Aon Plc · NYSE:AON
Aon — Q4 2024 Earnings Presentation
35 slides from Aon's earnings presentation, Jan 31, 2025
Slide 1: Earnings Conference Call Fourth Quarter and Full Year 2024
Earnings Conference Call Fourth Quarter and Full Year 2024 January 31, 2025 1
Slide 2: 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 3: Explanation of Non-GAAP Measures
Explanation of Non-GAAP Measures This communication includes supplemental information not calculated in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), including Organic revenue growth, free cash flow, free cash flow margin, adjusted operating income, adj
Slide 4: Executive Summary
Executive Summary
Slide 5: Key Messages
Key Messages We closed the year with another strong quarter of performance and delivered an outstanding full 1 year 2024, with 6% Organic revenue growth, strong margins, double-digit adjusted EPS growth and $2.8B of Free Cash Flow, with NFP performing inline or better than our business case Our stro
Slide 6: Summary Financial Results
Summary Financial Results1 ($ in millions, except per share data) Q4'24 Inc/(Dec) FY'24 Inc/(Dec) Total revenue $4,147 23% $15,698 17% Organic revenue growth (Non-GAAP) 6% 6% Operating income $1,091 40% $3,835 1% Adjusted operating income (Non-GAAP) $1,380 21% $4,939 17% Adjusted operating margin ex
Slide 7: Quarterly Performance
Quarterly Performance
Slide 8: Organic Revenue - Strong Growth From All Solution Lines
Organic Revenue¹ - Strong Growth From All Solution Lines • Organic revenue growth of +6% overall in the fourth quarter, driven by net new business and ongoing strong retention • Reported revenue growth of +23% in the fourth quarter, including 6% Organic growth and acquired revenues from NFP Q4’23 Q4
Slide 9: Quarterly Summary of Organic Revenue Growth By Solution Line
Quarterly Summary of Organic Revenue Growth¹ By Solution Line Risk Capital Commercial Risk Solutions • Organic revenue growth of +6% reflects mid-single-digit or greater increases across all major geographies driven by net new business and ongoing strong retention • Performance was highlighted by st
Slide 10: Adjusted Operating Margin - Driven By Strong Organic Revenue Growth
Adjusted Operating Margin1 - Driven By Strong Organic Revenue Growth 1 Q4 Commentary +17% • Adjusted operating income growth of +21% and Adjusted operating margin of 33.3% reflects +6% Organic revenue growth, the impact from NFP, and $40 million of net restructuring savings, partially offset by incr
Slide 11: Non-Operating Financials
Non-Operating Financials ($ millions) Q4'23 Q4'24 Interest Income $12 $4 Interest Expense $(124) $(206) Adjusted Other Income (Expense)1 $(58) $2 Effective Tax Rate¹ 18.2% 16.7% Noncontrolling Interests $(9) $(18) Actual Common Shares Outstanding2 198.6 216.0 1. Adjusted Other Income (Expense) and E
Slide 12: Strong Financial Flexibility and Cash Generation
Strong Financial Flexibility and Cash Generation Free Cash Flow1 Balance Sheet ($ millions) Dec 31, 2023 Dec 31, 2024 ($ millions) Cash $778 $1,085 Short-term Investments $369 $219 Total Debt $11,199 $17,016 Shareholders’ Equity (Deficit)² $(826) $6,121 • $17.0 billion debt outstanding with a weight
Slide 13: 2025 Guidance
2025 Guidance Supplemental Financial Guidance Information Organic Revenue Mid-Single-Digit or Greater Net NFP: ~(20) bps Fiduciary Income: ~(20) bps Adj. Operating Margin Expansion Restructuring: ~85 bps Operating Leverage: ~35 – 45 bps Expected Tax Rate: 19.5% – 20.5% Adj. EPS Strong Growth Non-Cas
Slide 14: Long Term Strategy and Track Record
Long Term Strategy and Track Record
Slide 15: 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 16: 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 17: 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 and clients-firs
Slide 18: 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 19: Accelerating Aon United Program to Drive ~$350MM Expected Annual Savings
Accelerating Aon United Program to Drive ~$350MM Expected Annual Savings We built Aon United in response to ongoing, increasing risk and demand from our clients and are now Cumulative Annual Expected Savings ($MM) investing in: • Aon Business Services: investing in platform simplification and migrat
Slide 20: 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 21: Appendices
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Slide 22: 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. Retail Brokerage: • Our dedicated teams of risk professionals utilize Risk Capital’s comprehensive analytics capabilities
Slide 23: 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 24: 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: Place over $45B • Develops and implements innovative, customized health and benefi
Slide 25: 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. $5.0T1 Retirement Consulting and Pension Administration: ▪ Utilizes our deep pension expertise to deliver high-qu
Slide 26: 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 Q2'24 Q3'24 Q4'24 FY'24 Risk Capital Commercial Risk Current period revenue 1,640 1,643 1,505 1,
Slide 27: 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 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total Revenue Current period revenue 12,045 11,682 11,627 9,998 10,770 11,013 11,066 12,193 12,479 13,376 15,698 Prior year peri
Slide 28: Appendix B: Reconciliation of Operating Income, Operating Margin, and Diluted EPS
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income, Operating Margin, and Diluted Earnings Per Share1 1. Certain noteworthy items impacting operating income in 2024 and 2023 are described in this schedule. The items shown with the caption "adjusted" are non-GAAP measures. 2. Segment
Slide 29: Appendix B: Reconciliation of Operating Income, Operating Margin, and Diluted EPS (Cont’d)
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income, Operating Margin, and Diluted Earnings Per Share1 (Cont’d) 1. Certain noteworthy items impacting operating income in 2024 and 2023 are described in this schedule. The items shown with the caption "adjusted" are non-GAAP measures. 2.
Slide 30: Appendix B: Reconciliation of Operating Income, Operating Margin, and Diluted EPS (Cont’d)
Appendix B: Reconciliation of Non-GAAP Measures – Operating Income, Operating Margin, and Diluted Earnings Per Share1 (Cont’d) Twelve Months Ended December 31, 2014 (millions, except per share data) (as revised) Adjusted operating income (1) $ 2,353 Interest income 10 Interest expense (255) Other in
Slide 31: Appendix B: Reconciliation of NFP Adjusted Operating Income
Appendix B: Reconciliation of NFP Adjusted Operating Income 1. NFP historical results have been represented to align with Aon’s presentation. 31
Slide 32: Appendix C: Other Income (Expense) Under Pension Accounting Standard
Appendix C: 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 33: Appendix D: Reconciliation of Free Cash Flow
Appendix D: Reconciliation of Free Cash Flow Free Cash Flows 1 (Unaudited) Twelve Months Ended December 31, (millions) 2024 2023 % Change Cash Provided by Operating Activities $3,035 $3,435 (12)% Capital Expenditures (218) (252) (13)% Free Cash Flows (1) $2,817 $3,183 (11)% 1. Free cash flow is defi
Slide 34: Appendix E: NFP 2023 Quarterly Financials
Appendix E: NFP 2023 Quarterly Financials $ millions Q1 Q2 Q3 Q4 2023 NFP Revenue1 523 540 543 588 2,194 Health Solutions 240 254 263 286 1,043 Commercial Risk Solutions 185 192 184 200 761 Wealth Solutions 98 96 96 102 392 Adj. Operating Income2 111 119 119 125 474 Adj. Operating Margin 21.2% 22.0%
Slide 35: Investor Relations
Investor Relations Nicole Hendry nicole.hendry@aon.com Office: 312-381-5505 Grace Lenz grace.lenz@aon.com Office: 847-442-0622 35