Slide 1: Aon plc First Quarter 2024 Results
Aon plc First Quarter 2024 Results April 26, 2024
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, all of which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1
Slide 4: 2024 U.S. GAAP Financials
2024 U.S. GAAP Financials Q1’24 Total Revenue Growth +5% Operating Margin 36.0% Earnings Per Share $5.35 Cash Flows from Operations $309M Explanation of Non-GAAP Measures This communication includes supplemental information not calculated in accordance with generally accepted accounting principles i
Slide 5: Table of Contents
Table of Contents 01 Executive Summary 02 Quarterly Performance 03 Delivering Long- Term Growth 04 Appendices 5
Slide 6: Footnotes on captive premium and assets under advisement
1. Includes approximately $55 billion of captive premium 2. As of 6/30/2023, 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 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 +5%; driven by ongoing strong retention, net new business generation and management of the renewal book • Adjusted Operating Margin expansion of +100 basis points and Adj
Slide 9: Aon United - Driving Top and Bottom-Line Results
Aon United - Driving Top and Bottom-Line Results1 Committed to Mid-Single-Digit or Greater Organic Revenue Growth Over the Long-Term ◦ Track record of +4% average annual organic revenue growth over the last 12 years, with +7% organic revenue growth in 2023 and strong start to 2024 ◦ Driven by three
Slide 10: 2024 Financial Guidance and Supplemental Financial Information
2024 Financial Guidance and Supplemental Financial Information¹ Organic Revenue: Acquisition of NFP: ▪ Expect to deliver mid-single-digit or greater organic revenue • Closed acquisition of NFP on April 25 and issued 19.0 million shares growth for full year 2024 and over the long-term • Have provided
Slide 11: Quarterly Performance
Quarterly Performance AON
Slide 12: Performance Across Key Metrics
Performance Across Key Metrics¹ Q1'23 Q1’24 Organic Revenue +7% +5% Adjusted Operating Margin 38.7% 39.7% Year-over-Year +100 bps Adjusted Earnings Per Share $5.17 $5.66 Year-over-Year +9% Free Cash Flow $367M $261M Year-over-Year (29)% 1. The results presented on this page are non-GAAP measures tha
Slide 13: Organic Revenue - Growth Across All Solution Lines
Organic Revenue¹ - Growth Across All Solution Lines • Organic revenue growth of +5% overall in the first quarter, driven by ongoing strong retention, management of the renewal book, and net new business generation • Reported revenue growth of +5% in the first quarter, including a 1% favorable impact
Slide 14: Quarterly Summary of Organic Revenue Growth Across Solution Lines
Quarterly Summary of Organic Revenue Growth¹ Across Solution Lines Commercial Risk Solutions • Organic revenue growth of 3% reflects growth across most major geographies driven by strong retention, management of the renewal book, and net new business generation • Growth in retail brokerage was highl
Slide 15: Adjusted Operating Margin - Driven By Strong Revenue Growth
Adjusted Operating Margin1 - Driven By Strong Revenue Growth Adjusted Operating Income1 ($ millions) Q1 Commentary $1,615 • Adjusted operating income growth of +8% and adjusted $1,498 operating margin expansion of +100 bps reflects 5% organic revenue growth, $79 million fiduciary investment income a
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, operating margin expansion and effective capital management, partially offset by an increase in our effective tax rate • FX translation had $0.02 favorable impact in th
Slide 17: Non-Operating Financials
Non-Operating Financials • Interest income increased $23 million primarily reflecting ($ millions) Q1’23 Q1’24 interest earned on the investment of $5 billion of term debt proceeds which were used to fund the purchase of NFP Interest Income $5 $28 • Interest expense increased $33 million, reflecting
Slide 18: Strong Financial Flexibility and Cash Generation
Strong Financial Flexibility and Cash Generation Free Cash Flow1 Balance Sheet Dec 31, Mar 31, ($ millions) ($ millions) 2023 2024 $367 Cash $778 $995 $261 Short-term Investments $369 $5,413 Total Debt $11,199 $16,522 Shareholders’ Equity $(826) $(133) Q1'23 Q1'24 (Deficit)² ◦ Cash flows from operat
Slide 19: Delivering Long-Term Growth
3 Delivering Long-Term Growth
Slide 20: Our 3x3 Plan to Drive Ongoing Acceleration of Aon United
Our 3x3 Plan to Drive Ongoing Acceleration of Aon United NFP and restructuring program reinforce and contribute to ongoing strategy • Client need continues to evolve and increase, and Aon United enables a connected, stronger firm for clients and colleagues, as demonstrated by our long-term track rec
