Aon PLC

Thank you for holding the second quarter 2025 conference call. At this time all parties will be in a listen only mode until the question and answer portion of today's call. I would also like to remind all parties that this call is being recorded. If anyone has an objection, you may disconnect your line at this time. It is important to note that some of the comments in today's call may constitute certain statements that are forward looking in nature as defined by the Private Securities Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. For information concerning these risk factors, please refer to our earnings release for this quarter and to our most recent quarterly or annual SEC filing, all of which are available on our website. It is now my pleasure to turn the call over to Greg Case, CEO of Aon PLC. Thank you. Please go ahead.

Thank you, Donna. Good morning and welcome to our second quarter earnings call. I'm joined today by Edmund Reese, our CFO, and as always, we posted a detailed financial presentation on our website, which Edmund will reference in his remarks. To begin, we want to take a moment to reflect on the momentum coming out of our investor day, where we detailed why and how our client-centric Aon United strategy drives sustainable top line growth and exceptional free cash flow for share growth. Aon United, operationalized and accelerated by the 3x3 plan, is driving meaningful performance demonstrated in our Q2 results with continued momentum as we enter the second half of 2025 and look ahead to 2026. Let's start with some Q2 highlights. We delivered a strong quarter in line with our expectations, including 6% organic revenue growth, 19% adjusted EPS growth, and 59% free cash flow growth. For clients facing an increasingly complex operating environment, our work to deliver for them has never been more essential, and we remain confident in our ability to meet their evolving needs, both now and over the long term. At investor day, we discussed how market reality shaping the current operating landscape are complex and constantly evolving. Clients of all sizes, industries, and geographies are challenged with how to address and respond to the interconnected mega trends of trade, technology, weather, and workforce. And the pressure is only growing. In the weeks following investor day alone, we've seen several major developments that demonstrate the impact and connectivity of these mega trends. The enactment of US tax legislation and continued shifts in the global tariff landscape, severe flooding and convective storms across the US alongside record-breaking heat waves in both the US and Europe, events that have driven historic first-half catastrophe losses, disrupted supply chains, displaced workforces, and caused widespread property damage. And significant workforce changes announced by some of the world's largest technology companies, citing the accelerated impact of AI on roles and responsibilities. These events and many others reinforce the importance of our and united strategy as we help clients make better decisions and achieve better outcomes in what is arguably the most complex operating environment they've ever faced. Our strategy is working. As we detailed at investor day, the industrial strength foundation powering and united and driving sustainable top-line growth and margin expansion is AI on business services. With ABS fully operationalized, we're winning more share in core markets, capturing demand in existing markets, and creating new demand in new categories. Let me highlight a few specific examples from the second quarter. We are winning more in the core by deepening relationships with existing clients. One of the world's largest investment firms who previously engaged us solely on risk capital topics recently awarded us their US and global benefits advisory business. This win was driven by two key factors. First, our integrated risk capital and human capital structure is unique in our industry and allows clients to employ a holistic risk strategy across their full business. Leveraging our scale in analytics, this leading global company could see their business differently across their own internal silos. And second, our differentiated human capital analytics provide globally comparable insights that help them make better data driven decisions. We are also capturing demand in existing markets by developing new capabilities. In the second quarter, we launched Aon Broker Copilot and placed our first client program, a game changer for our brokers, advisors, and clients. This capability leverages Aon's global scale, proprietary data, and embedded AI to provide an enhanced view into how the global insurance market is pricing risk. Arming our team with insight into real time market behavior, Broker Copilot augments predictive broking, enabling Aon brokers to match capital to risk in an unparalleled manner. And another example of how ABS assets support our colleagues to capture new demand and serve clients with superior solutions. And finally, we're creating new demand in new ways by innovating on behalf of clients in categories like cyber, an expected area to drive outsize growth for Aon as sourcing sufficient and tailored cyber insurance remains a pressing concern for clients. In Q2, we developed and placed a first of its kind cyber reinsurance offering, Aon Surge Stop Loss, which enables enhanced protection against cumulative cyber losses. Unlike traditional reinsurance products that require a specific event driven

event

to trigger coverage, Aon Surge Stop Loss triggers based on aggregate loss thresholds, resulting in broader, more flexible protection. An important evolution in the cyber reinsurance market, given the ever increasing risk of cyber attacks. We also continue to invest in client facing talent across high growth areas. And our revenue generating hires are up 6% through June 30th. Colleagues come to Aon because they recognize the competitive advantage of Aon's differentiated platform and how it enables them to deliver superior client outcomes. Finally, the 31 billion North American middle market remains a significant growth opportunity. Our integration of NFP continues to progress very well. And we're making meaningful progress toward our 80 million net revenue synergy target for 2025. As our combined team continues to unlock value by leveraging complementary capabilities and deep client relationships. It's clear our Aon United strategy powered by ABS continues to drive innovation, deliver actionable insights and match client risk with new sources of capital. Our strong first half performance and continued progress against the commitments of the 3x3 plan reinforce that we have the right strategy and plan in place to deliver long term value. And as a result, we reaffirm our 2025 full year guidance and our commitment to deliver double digit free cash flow growth over the 23 to 26 3x3 plan period. To conclude, I will highlight three points. First, as the global environment continues to evolve, Aon's capability and integrated solutions are mission critical for clients to mitigate complexity, protect assets and grow their businesses. Second, our team is confident in our ability to capitalize on the compelling opportunities ahead and deliver long term shareholder value. And the results today are just another proof point of the strength of our strategy. And third, we have momentum across our businesses. We are attracting great talent. We are capturing the growing middle market opportunity. And we are winning more with both new and existing clients. Finally, to our over 60,000 colleagues around the world, thank you. Thank you for your commitment to our clients, each other, and our Aon United strategy. Your dedication is the driving force of our firm. Now I'll turn the call over to Edmund for his thoughts on our financial performance and long term opportunity to drive shareholder value creation. Edmund, over to you.

