Slide 1: Earnings Conference Call Third Quarter 2024
Earnings Conference Call Third Quarter 2024 October 25, 2024
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
2024 U.S. GAAP Financials 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, adju
Slide 4: Executive Summary
Executive Summary AON
Slide 5: Key Messages
Key Messages Aon’s strong third quarter results, highlighted by 7% organic revenue growth and adjusted margin 1 expansion, demonstrate strong progress and momentum from executing our 3x3 Plan Our growth was broad based across regions driven by client solutions that match capital with risk, 2 expandi
Slide 6: Summary Financial Results
Summary Financial Results ($ in millions, except per share data) Q3'23 Q3'24 Inc/(Dec.) Total revenue $2,953 $3,721 26% Organic revenue growth (Non-GAAP) 6% 7% Operating income $691 $623 (10)% Adjusted operating income (Non-GAAP) $717 $915 28% Adjusted operating margin (Non-GAAP) 24.3% 24.6% 30Bps A
Slide 7: Quarterly Performance
Quarterly Performance AON
Slide 8: Organic Revenue - Strong Growth From All Solution Lines
Organic Revenue¹ - Strong Growth From All Solution Lines • Organic revenue growth of +7% overall in the third quarter, driven by net new business and ongoing strong retention • Reported revenue growth of +26% in the third quarter, including 7% organic revenue growth and acquired revenues from NFP Q3
Slide 9: Quarterly Summary of Organic Revenue Growth Across Solution Lines
Quarterly Summary of Organic Revenue Growth¹ Across Solution Lines Commercial Risk Solutions • Organic revenue growth of 6% reflects mid-single-digit or greater increases across all major geographies, and in NFP, driven by net new business and ongoing strong retention • Results reflect strong growth
Slide 10: Adjusted Operating Margin - Driven By Strong Revenue Growth
Adjusted Operating Margin - Driven By Strong Revenue Growth 1 Adjusted Operating Income1 Q3 Commentary ($ millions) • Adjusted operating income growth of +28% and adjusted operating $3,559 margin expansion of +30 bps reflects the acquisition of NFP, the $3,082 impact of 7% organic revenue growth, $2
Slide 11: Non-Operating Financials
Non-Operating Financials ($ millions) Q3'23 Q3'24 Interest Income $9 $4 Interest Expense $(119) $(213) Adjusted Other Income (Expense)1 $(21) $33 Effective Tax Rate¹ 17.2% 18.0% Noncontrolling Interest $(11) $(12) Actual Common Shares Outstanding2 200.8 216.5 1. Adjusted Other Income (Expense) and E
Slide 12: Strong Financial Flexibility and Cash Generation
Strong Financial Flexibility and Cash Generation Balance Sheet Dec 31, Sep 30, Free Cash Flow1 ($ millions) 2023 2024 ($ millions) Cash $778 $1,103 $1,971 Short-term $369 $196 $1,672 Investments Total Debt $11,199 $17,090 Shareholders’ Equity $(826) $6,244 (Deficit)² YTD'23 YTD'24 ◦ $17.1 billion de
Slide 13: 2024 Guidance
2024 Guidance1 FY'24 Guidance Updates/Changes Organic Revenue Mid-Single-Digit or Greater No Change Adj. Operating Margin Expansion No Change From 2023 Aon + NFP baseline of 30.6% Free Cash Flow Long-Term Double-Digit Growth No Change 2024 In-Year Restructuring Savings $100MM No Change 1. See supple
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: 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 +7% 31.6% +4% ◦ Mid-single-digit or greater +1,26
Slide 22: Appendices
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Slide 23: Supplemental Financial Information
Supplemental Financial Information • Expect to deliver total annual, run-rate savings of ~$350MM, with $100MM in 2024, $250MM in Accelerating Aon United 2025, and $350MM in 2026 Restructuring Program • In Q3 2024, savings of $25MM were recognized, for $70MM in year-to-date savings. Expect $100MM of
Slide 24: 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 25: 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 26: 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 27: 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 28: Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth
Appendix A: Reconciliation of Non-GAAP Measures – Organic Revenue Growth Aon Organic Revenue Reconciliation 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 Commercial Risk Current period revenue 1,505 1,847 6,635 1,719 1,692 1,482 1,822 6,715 1,778 1,7
Slide 29: 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 30: 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 31: 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 Share (Cont’d) 1 1. Certain noteworthy items impacting operating income in the three and nine months ended September 30, 2024 and 2023 are described in this schedule. The items shown with the caption “adjuste
Slide 32: 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 33: 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. 33
Slide 34: Appendix C: Adjusted Operating Income and Margin and ROIC Reconciliation
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 35: 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 36: 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 37: Appendix F: NFP 2023 Quarterly Financials
Appendix F: NFP 2023 Quarterly Financials $ millions Q1 Q2 Q3 YTD’23 Q4 2023 NFP Revenue1 523 540 543 1,606 588 2,194 Health Solutions 240 254 263 757 286 1,043 Commercial Risk Solutions 185 192 184 561 200 761 Wealth Solutions 98 96 96 290 102 392 Adj. Operating Income2 111 119 119 349 125 474 Adj.
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 38