Financial Officer Eric Andersen President
Slide 3: Safe Harbor Statement
Safe Harbor Statement This communication contains certain statements related to future results, or states Aon’s intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. The
Slide 4: 2023 U.S. GAAP Financials
2023 U.S. GAAP Financials Q1’23 Total Revenue Growth +5% Operating Margin 38.1% Earnings Per Share $5.07 Cash Flows from Operations $443 Explanation of Non-GAAP Measures This communication includes supplemental information not calculated in accordance with generally accepted accounting principles in
Slide 5: Table of Contents
Table of Contents 01 Executive 02 Quarterly 03 Delivering Long- Summary Performance Term Growth 04 Free Cash Flow 05 Appendices Drives Long-Term Shareholder Value 4
Slide 6: Aon at a glance: premium and assets advised
1 Includes approximately $55 billion of captive premium 2 As of 6/30/2022, includes non-discretionary assets advised by Aon and its global affiliates which includes retainer clients and clients in which Aon and its global affiliates have performed project services for 5 over the past 12 months. Proj
Slide 7: Executive Summary
Executive Summary AON
Slide 8: Quarterly Performance and Focus on Long-Term Strategy
Quarterly Performance and Focus on Long-Term Strategy¹ Quarterly Performance on Key Financial Metrics • Organic Revenue growth of +7%; driven by ongoing strong retention and net new business generation • Adjusted Operating Margin expansion of +70 basis points and adjusted operating income growth of
Slide 9: Aon United - Driving Top and Bottom-Line Results
Aon United - Driving Top and Bottom-Line Results1,2 Committed to Mid-Single-Digit or Greater Organic Revenue Growth Over the Long-Term • Track record of +4% average annual organic revenue growth from 2010-2022, with +6% organic revenue growth in 2022 • Driven by three areas: Delivering client value
Slide 10: 2023 Supplemental Financial Information
2023 Supplemental Financial Information¹ Organic Revenue: • Expect to deliver mid-single-digit or greater organic revenue growth for full year 2023 and over the long-term Expense Outlook • Expect to deliver adjusted operating margin expansion for full year 2023 and over the long-term Foreign Currenc
Slide 11: Quarterly Performance
Quarterly Performance AON
Slide 12: Performance Across Key Metrics
Performance Across Key Metrics¹ Q1’22 Q1’23 Organic Revenue +8% +7% Adjusted Operating Margin 38.0% 38.7% Year-over-Year +70 bps Adjusted Earnings Per Share $4.83 $5.17 Year-over-Year +7% Free Cash Flow $440M $367M Year-over-Year -17% 1 The results presented on this page are non-GAAP measures that a
Slide 13: Organic Revenue - Strong Growth Across All Solution Lines
Organic Revenue¹ - Strong Growth Across All Solution Lines • Organic revenue growth of +7% overall in the first quarter, driven by ongoing strong retention, net new business generation, and management of the renewal book portfolio • Reported revenue growth of 5% in the first quarter, including a (3)
Slide 14: Quarterly Summary of Organic Revenue Growth Across Solution Lines
Quarterly Summary of Organic Revenue Growth¹ Across Solution Lines Commercial Risk Solutions • Organic revenue growth of +6% reflects growth across most major geographies driven by strong retention, net new business generation, and management of the renewal book portfolio • Growth in retail brokerag
Slide 15: Adjusted Operating Margin - Driven By Strong Organic Revenue Growth
Adjusted Operating Margin1 - Driven By Strong Organic Revenue Growth Adjusted Operating Income1 ($ millions) $1,498 Q1 Commentary $1,395 • Adjusted operating income growth of +7% and adjusted operating margin expansion of +70 bps reflects 7% organic revenue growth and $52m fiduciary investment incom
Slide 16: Adjusted EPS - Delivered Strong Growth
Adjusted EPS¹ - Delivered Strong Growth • Adjusted earnings per share growth in the quarter reflects strong organic revenue growth and effective capital management • FX translation had a $(0.14) per share unfavorable impact in the first quarter • If currency were to remain stable at today’s rates, w
Slide 17: Non-Operating Financials
Non-Operating Financials • Interest expense increased $20M, reflecting an ($ millions) Q1’22 Q1’23 increase in total debt and higher interest rates • Total other income (expense) decreased $50M, Interest Income $3 $5 primarily reflecting a gain on the sale of a business in the prior year period and
Slide 18: Delivering Long-Term Growth
3 Delivering Long-Term Growth
Slide 19: Aon United Blueprint
Aon United Blueprint Delivering Aon United Innovation at Scale Our Delivering Aon United strategy Our Innovation at Scale strategy applies defines how Aon colleagues work a common content and capability together to deliver value to clients and Delivering development methodology and set of sets a new
Slide 20: Drivers of Sustainable Organic Revenue Growth
Drivers of Sustainable Organic Revenue Growth¹ • When we bring the best of the firm through our Aon United strategy, we can win more, retain more, and do more with Organic Revenue Growth Delivering Client clients Value in the 9% Core • Our strong core business is largely recurring, non- discretionar
Slide 21: Aon Business Services Operating Model Enables Efficiencies, Client Service, and Innovation