Edmund Thank you, Greg. And good morning, everyone. I'm excited to be here to discuss our second quarter results, which reflect both execution and the growing momentum of our 3x3 plan. Before we get into the details of our second quarter results, I want to take a moment to elevate what matters most. There are three key proof points that best capture the momentum behind our strategy and the strength of our performance. These highlights provide the right context for the details that follow and underscore how our execution on the 3x3 plan is translating into tangible results. First, we see clear evidence that our financial model is delivering is designed. Our investments in revenue generating hires, equipped with the analytical tools, inclined experience enhancements, and able by Aon Business Services or ABS, are translating into sustainable mid single digit or greater organic revenue growth. Organic revenue growth was 6% of the quarter, and we are winning new business, expanding our relationships with existing clients, and doing so with greater client engagement. Second, these Q2 results are not just about top line performance. They reflect our ability to invest in growth and expand margins, not through cost cutting, but through operating leverage. The scale improvements powered by ABS, along with our restructuring program savings, created capacity to fund growth investments while still expanding margins by 80 basis points over last year, in line with our long term model. Third, the top line strength coupled with the operating leverage drove 19% adjusted EPS growth year over year, and we converted those earnings into 59% free cash flow growth in the quarter, a clear demonstration of the strength of our earnings power and capital position. This performance reinforces our conviction in delivering double digit free cash flow growth for the full year, and gives us the flexibility to execute across all dimensions of our capital allocation strategy. We remain on track to meet our leverage objectives, continue our discipline middle market M&A strategy, and return $1 billion in capital to shareholders via share repurchases this year. Taken together, our first half performance, 5% organic revenue growth and 8% adjusted EPS growth, reflects the strength and resilience of our business and financial model, and the discipline of our execution. In a macro environment that remains uncertain, we are delivering results by deepening client relationships and creating more value for clients through data insights and innovative capital solutions. We are driving growth through our investments and data capabilities, expanding margins through ABS, and converting earnings into strong free cash flow. This gives us confidence in achieving our full year 2025 guidance. So now turning to the second quarter results in the financial summary on slide five. You see that we delivered 6% organic revenue growth in the second quarter, and total revenue increased 11% to $4.2 billion. Adjusted operating margin was 28.2%, up 80 basis points for the quarter, in line with our expectations. And this includes the impact from NFP as we lapped the anniversary of the acquisition at the end of April, resulting in a more normalized margin profile going forward. Adjusted EPS was $3.49, and finally free cash flow increased to $732 million, reflecting strong adjusted operating income growth, and continued improvement in day sales outstanding. Let's get into the details of these results, starting with organic revenue growth on slide six. Organic revenue growth in Q225 was in line with our mid single digit or greater guidance range. Growth was broad based with three of our four solution lines, commercial risk, reinsurance, and health, each delivering 6% organic revenue growth, reflecting strong new business performance and high retention. In commercial risk, the 6% organic revenue growth in Q2 reflected strong performance in our core PNC business, with meaningful contributions from both North America and EMEA, as well as strength in M&A services relative to prior year, and double digit growth in construction. Notably, construction and renewable energy projects remain key areas of focus for us, with activity levels continuing to be robust. And reinsurance organic revenue growth was 6%, driven by double digit growth in our insurance link securities business, where we continue to lead the market in cap bond placements, now totaling $50 billion outstanding. We saw double digit growth in facultative placements in EMEA and Asia Pacific, which helped offset softer April 1 property renewals, where rates declined 5 to 20%. Looking ahead, we continue to expect full year organic revenue growth in line with our mid single digit or greater objective, supported by higher limits at July 1 renewals, continued momentum in international facultative placements, and strong demand for analytics from our strategy and technology group. Health solutions also delivered 6% growth in the quarter and benefited from continued strength in our core health and benefits business. Especially across international markets, growth was fueled by net new business and market dynamics that continue to drive rising healthcare costs. We also saw a strong contribution from NFP, most notably in executive benefits and pharmacy solutions where demand remains elevated. And finally, wealth generated 3% organic revenue growth on top of 9% growth in the prior year period. The performance this quarter was driven by regulatory work across the UK and EMEA. We also saw a meaningful contribution from NFP asset inflows and market performance. So let me take a moment now to walk through the components of our Q2 organic revenue growth on slide 7. As I shared at Investor Day, Aon has a consistent track record of generating new business, and that continued in Q2. In the quarter, new business powered organic revenue growth and contributed 11 points, with an equal contribution from both new clients and expansion with existing clients. Our investments in revenue generating talent in high growth areas like construction and energy are delivering measurable impact. Revenue generating headcount is up 6% through the first half, and these colleagues are equipped with advanced data analytics and capabilities from ABS, enabling them to win more business. We continue to expect these investments to support sustainable organic revenue growth, with the 2024 cohort