Slide 21: 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, delivered as Risk Capital and Human Capital, and the Delivering Client Aon Client Leadership model, we win more, retain more, and do Value in the more with clients Core • Our strong c
Slide 22: Completion of NFP Acquisition Unlocks Middle Market
Completion of NFP Acquisition Unlocks Large and Fast-Growing Middle Market and Accelerates our Aon United strategy Combination further accelerates our Aon United strategy • Enables Aon to efficiently and effectively address the fast-growing middle market, consistent with our strategy of investing in
Slide 23: NFP 2023 Quarterly Financials
NFP 2023 Quarterly Financials Q1 Q2 Q3 Q4 2023 • Going forward, we expect the combined firm to $ millions generate mid-single-digit or greater organic revenue growth, over the course of the full year NFP Revenue1 523 540 543 588 2,194 • For modeling purposes, it is reasonable to assume Health Soluti
Slide 24: Synergies and Deal Financials
Synergies and Deal Financials Transaction is Accretive to EPS1 in 2026 and adds $300m of FCF1 in 2025 Rest of Long- • Transaction is expected to be accretive to EPS1 in 2026 and 2025 2026 $ millions 2024 Term add to FCF1 beginning in 2025 based on the following assumptions: Net Revenue Synergy Impac
Slide 25: Aon Business Services – Ongoing Evolution of How We Operate
Aon Business Services – Ongoing Evolution of How We Operate Operating principles and track record of progress… …are the foundation for our next stage of value creation Standardized Platforms ▪ Investing in standardizing, digitizing and connecting platforms and technology across our Aon Business Serv
Slide 26: Accelerating Aon United Program to Drive ~$350m Expected Annual Savings
Accelerating Aon United Program to Drive ~$350m Expected Annual Savings We built Aon United in response to ongoing, increasing risk and demand from our clients and are now Cumulative Annual Expected Savings ($M) investing in: • Aon Business Services: investing in platform simplification and migratio
Slide 27: 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 Aon is committed to achieving n
Slide 28: Shareholder Value Creation
2023 Performance Continues Aon’s Long-Term Track Record1 2023 Performance 12-Year Performance2 With Guidance for Ongoing, Consistent, Long-Term Results3 Organic Revenue Growth Adjusted Operating Margin Organic Revenue Growth Adjusted Margin Expansion Mid-single-digit or greater 31.6% +4% ◦ +7% Key F
Slide 29: Appendices
Appendices AON
Slide 30: 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 Retail Brokerage: • Our dedicated teams of risk professionals utilize comprehensive analytics capabilities and
Slide 31: 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: • Addresses underwriting and capital objectives on a portfolio level, allowing our client
Slide 32: 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 33: 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 34: Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth
Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth Aon Organic Revenue Reconciliation Q1'21 Q2'21 Q3'21 Q4'21 FY'21 Q1'22 Q2'22 Q3'22 Q4'22 FY'22 Q1'23 Q2'23 Q3’23 Q4'23 FY'23 Q1'24 Commercial Risk Current period revenue 1,640 1,643 1,505 1,847 6,635 1,719 1,692 1,482 1,822 6,7
Slide 35: Appendix A: Organic Revenue Growth (Cont'd)
Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth (Cont’d) Aon Organic Revenue Reconciliation 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total Revenue Current period revenue 11,287 11,514 11,815 12,045 11,682 11,627 9,998 10,770 11,013 11,066 12,193 12,47
Slide 36: Appendix B: Operating Income and Diluted Earnings Per Share
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings Per Share Three Months Ended March 31, % (millions, except percentages) 2024 2023 Change Revenue $ 4,070 $ 3,871 5% Operating income $ 1,465 $ 1,473 (1)% Amortization and impairment of intangible assets 16 25 Acc
Slide 37: Appendix B: Reconciliation of NFP Adjusted Operating Income
Appendix B: Reconciliation of NFP Adjusted Operating Income 37 1. NFP historical results have been represented to align with Aon’s presentation
Slide 38: 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) Twelve Months Ended December 31, 2011 (millions, except per share data) (as revised) Operating income - as adjusted (1) $ 2,139 Interest income 18 Interest expense (245) Hewitt related costs —
Slide 39: Appendix C: Adjusted Operating Income and Margin and 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 40: 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 41: 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 42: 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 42