Slide 1: Fourth Quarter and Full Year 2023 Results
Aon plc Fourth Quarter and Full Year 2023 Results February 2, 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: 2023 U.S. GAAP Financials
2023 U.S. GAAP Financials Q4’23 FY'23 Total Revenue Growth 8% 7% Operating Margin 23.1% 28.3% Earnings Per Share $2.47 $12.51 Cash Flows from Operations $3,435 Explanation of Non-GAAP Measures This communication includes supplemental information not calculated in accordance with generally accepted a
Slide 5: Table of Contents
Table of Contents 01 Executive Summary 02 Quarterly & Full Year Performance 03 Delivering Long- Term Growth 04 Appendices 5
Slide 6: Aon at a glance
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 and FY Performance and Focus on Long-Term Strategy
Quarterly and FY Performance and Focus on Long-Term Strategy¹ Quarterly Performance on Key Financial Metrics Annual Performance on Key Financial Metrics • Organic Revenue growth of +7%; driven by ongoing strong • Organic Revenue growth of +7%; reflecting growth in both the retention, net new busines
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 • Driven by three areas: Delivering client
Slide 10: 2024 Financial Guidance and Supplemental Financial Information
2024 Financial Guidance and Supplemental Financial Information¹ Organic Revenue: Expected Acquisition of NFP: • Expect to deliver mid-single-digit or greater organic revenue growth for full year • Announced definitive agreement to acquire leading broker NFP in Q4 2023 and our 2024 and over the long-
Slide 11: Quarterly and Full Year Performance
2 Quarterly and Full Year Performance
Slide 12: Performance Across Key Metrics
Performance Across Key Metrics¹ Q4'22 Q4'23 FY'22 FY'23 Organic Revenue +5% +7% +6% +7% Adjusted Operating Margin 33.2% 33.8% 30.8% 31.6% Year-over-Year +60bps +80bps Adjusted Earnings Per Share $3.89 $3.89 $13.39 $14.14 Year-over-Year —% +6% Free Cash Flow $3,023M $3,183M Year-over-Year +5% 1. The
Slide 13: Organic Revenue - Growth Across All Solution Lines
Organic Revenue¹ - Growth Across All Solution Lines • Organic revenue growth of +7% overall in the fourth quarter, driven by ongoing strong retention, net new business generation and management of the renewal book • Full year organic revenue growth of +7% highlighted by double-digit growth in two of
Slide 14: Quarterly Summary of Organic Revenue Growth By Solution Line
Quarterly Summary of Organic Revenue Growth¹ By Solution Line Commercial Risk Solutions • Organic revenue growth of +4% reflects solid growth across most major geographies driven by strong retention, management of the renewal book, and net new business generation • Growth in retail brokerage was hig
Slide 15: Adjusted Operating Margin - Driven By Strong Revenue Growth
Adjusted Operating Margin1 - Driven By Strong Revenue Growth Adjusted Operating Income1 Q4 Commentary ($ millions) • Adjusted operating income growth of +10% and adjusted operating margin expansion of +60 bps reflects +7% organic revenue growth and $78 million fiduciary investment income, partially
Slide 16: Adjusted EPS - Delivered Full Year Growth
Adjusted EPS¹ - Delivered Full Year Growth • For the full year, adjusted earnings per share growth driven by operating income growth and effective capital management, overcoming headwinds from non-cash pension expense and unfavorable impacts from balance sheet FX remeasurement • In the fourth quarte
Slide 17: Non-Operating Financials
Non-Operating Financials • Interest expense increased $14 million, reflecting ($ millions) Q4'22 Q4'23 an overall increase in total debt and higher interest rates Interest Income $3 $12 • Total other income (expense) increased $32 million, primarily due to an increase in non-cash net periodic pensio
Slide 18: Strong Financial Flexibility and Cash Generation
Strong Financial Flexibility and Cash Generation Free Cash Flow1 Sep 30, Dec 31, ($ millions) Balance Sheet ($ millions) 2023 2023 $3,183 $3,023 Cash $808 $778 Short-term Investments $175 $369 Total Debt $11,251 $11,199 Shareholders’ Equity (Deficit)² $(586) $(826) FY'22 FY'23 • Committed to maintai
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 our 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: Acquisition of NFP Unlocks Fast-Growing Middle Market
Acquisition of NFP Unlocks Fast-Growing Middle Market with Aon Business Services-Enhanced Distribution 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 priority ar
Slide 23: 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 24: Accelerating Aon United Program to Drive ~$350m Expected Annual Savings
Accelerating Aon United Program to Drive ~$350m Expected Annual Savings We built Aon United in response to ongoing, increasing risk and demand from our clients and are now Cumulative Annual investing in: Expected Savings ($M) • Aon Business Services: investing in platform simplification and migratio
Slide 25: 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 Our Aon United strategy, which
Slide 26: 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 +7% 31.6% +4% Key F
Slide 27: Appendices
Appendices AON
Slide 28: 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 29: 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 30: 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 31: 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 32: Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth
Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth Aon Organic Revenue Reconciliation Q1'20 Q2'20 Q3'20 Q4'20 FY'20 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 Commercial Risk Current period revenue 1,477 1,400 1,320 1,664 5,861 1,6
Slide 33: 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 34: 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 Twelve Months Ended December 31, December 31, % % (millions, except percentages) 2023 2022 Change 2023 2022 Change Revenue $ 3,375 $ 3,130 8 % $ 13,376 $ 12,479 7% Operating income $
Slide 35: 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 36: 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 37: 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 38: 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 39: 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 39