projected to contribute 30 to 35 basis points to full year organic revenue growth. Q2 25 retention improved by one point year over year, driven by continued gains in commercial risk as we expand enterprise client leader coverage and deploy our risk capital analyzer. Net new business contributed five points to organic revenue growth in the quarter. Net market impact, which captures the impact of rate and exposure, contributed approximately one point to organic revenue growth, consistent with our zero to two point estimated range. Reinsurance was down from rate declines and higher retentions, and rate pressure and commercial risk was offset with limit and coverage increases across our book. Health and wealth both benefited from positive net market impact, with rising healthcare costs and favorable asset performance supporting growth. And one final point on revenue. Second quarter fiduciary investment income was 66 million in the quarter, down 12% versus the prior year, while average balances increased lower interest rates more than offset that benefit. On slide eight, adjusted operating income was up 14% year over year to 1.2 billion, and adjusted operating margin was up 80 basis points to 28.2%. This margin expansion reflects the impact of the four components that we highlighted when we provided full year guidance. NFP, fiduciary investment income, restructuring, and operating leverage, all of which are in line with our expectations. While we absorbed a one month margin headwind from NFP given the April 2024 closing, our margin continued to benefit from the scale improvement driven by ABS and the savings from our restructuring program. Specifically, restructuring savings totaled 35 million in the quarter, contributing approximately 83 basis points to adjusted operating margin. We remain on track to deliver 150 million in restructuring savings for the full year and are progressing well toward our goal of 350 million in run rate savings by 2026. Given our strong progress in the first half of the year, we remain confident in our ability to drive full year adjusted operating margin expansion of 80 to 90 basis points consistent with our long term model. Moving to interest, other income, and taxes on slide nine, as we indicated last quarter, interest income was negligible in the second quarter and 31 million was lower than last year when we earned interest on funds held ahead of the NFP acquisition. Interest expense of 212 million was lower by 13 million versus the prior year, primarily due to lower average debt balances. We expect interest expense to be approximately 210 million in Q325. Other expense rose by 17 million year over year to 32 million, primarily due to the remeasurement of balance sheet items in non-functional currencies and higher non-cash pension expense. We estimate Q325 other expense to range between 25 million and 32 million. And finally, the Q2 tax rate was 16.5%, reflecting a favorable impact related to discreet items. While we expect variability in the quarterly rate, our year to date rate of .3% is in line with our expectations and our full year tax outlook remains unchanged at .5% to 20.5%. Turning now to free cash flow on slide 10, we generated 732 million in free cash flow in the second quarter, up 59% year over year. On a year to date basis, free cash flow is up 13%. And this growth reflects strong adjusted operating income, including contributions from NFP and continued improvements in day sales outstanding. This free cash flow performance gives us the flexibility to execute across all dimensions of our capital allocation strategy. And we continue to expect double digit free cash flow growth in 2025. Turning the capital allocation on the right side of the page, we remain focused on executing our disciplined and balanced capital allocation. We continue to make progress on deleveraging, lowering our ratio to 3.4 times in the second quarter. We remain on track to achieve our target range of 2.8 times to 3.0 times by the fourth quarter of 2025, consistent with the objective we set when we announced the NFP acquisition. We also remained active in M&A, continuing our targeted tuck-in acquisitions across priority areas, including middle market deals through NFP. Through June, NFP has closed eight acquisitions representing 20 million of EBITDA, with 80% of the EBITDA connected to PNC deals. Finally, we returned 411 million in capital to shareholders this quarter, through the dividend and 250 million in share repurchases, keeping us on track for 1 billion in capital return through share repurchases for the full year. Each of these actions, underpinned by strong free cash flow generation, reflects our disciplined capital allocation model in action, reducing leverage, investing in high return growth, and returning capital to shareholders. So I'll conclude my prepared remarks on slide 11 with some thoughts on our financial objectives and 2025 guidance. Our second quarter results and our performance through the first half of 2025 reflect the strength of our financial model and our execution on our 3x3 plan. We are delivering sustainable organic revenue growth by investing in the capabilities that we have. Our organic revenue growth, combined with the initiatives we're executing across ABS to standardize operations and integrate platforms, is creating capacity to fund our growth investments while strengthening the foundation for ongoing margin expansion. This combination is enhancing our earnings power and positioning us to deliver on our full year guidance and long-term financial objectives. As a result, we are reaffirming our full year guidance, including -single-digit or greater organic revenue growth, 80 to 90 basis points of margin expansion, including 260 million in cumulative annual savings from our Aon United restructuring initiative, strong earnings growth, and double-digit free cash flow growth in 2025, and a double-digit three-year CAGR for 2023 to 2026. We are executing with focus. We have momentum and we remain confident in our ability to deliver long-term value for our shareholders. So with that, let's jump into your questions. Donna, back to you.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We do ask that you please limit yourself to one question and one follow-up. Again, that's star 1 to register a question at this time. Our first question this morning is coming from Jimmy Bolar of JP Morgan. Please go ahead.

