Slide 1: Aon plc Second Quarter 2024 Results
Aon plc Second Quarter 2024 Results July 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 Q2’24 YTD’24 Total Revenue Growth +18% +11% Operating Margin 17.4% 27.1% Earnings Per Share $2.46 $7.72 Cash Flows from Operations $822 Explanation of Non-GAAP Measures This communication includes supplemental information not calculated in accordance with generally accepted
Slide 5: Table of Contents
Table of Contents 01 Executive Summary 02 Quarterly 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. Pro
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 +6%; driven by net new business generation and ongoing strong retention Adjusted Operating Margin expansion of +10 basis points and Adjusted Operating Income growth of +1
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: Accelerating Aon United Restructuring Program: ▪ Expect to deliver mid-single-digit or greater organic revenue • Expect to deliver total annual, run-rate savings of ~$350 million, to be growth for full year 2024 and ove
Slide 11: Quarterly Performance
Quarterly Performance AON
Slide 12: Performance Across Key Metrics
Performance Across Key Metrics¹ Q2'23 Q2’24 YTD’23 YTD’24 Organic Revenue +6% +6% +7% +5% Adjusted Operating Margin 27.3% 27.4% 33.6% 33.8% Year-over-Year +10 bps +20 bps Year-over-Year, from Aon + NFP2 +60 bps +80 bps Adjusted Earnings Per Share $2.76 $2.93 $7.93 $8.50 Year-over-Year +6% +7% Free C
Slide 13: Organic Revenue - Growth Across All Solution Lines
Organic Revenue¹ - Growth Across All Solution Lines • Organic revenue growth of +6% overall in the second quarter, driven by net new business generation and ongoing strong retention • Reported revenue growth of +18% in the second quarter, including acquired revenues from NFP and 6% organic revenue g
Slide 14: Quarterly Summary of Organic Revenue Growth Across Solution Lines
Quarterly Summary of Organic Revenue Growth¹ Across Solution Lines Commercial Risk Solutions • Organic revenue growth of 6% reflects growth across all major geographies driven by net new business generation and strong retention Growth in retail brokerage was highlighted by double-digit growth in EME
Slide 15: Adjusted Operating Margin - Driven By Strong Revenue Growth
Adjusted Operating Margin1 - Driven By Strong Revenue Growth Adjusted Operating Income1 Q2 Commentary ($ millions) • Adjusted operating income growth of +19% and adjusted operating margin expansion of +10 bps reflects 6% organic revenue growth, $2,644 $2,365 the impact of the acquisition of NFP, $25
Slide 16: Non-Operating Financials
Non-Operating Financials • Interest income increased $26 million, reflecting interest ($ millions) Q2’23 Q2’24 earned on the investment of $5 billion of term debt proceeds which were ultimately used to fund the Interest Income $5 $31 acquisition of NFP • Interest expense increased $95 million, refle
Slide 17: Adjusted EPS - Delivered Strong Growth
Adjusted EPS¹ - Delivered Strong Growth • Adjusted earnings per share growth in the quarter reflects strong total revenue growth, adjusted operating income growth and $250 million of share buyback, partially offset by an increase in interest expense related to debt and the issuance of 19.0 million s
Slide 18: Strong Financial Flexibility and Cash Generation
Strong Financial Flexibility and Cash Generation Balance Sheet Dec 31, June 30, Free Cash Flow1 ($ millions) 2023 2024 ($ millions) Cash $778 $974 Short-term $369 $182 Investments Total Debt $11,199 $17,614 Shareholders’ Equity $(826) $5,860 (Deficit)² ◦ $17.6 billion debt outstanding with a weighte
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: NFP: Driving Value Across Four Key Dimensions
NFP: Driving Value Across Four Key Dimensions in Large, Fast-Growing Middle Market Independent and Top-Line Growth and Connected Shared Success • NFP is an established Risk, Health and Our culture is based on a one-firm Driving organic revenue growth Wealth broker with strong growth profile, and cli
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 ~$350m Expected Annual Savings We built Aon United in response to ongoing, increasing risk and demand from our clients and are now Cumulative Annual Expected Savings ($M) investing in: • 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 Aon is committed to achieving n
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. Health and Benefits - Consulting and Brokerage: • Develops and implements innovative, customized health and benefits strategies fo
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 and Pension Administration: ▪ Utilizes our deep pension expertise to deliver high-quality i
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 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 Q2'24 Commercial Risk Current period revenue 1,643 1,505 1,847 6,635 1,719 1,692 1,482 1,822 6,715 1,7
Slide 33: Appendix A: Reconciliation of Non-GAAP Measures – 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 YTD'24 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 12,19
Slide 34: Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted EPS
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings Per Share1 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: Reconciliation of Non-GAAP Measures – Operating Income and Diluted EPS (Cont'd)
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings Per Share1 (Cont’d) Three Months Ended June 30, Six Months Ended June 30, % % (millions, except percentages) 2024 2023 Change 2024 2023 Change Revenue $ 3,760 $ 3,177 18 % $ 7,830 $ 7,048 11 % Operating income $
Slide 36: Appendix B: Reconciliation of Non-GAAP Measures – 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) Adjusted operating income (1) $ 2,139 Interest income 18 Adjusted interest expense (245) Other income (expe
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 C: Adjusted Operating Income and Margin and Reconciliation of 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 39: 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 40: 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 41: Appendix F: NFP 2023 Quarterly Financials
Appendix F: NFP 2023 Quarterly Financials $ millions Q1 Q2 YTD ‘23 Q3 Q4 2023 NFP Revenue1 523 540 1,063 543 588 2,194 Health Solutions 240 254 494 263 286 1,043 Commercial Risk Solutions 185 192 377 184 200 761 Wealth Solutions 98 96 194 96 102 392 Adj. Operating Income2 111 119 230 119 125 474 Adj
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