Aon Business Services Operating Model Enables Efficiencies, Client Service, and Innovation FY Adjusted Operating Margin1 Efficiency and Operating Leverage • Single platform enables prioritized investment in our highest return opportunities balanced with ongoing operating margin improvement 30.8% • G
Slide 22: ESG at Aon - Better Decisions for a Better World
ESG at Aon - Better Decisions for a Better World At Aon, helping clients manage risk — including ESG risk — is at the core of what we do. We see significant opportunity in enhancing our impact and delivering innovative client solutions. Environmental Social Governance Progressing on our commitment t
Slide 23: Free Cash Flow Drives Long-Term Shareholder Value
4 Free Cash Flow Drives Long-Term Shareholder Value
Slide 24: Strong Financial Flexibility and Cash Generation
Strong Financial Flexibility and Cash Generation Free Cash Flow1 Balance Sheet Dec 31, Mar 31, ($ millions) ($ millions) 2022 2023 Cash $690 $1,119 $440 $367 Short-term Investments $452 $172 Total Debt $10,770 $11,352 Shareholders’ Equity Q1'22 Q1'23 $(529) $(70) (Deficit)² • Cash flows from operati
Slide 25: Our Annual Long-Term Track Record on Key Financial Metrics
Our Annual Long-Term Track Record on Key Financial Metrics¹ Driving Top and Bottom-Line Improvement FY 2010 FY 2022 12-Year Change Organic Revenue Growth +0% +6% +4% avg / year +1,120 bps Adjusted Operating Margin 19.6% 30.8% ~90 bps / year Adjusted Earnings Per Share $3.48 $13.39 +12% CAGR Free Cas
Slide 26: Appendices
Appendices AON
Slide 27: Commercial Risk Solutions
Commercial Risk Solutions Shifts in technology, economics and geopolitics are creating unprecedented volatility. We help clients identify, measure and manage their risk exposure. Place over $110B Retail Brokerage: • Our dedicated teams of risk professionals utilize comprehensive analytics capabiliti
Slide 28: Reinsurance Solutions
Reinsurance Solutions Businesses, governments and communities need to become more resilient. Our expertise and insight help re/insurers navigate uncharted territories and create more relevant solutions. Treaty: Place over $50B • Addresses underwriting and capital objectives on a portfolio level, all
Slide 29: Health Solutions
Health Solutions Healthcare costs are skyrocketing and workers have vastly differing needs. We help companies improve employee health and wellbeing while managing costs. Consulting & Brokerage: • Develops and implements innovative, customized health and benefits strategies for clients of all sizes a
Slide 30: Wealth Solutions
Wealth Solutions Global business is becoming increasingly difficult to navigate. We help employers, fiduciaries, and investment officers optimize results to provide a more secure future. Retirement Consulting & Pension Administration: • Utilizes our deep pension expertise to deliver high-quality int
Slide 31: Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth
Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth (1) Currency impact represents the effect on prior year period results if they were translated at current period foreign exchange rates. (2) Total fiduciary investment income for the three months ended March 31, 2023 was $52 mi
Slide 32: Appendix A: Organic Revenue Growth (Cont'd)
Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth (Cont’d) Aon Organic Revenue Reconciliation 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Revenue Current period revenue 8,512 11,287 11,514 11,815 12,045 11,682 11,627 9,998 10,770 11,013 11,066 12,193
Slide 33: Appendix B: Operating Income and Diluted Earnings Per Share
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings Per Share (1) Certain noteworthy items impacting operating income in the three months ended March 31, 2023 and 2022 are described in this schedule. The items shown with the caption “as adjusted” are non-GAAP meas
Slide 34: Appendix B: Operating Income and Diluted EPS (Cont'd)
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings Per Share1 (Cont’d) 33
Slide 35: Appendix C: Adjusted Operating Income and Margin, ROIC
Appendix C: Adjusted Operating Income and Margin and Reconciliation of Return on Invested Capital (ROIC) Return on Invested Capital (ROIC) is a non-GAAP measure calculated as adjusted net operating profit after tax (NOPAT) divided by average invested capital (short-term debt, + long-term debt + tota
Slide 36: Appendix D: Other Income (Expense) Under Pension Accounting Standard
Appendix D: Other Income (Expense) Under Pension Accounting Standard Effective 1/1/2018 (ASU No. 2017-07) With the exception of service cost, all financial components of net periodic pension cost and net periodic postretirement benefit cost shifted from above the line in compensation and benefits ex
Slide 37: Appendix E: Reconciliation of Free Cash Flow & Free Cash Flow Margin
Appendix E: Reconciliation of Free Cash Flow & Free Cash Flow Margin Free Cash Flow Margin is a non-GAAP measure calculated as Free Cash Flow (defined as Cash Flows from Operations less Capital Expenditures) / Total Revenue and represents our conversion rate of revenue into cash. The metric for the
Slide 38: Investor Relations
Investor Relations Leslie Follmer leslie.follmer@aon.com Office: 312-381-3230 Nicole Hendry nicole.hendry@aon.com Office: 312-381-5505 Grace Lenz grace.lenz@aon.com Office: 847-442-0622 37