Hey, good morning. So first, just a question for Greg on the contribution to growth from capital markets activities and new hires. On new hires, I think Edmund had outlined it in yesterday that the contribution should pick up as you go through this year. So assuming that hasn't changed, but you could comment if it has. And then on capital markets, not sure if you're or expecting a greater impact in the third and the fourth quarters versus what you've seen in the first half, given that it looks like M&A IPO activity across the board is picking up in several industries.

First of all, Jimmy, appreciate the questions. We'll start with M&A services and then maybe go to talent when you're asking your second question. Listen, M&A services, you know this story well from our site. We love this space. We're unbelievably well positioned to win. We've been investing behind this capability because we know how important it is from a client standpoint. And we've been investing behind it in times when it wasn't doing so well. We've said to you before on calls, we're going to quit projecting and we're going to talk to you about the rear view mirror. As this has impact, you will see it have impact. And we've made progress in the quarter. Maybe describe it as better, but not back. You certainly see the pipelines pick up as you've heard the investment banks describe. But there's tremendous amount of potters still out there on the sidelines. And we made progress. And as Edmund described, it was a tailwind in the quarter. But literally, the overall impact on our growth and performance in the quarter was really very broad based, as Edmund described. So generally, very positive, good prospects. But describe it as progress. But Edmund, what else would you add before we go to talent? Yeah,

just on the M&A point, Greg, just reiterating your point. It's strengthened in Q1, Jimmy, and in Q2, that was modest growing over a low base. There's modest growth in our second half outlook for M&A. We still expect to maintain our mid single digit growth levels despite that. If it comes in stronger, then that'll be a tailwind for us. The point I want to emphasize is the point that Greg made about broad based growth. M&A falls into our commercial risk segment, which was at 6% for the quarter. Again, right in line with our expectations. We weren't surprised by that. That was strength driven by what I mentioned in my prepared remarks, our core P&C business in North America, double digit growth in construction. That means the priority hires. The next part of your question is contributing right in line with our expectations. M&A was a tailwind, but not the key driver. I'll also point out in construction our international markets, particularly in the in Latam. Again, there the growth was driven by new business and the impact of us hiring in those markets. The growth was broad based across our different solution lines coming from new business and new hires. On your second question, Greg, should I start there? On the second question, you're right. I think the first thing, you heard me say it in the remark, through six months, we're up 6% in revenue generating hires. Right in line with the 4 to 8% that we communicated at investor day. That is strong growth in the priority areas. We saw growth in energy. Again, I'll mention double digit growth in construction. Those are areas that we think are outpacing GDP growth, but we're doubling down on. Contribution at 11 points of contribution from new business to organic revenue growth. That's broad based, but there's a significant component of that as we start to see the new hires pick up in their contribution. We still remain confident in what we said at investor day of 30 to 35 basis points of contribution from the 24 cohort of new hires. The last point I'll make on it is that we're just going to stay focused on this. We're a growth company. We'll remain committed to investing in talent and the tools that we talked about on the calls and the capabilities through ABS as well.

Thanks. Maybe just a question on your preferred use of the free cash flow. You mentioned deleveraging as you outlined with the NNFB deal. Just maybe comment on your interest in large M&A. It seems like the antitrust environment better than it was before. Some of your peers have done larger deals since you did the NNFB acquisition. Just your interest in large scale M&A as a use of capital.

Maybe I'll make a few points about where we are in our position, which is strength, a position of strength. I start the answer to this question, which is the free cash flow growth, 59% in the quarter, 13% year to date, coming from our operating income, coming from NFP, coming from integration and transaction costs winding down as we called out through an investor day. The confidence in double digit free cash flow is very high. That means that we are in a position of strength with flexibility. On that point about flexibility, the priority is giving that leverage ratio down. We are well on track to be able to do that. We are paying the dividend. We will continue to evaluate assets that meet our strategic and financial criteria. We are very diligent on ensuring that our M&A decisions are accreted to returns. I put up a slide during investor day that 12% revenue growth after one year of ownership, over 20% of IRR in industry leading ROIC. My point is that we are in a position of strength with the free cash flow. We have the flexibility. We are going to use the right criteria to evaluate as we continue to invest for growth. Greg, maybe a little bit on the environment.

Greg Foss Yeah, and listen, you captured it very well, Edmund. You get the point here. This is an underlying foundation that has driven our capital allocation decisions for a long time, just fully reinforced by Edmund. This is operating on strength with flexibility. But go back in time. Return on capital, cash on cash return, true evaluation across the spectrum. Also remember, we are buying and selling. We are managing capital in a way in which we are absolutely focused on it. We will take steps to focus the portfolio if it is going to be helpful and added the portfolio in any way it is going to support us as well, from dividend, the buyback to acquisition in every way, shape or form. I appreciate the question, but we are excited about the potential here. Greg Foss Thank you.

Coordinator Thank you. The next question is coming from Elise Greenspan of Wells Fargo. Please go ahead.

Elise Greenspan Hi, thanks. Good morning. My first question is also on the M&A transactional book. I was wondering, is it overly any geography or industry vertical or is it pretty diversified? And then directionally, is the margin better or worse than the core P&C margin within the commercial risk segment?

Greg Foss Appreciate the question, Elise. Listen, we happen to talk about M&A services all day long, so just love the questions. For us, remember, we have truly invested in world-class capability and content here, and we continue to do it when it wasn't as robust. The demand wasn't as robust for all the reasons that we all know. We described at the time that we have expanded our capability. So we expanded it both geographically as well as beyond just sort of the classic PE focus. So it really is to the corporate world too. If you think about sort of the uses of M&A services, they've directed toward the PE world, but equally compelling in the context of the overall corporate world. So from our standpoint, what we've got is broad-based capability and what we believe will be, with time, very broad-based demand across the world and now even broader in terms of how it's going to be applied. So again, we're excited about the potential. We've always has been. Nothing's changed there. But as Edmund and I both tried to describe, better, not back. There's a long way to go here with a lot of dry powder, and we're going to continue to see it evolve over time. On the margin question, Edmund, can you comment on that?

Yeah. And I think first on the first question, your operative word there is broad-based. So at least the growth is a tailwind, but modest. But we saw that growth across all of our regions. EMEA was strong. Asia Pacific was strong, just like US as well in the M&A space. On the margin, I think your question is about margins in the components of commercial risk versus the other areas. I think the key thing for us is that commercial risk has a slightly higher margin, but the margins are in line. I don't pay too much attention to a particular, we're an annual company, so the margin in a particular quarter isn't where I'd focus. But most importantly, the key area of focus should be the expansion in both margins, on the commercial risk side and on the human capital side. And we're seeing that expansion across both the segments because it's driven by the operating leverage and the scale improvements that we get through ABS. So we're seeing it across our solutions.

Thanks. And then my second question, I was hoping you could spend a little bit more time on what's called the pretty strong free cash flow growth in the quarter. And then I know the full year guide is for 300 million from NFP free cash flow. Where do we sit through the first half of the year?

Yeah, so I call it that. Again, you're answering the question within the question there. Those are the drivers. I think there are four areas to keep your eyes on when you think about our free cash flow growth and how we get to double digit. One is the operating income growth and within that NFP. Both of those items were contributed for us in the quarter. So we feel very good about the $300 million in 2025 free cash flow contribution from NFP on that question. The second area for us is the continued working capital improvements and in particular, day sales outstanding. I called that out in the prepared remarks. We continue to focus on that by region within our procurement teams. So we continue to see benefits from that as well. The third area that I'd focus on is the Aon United restructuring program. That continues to be a degradation of free cash flow as we go through 2026 in line with our plans on that. The benefit that we saw in addition to those three items in the quarter was through the lower NFP transaction and integration costs, just as I said, at Investor Day. So operating income, including NFP, the working capital improvements and the lower transaction and integration costs from NFP. Those are the drivers for 13% year to date and just continued strength in those drivers is what will have us on track for double digits in 2025.

But at least I just want to point here, an important one, because you touched on the key note for us, which is free cash flow and free cash flow growth. So Edmund just described very well what's happening in the year, what's happening year to date, all exactly on point. Step back. Remember, we are all about revenue and revenue enhancement and then the translation of free cash flow from revenue, period. And we look at that in every angle, every shape you can imagine. And you look at our history, we've done double digit free cash flow growth for a long period of time. And then we add the three by three plan. And the three by three plan with Aon Business Services is again, it's a leverage to revenue, it's a leverage on capability, driving revenue, you're seeing that opportunity. And then it is a leverage to operating improvement, operating efficiency. So for us, we did double digit without Aon Business Services. Now Aon Business Services continuing to come on fully online. And what we're now underscoring is reinforcing our ability to deliver that. You're seeing that come to fruition. So for us, we absolutely want you to stay focused on free cash flow. We are as well. And the opportunity here for us we think is substantial, which is why we're reinforcing guidance around this. But understand the mechanics of this isn't about a just a 25 result. It's about 25, 26 and ongoing well beyond the three by three plan, period.

Thank

you. Thank you. The next question is coming from Andrew Cleggerman of TD Cowan. Please go ahead.

Hey, good morning. So, you know, back when you closed on the NFP deal about a year, a year plus ago, the talk was of the expectation of generating about 175 million energy coupled with about 60 million in cost energy. And I think Edmund, you mentioned that this year you're on the track for 80 million in revenue energy. So looking out to 2026, how are you progressing there? What can we expect along these numbers? Any specific numbers you could provide around these metrics as we look to the incremental upside in 2026?

Andrew, thanks for the question. Maybe just a bit of context around NFP overall and the progress, because then it sets up the specifics. And so how they've continued to strengthen and evolve, which Edmund can take us through. Listen, step back. We talked about this on investor day, high expectations as NFP came into the Aon world, and they have been exceeded. It's been truly been terrific for us to sort of get a chance to work with this team, support them and they support Aon. It's actually been a great, great combination. And you've seen this show up on the revenue side and the organic revenue side, and able to do as well as on the operating side, which showed up sort of in the quarter of this showing up throughout the overall year. So for us, this is exactly what we hoped it would be, the platform, then the platform also upon which we can add the programmatic M&A that Edmund talked about as well. And really a lot of this driven, as you think about NFP overall, on the idea of independent and connected. Independent and connected has made a huge difference as we think about adding capability to NFP from the producer front, but also from an M&A front, us more attractive to others who want to be part of the overall Aon world. So I just want to set context as you think about sort of NFP and the progress we've made. And then against that, absolutely you're seeing it show up in the outcome. So maybe Edmund, a little comment on that.

Yeah, Andrew, on this question, the first thing that Greg and I both highlight is producer retention. That's because without that, you're not going to have any of the revenue synergies come through. It's better than it was pre-acquisition. And in 2025, we continue to be as strong as we were in 2024 on producer retention as well. And that's driven by the independent and connected strategy that Greg was just talking about. So first step is minimizing any revenue leakage. To date, you're right with the numbers that you mentioned, 80 million in 2025, 175 million in synergies through 2026. To date, we've bound several million in new business from joint activity across the business units. But as we think about specific areas that we're focused on, as we look at the pipeline of what we've accomplished to date and what's going to help us meet that 80 million number and 175 million number, maybe highlight two or three things for you. One is transitioning from third party wholesale to AON expertise capability that we have. That was exactly what we thought when we thought about opening up the AON store to the NFP population. Two is using our AON global broking center for international placements and specialized placements. That has been an area of growth and strength that NFPs taking advantage of and contributing to the synergies this far. And then we have mid middle market panels in place in places like marine and terrorism and builders risk places that are even certainly relevant in the macro environment that we're in right now. So those are areas that we're focused on to be able to meet the 80 million commitment in 2025 and 175 million in 2026, which we continue to be confident in.

Got it. And then just second question is around reinsurance solutions. You talked about double digit increases in ILS and faculty placements. How should we think about the dynamic with treaty? Is that kind of taking some treaty or do you see kind of an up list in both? How should we think about that dynamic between the two product areas, ILS and treaty?

Andrew, love the question. We'd suggest you step back a little bit and think about this isn't really from a product orientation. It's from a client orientation. We're literally stepping in asking the question, how can we help clients both defend the house, think about their balance sheet and what they're doing, but also grow it and actually build capability. And for us, whether treaty, faculty, ILS, all of these things sort of come into play as you think about helping the client do that. So in many respects, not competing, but complimentary. And for us, it's really been a great story from a reinsurance standpoint. We've just got such a remarkable capability, remarkable global capability that continues to get stronger. And now with the three by three plan and the investment behind it in analytics, absolutely tremendous. And we highlighted one of the examples that we came up with, the surge stop loss opportunity. This is a net new ad that comes into the fray that helps us actually be better from a reinsurance standpoint. And then Andrew step back and understand this capability as part of risk capital is then an amplifier, a big amplifier. So you've got reinsurance in and of itself, tremendously positive, continuing to progress with increasing demand, great opportunity. Within risk capital, now we're talking about how to take this capability and really embed it into the commercial risk decision process as well. Very complimentary. Now we're talking about the largest companies in the world, trillion dollar balance sheets, asking the question around, how do I understand volatility? And the answer to that is not a product. It's not an individual solution line. It is global and you may even think about just ILS and what we've done for commercial companies emanating from reinsurance in 2021, we did basically no deals, 2020 nothing. In 24, we did 109 and year to date 25, we're already at roughly 100. I mean, this is truly remarkable in terms of what the opportunity is here. So for us, this is the wheelhouse in terms of sort of net new demand as it evolves over time that we're going after. And so pretty excited about the opportunities here as they connect reinsurance and commercial risk. And the same story on the commercial risk side we can talk about as well.

Thanks. Very helpful.

Thank you. The next question is coming from Rob Cox of Colton Sachs. Please go ahead.

Hey, thanks. Good morning. Yeah, just a question first on talent. The revenue generating headcount seems like it's up 6% year to date and this push has been successful. I'm curious, has this changed your mind at all about the sort of run rate future investments in talent? And is this 4 to 8% increase annually for the right level to think about going forward?

Maybe Rob, if I could, I'm going to start with an overview, but then really dig in on this. This talent question is important. It really is part of the conversation we had on the Investor Day around adding content and capability. But I really want to touch on this for a bit. When we think about talent, remember the mission of our firm is client obsessed. It literally is helping clients make better decisions and get the better outcomes. Because of that, not because for financial leverage and not because we're going to move people around, our industry does a lot of that. We're adding talent to deliver an outcome. That's why we focus on priority areas, construction, energy, health in our priority areas. But remember, our commitment is add talent, better capability, but we've got to help them be better at Aon. So somebody coming over to Aon without the analyzers is not a net add. Somebody coming without the improvements in service and what we do with certs, et cetera, is not an add. So for us, Rob, this is talent in the right areas. And then it's reinforced by Aon, by what we do, by Aon Business Services. And then we basically made the point, and Edmund made it well on investor day, I'd love him to comment on it more now, is this is about continuous improvement. It's continuous improvement in terms of what we're trying to do on their behalf to support clients, but also continuous investment. And the machine we're talking about here is a machine that drives top line, improves operating performance, but also invests back into the business on an ongoing basis. So for us, we're going to continuously look at this. We're going to evaluate it. We're going to make the right calls. This is a top-level allocation. We're going to make the right calls in terms of what we're trying to do. And we see more and more potential to bring talent in, particularly because we can amplify the talent that comes in. That's also why they come. They're excited to do something to wow a client, to do something with their client they haven't been able to do before. And that's what makes us attractive. And that's the commitment we have to them. So I want to offer that view at a macro level and then, Edmund, talk about where we are in the year and what we're expecting over the planned period.

And I'll start by emphasizing your point, Greg. This is about meeting client need, meeting client need. If you do that, then you draw, and we're very specific about this word, Rob, sustainable organic revenue growth. If you meet the client need, then you can drive the sustainable organic revenue growth. You do that by making these hires. We have the capacity to make the hires primarily because of the eight on business services, ABS, and the scale improvements that we get there. I'll refer you back to the slide at Investor Day on margin expansion and growth and investment and growth. Where we drive this margin expansion through eight on business services, we get some benefit from expense discipline, and then we invest 40 to 60 basis points in revenue generating hires and other capabilities. The objective there is to meet our near-term objectives, double-digit free cash flow growth in the current year here, and invest for ongoing sustainable top-line growth. If we can get more from the scale improvements, then we'll invest more. If we can deliver in the current year and are outperforming, then we'll invest more. If we find the investments in the right areas, areas that we think are growth, it's not about quantity, we keep saying here, it's about quality, talent in the growth area. That is the model for us, is to create the capacity to both grow and expand margins that allow us to hit our immediate near-term financial objectives, but have sustainable growth in the long term as well. If we can create more opportunity to invest more, then we're going to do that with that in mind.

That's great. Thanks for all the color there. If I could just follow up on maybe a broader question on the economy, broad strokes, what are you hearing from clients and how are you thinking about growth and exposures in the back half of the year?

Well, listen, again, back to what we talked about in the investor day context. Look, these four megatrends we've talked about, trade, technology, weather, workforce, they just continue to be reinforced. As we said in the investor day, we were talking about trade a year before the liberation day and now it's been intensified massively and we're seeing that. I would observe though, listen, the three by three plan and the investments we're making, again, not something we created, it's something we listened to clients and we responded to. We just responded to at an industrial strength level. It is true, there is more volatility. We've been talking about that for a decade, more risk. There's a need for real capability to respond to that. But if you think about it, there's no denying the complexity, no denying the volatility. Unmanaged, by the way, what happens? Complexity creates uncertainty and ambiguity and it slows everything down, action stops, investment stops. That's what everybody's worried about. We think about it as complexity, again, no denying it. But if you can help a client understand options, real options, and then you've got solutions behind the options, they see advantage and they see speed. And be clear, our clients want to take action. But if pandemic taught us nothing else, it was inaction is not a great outcome. Hope is not a strategy. They came to realize that. They're looking for actions. And I'm just trying to think. One example I'll share with you, because it resonated very strongly for me. I've been having ongoing conversations we have across the firm with a CEO, one of the largest builders in the world. And we've been talking about, in this role over the last three months, and they've been talking about their portfolio of major infrastructure projects. And these are mega around the world and they're open for bid. And they're massive, as I said. But they're also complex. And the geography is complex and the politics are complex. And three months ago, they're talking about a pullback. Literally, maybe a no bid on a number of them. And they're just taking a hugely reserved position. We spent time over the last three months on a set of analytics that helped them understand ways to reduce aspects of volatility. We're not going to change the operating underlying aspects, but all things that surround those projects. And now they've got a brand new prioritization around what they're going to go after, real offense. And in their mind, they've got great conviction around the subset of these they think is a greater opportunity. And so what I'm trying to highlight for you is all that you read, all that's out there is real, but understand clients want to take action and they want the content to be able to take action with conviction. And that's us. I mean, this is the analyzers. This is the capability that we bring to the table. This is the matching of capital with risk and matching beyond just insurance capital, but really pension capital and sovereign fund capital and PE capital. And so it really is in that context for us, an opportunity to help clients take a step ahead with conviction. And that's real opportunity, recognizing the complexity that's out there. So hopefully that wasn't too much, but it gives you a sense on sort of literally what's happening in the market day to day.

That's great. Thanks for the answers.

Thank you. The next question is coming from David Motumetum of Evercore ISI. Please go ahead.

Hey, thanks. Good morning. Edmund, I was wondering if you could just size the tailwind to organic growth from the M&A services for both the total company and then specifically within commercial risk and then maybe help us think about it. I understand it's not back yet, but if it were back, how much of a contribution could it have?

Yeah, David, thanks for the question. I mean, there certainly is a kind of emphasis on M&A right now. I'd prefer to stay focused on what the drivers are today here. And M&A is providing a tailwind for you. I've said before, growing off of the base that we have for M&A right now, we have objectives of mid single digit or greater. You would need M&A to be multiples of that. You would need it to be four, five times that before it becomes a significant contribution to the overall organic growth rate that we have. The items that are driving it right now really is the core P&C business, the investment hires that we're making, the double digit growth and construction, those investment hires driving new business right now. And so we're going to continue to be focused on new business and retention. The other big thing in commercial risk, we talked about retention being up one point year over year. And this is an opportunity to even call it our North American retention in commercial risk, which was up substantially given what we're doing with our priority accounts, with our premier accounts, what we're doing in terms of expanding coverage. So M&A, I get the focus on that right now. It's a bit of a tailwind. I think our outlook is for it to be modest in the second half of the year. If it comes in higher, then that gives us more confidence in being at the mid single digit or greater levels in our bounce. We're not dependent on that. We're more focused on recurring organic revenue growth. We'll maintain our fair share, as Greg said earlier, of M&A services, particularly with PE. And we're focusing on expanding with corporates, but our focus is on recurring revenue growth. And those are the drivers.

And David, we're not trying to hedge here at all, but understand M&A services is intertwined. It connects with all of our aspects of our business. So it isn't just a transactional liability placement. It really is around a run-up discussion, or it's around a whole series of other things related to the P&L. So it's very interconnected. And again, I've been characterized perfectly. And you'll see it play out as it plays out. And it looks like it may be a little more positive, but again, very connected to what we do across the firm. That's why we're not going to really break it out as an individual piece, because it's really very, very supported by colleagues around the firm.

Understood. Thank you for that. And I totally understand. On just a follow-up on the 6% increase in the revenue-generating roles through the first half, already at halfway through the midpoint of the full year goal, maybe you could just talk about the talent pipeline, and if you think there's maybe the potential to get above that 8% growth in revenue-generating roles that you guys had targeted for this year.

And listen, Edmund described it very, very well. We're making calls on capability to help serve and support our clients. We're identifying capability to come in in these priority areas, and with a game plan on how they can actually come in with a high conviction and excitement about how they can do more than they've done before. Not the same, more than they've done before. And so when we see those opportunities, we will take advantage of them. This is not a specific target. Edmund's describing exactly what's come about, and we anticipate just continuing to maintain momentum. But listen, the analyzers matter. What we're doing on the client experience we described on investor day, next-generation client experience, as the world understands what that means at a micro level sitting across the table from a client, it's more interesting. When you can actually help a client understand they don't have to actually deal with certificate proof of insurance because we've actually digitized it and created an outcome with AI that literally makes it real-time that a client could do themselves. They go, wow, I get to talk to my client about being able to do that. They couldn't have done that before. These capabilities matter, and people see that. Producers see that, and they want to be part of that. We invite that, and we're going to nourish that as best we can. But it will play out as it plays out, and we'll push it as the opportunity is there versus just pushing it to push it.

Great. Thank you.

Thank you. Our final question today is coming from Mayor Shields of KBW. Please go ahead.

Great. Thanks so much, and good morning. I was hoping to get an update on how sensitive clients of different sizes are to elevated social inflation or legal risk in the US. I know on the insurance side, obviously, it's a major concern, but I'm wondering whether it's penetrating the broader consciousness.

Mayor, thanks for the question. Listen, again, client orientation. Yes, it penetrates everywhere. Everyone reads, and clients understand that in many respects, this is focused ultimately on them in terms of what it really means, absolutely focused on them. They're concerned about it, therefore, we're concerned about it. You saw in October of last year, the first to basically say, we're not going to support this because it really doesn't support our clients, period. We just said no, especially focused on the North American and the US theater. Yes, it's an area of concern, and we're taking action to explicitly not support it. We made that public. Others have now joined the fray, which is terrific. We believe it's the right answer. But yes, it's absolutely a known outcome across the board. Some more acute than others, depending on the industry you're in and the size, but make no mistake, it's a big deal.

Okay, fantastic. That's very helpful. I want to go back to the talent question just one more time, because we've gone through, I think, these many waves in the industry where company X is hiring and so on. I think it's great, but I'm wondering, what's Aon doing to not so much recruit talent as to train it from scratch or to grow it from scratch?

We would love to spend any and all time with you on this. This is what I was trying to highlight before with Edmund as well. This is it. Moving bodies around doesn't matter. How do you get better choice when you just move people around? You bring colleagues in and, by the way, they want this. They drive this. This is all about people. They want more capability. They want a better answer. The example I was giving before on the construction company, this is all about they got some insight they didn't have before provided by our colleagues, provided by a producer. This is taking someone and helping them be better. They're phenomenal. They're driving it. Now with the seven analyzers, they're better. They're a property analyzer embedded with reinsurance content. Literally, a commercial company making decisions about global property placement at a structure level with literally the information that was there from reinsurance driven off of impact forecasting is like, wow. A producer gets to see that they're better. Broker copilot, literally, we're capturing information never been captured before in a comparable way ingested so you can actually compare it real time. Our colleagues get a chance to see that and they're like, wow. For us, if we can help a producer be better in real time with a client and then with solutions and then as they interact with the market, this is a big deal. On the insurance side, if we can help them in the reinsurance market do the same, this is a big deal. For us, talent is about better client solutions. Talent has got to be about better client solutions. We fall short that we don't succeed because our clients aren't better off. For us, we're not trying to opine on what everybody else does. You're absolutely right. It's been tried and true. It's important for us that you understand we are different. We're not saying we're better, although we like our chances there, but we are absolutely different in how we're approaching the market and approaching talent. It's resonating. It's resonating independently connected when you tell it in. Hopefully, that's a little bit of color commentary on how we're thinking about it. Very different.

That was very helpful. Thanks so much.

Thank you. At this time, I'd like to turn the floor back over to Mr. Case for closing comments.

Just wanted to say thanks, everyone, for joining and look forward to talking to you next quarter.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off at this time. Enjoy the rest of your day.