AON - Earnings call transcript Q3 2017

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Operator

Good morning and thank you for holding. Welcome to Aon plc’s Third Quarter 2017 Earnings Conference Call. At this time, all parties will be in a listen-only mode until the question-and-answer portion of today’s call. If anyone has an objection, you may disconnect your line at this time. I would also like to remind all parties that this call is being recorded and that 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. to to and results differ anticipated. subject cause that or are results actual materially statements certain uncertainties risks could those Such from historical concerning website. XXXX results differences well as cause press Information posted covering as that on been in our release quarter described the such third our having factors risk are could

Case, CEO of Aon Now, it turn to and pleasure the call President is my over to Greg plc.

Greg Case

conference morning everyone. Welcome our call. Thanks much XXXX and good very third to quarter

CFO, Christa our me is Joining here Davies. today

the for reflect beginning that to recent year-to-date and our results, I and world. Before the communities events discussion QX a millions on would catastrophic around of have various like on pause impacted to individuals moment the

business risk owners remain to to condolences those without and or forced sincere out who go are to Our rebuild, at resources. families to sufficient enduring trauma, this

We families their the colleagues are across affected our of XX events fortunate very by X,XXX directly safe. were series offices and that Aon

colleagues to of human our personally put work tremendous respond tragedy all of the their the and times Red clients my forth With to focused express events. to ground aid Aon to time collogues unite up individuals effort Aon supporting fully we neighbors, of aftermath their who need. partners the During deck, the colleagues during millions begin is affected. and is fellow such and to help can’t through need of my I on partner and of in relief and disaster hands continued enough gratitude are devastation, collogues heartening firm Cross the our on these to a times volunteer of and clients. efforts rise see from in also offering it investing across on

today. of Now, our commentary available referencing that along back are for there the to slides highlight with website you on our topic follow this call, to like specific we’d to

of and our the proven on strategy As calls, a that result to we completed a is aligning steps Aon’s a the billion accelerate to additional further to portfolio significant our our strategy value. this arenas provides Earlier needs substantial priorities We’ve clients’ here. actions With prior our model, position highest solutions risk, of emerging of taken decade-long and deliver in operating discussed further. platform, $X Aon client health. expect retirement on we get year, investment around focuses our shareholder strengthen capital we current of our divestiture catalyst approximately and in outsourcing which for firm even substantially United to in

profile high-margin growth by portfolio. areas We’re high-growth, our already our improvement investments in seeing across driven in

has P&L example, taking in through global encompassing now both steps clients global And progress their our connectivity, accelerated toward Aon’s and we’re of XXXX in operating further deliver to helping For efficiency industry-leading global local growth and organic Aon with increasing XXXX. services investments X% and one to unit year-to-date capabilities, business a single all to to us XXXX from in their markets. of Aon’s all model, Aon X%

areas before on I presentation. two review. over further financial the like five turning with Consistent quarter the the previous to to for quarters, turning Now call would Christa page to cover of

First including areas continued is metrics we our performance communicate strategic investment. second, to against overall growth of shareholders; key performance

XX% model Operating effective performance reflecting and improvement. Reinsurance in by our increased Retirement by organically, cash management. and free and operating Aon the growth course basis performance our On expand over primarily the to was in strong we first performance share metrics. deliver topic, and achieving flow metrics on grow the In quarter, growth. organic operational per X%, EPS quarter, key we Solutions. growth points, XXX revenue investments increased operating reflecting both savings capital margin earnings our margins, the Each the increase versus measure highlighted focus against $X.XX, from of core strong third key United year,

Finally, quarter points the seasonally related payments XXX with was growth heading continued to cash strongest into divestiture. the and improvement year-to-date $XXX year. quarter progress million our Overall, of a flow margin EPS QX growth, tax organic free of basis revenue XX% reflecting primarily results year-to-date, decreased reflecting X% of

of Turning particular Health second prior of on mentioned are declined comparable modestly organic included core our investments. in negative, certain X% growth Solutions. stable quarter. to revenue impact And organic strategic now the five across benefit reflecting X% X% lines Organic growth positive average, revenue slide all the pricing Reflecting year-to-date and growth growth seven, on a revenue and prior impact X%, Solutions, overall. each as the organic on Reinsurance the basis, in On exposures The from the quarter modestly was Risk and was strength resulting I onetime against was year from quarter. platforms. in strong globally, market in revenue growth relatively a growth overall items. Commercial In year with earlier, topic third of a

the Asia modest in internationally across items. and reflect Our results renewable In timing management generation the results portfolio. U.S., new the headwind certain of of faced EMEA, strong by driven the our quarter Pacific, and growth business from

organic the this reinsurance In growth organic viewed is an the year. comparable efforts catastrophic smallest immediate quarter, X%, recent we believe in of I timing benchmark an industry in in results was in We an delegated acceleration second revenue from the prior-year strongest Americas. growth quarter. basis including clients in would the In demand a reinstatement Solutions, Commercial in note, particular placements, reflecting for would the on of prior the X%, Reinsurance the Aon’s our our across flat partially saw challenges, our solutions, helping underlying significant highest a We in benefit growth events and treaty quarter. client expect the we quarter facultative Solutions Solutions, tailored saw global better achieved five are in consulting, business prioritize recent advice, reflect modest generation following investment by Results the transactions offset X% Retirement events. in were independent by with new the solutions, consecutive new action strong clients strong unfavorable premiums prior and as quarter unfavorable record market reflect from in and to show as was plans, strength and in our in year returns. processing the several the of treaty confluence and in area Aon from our to events acceleration quarter. a fourth growth in double-digit for outperforming third performance and against increase well believe organic the quarter continued growth claims [ph] years. Given impact, primarily fees We capital seasonally results in driven revenue business investment teams Risk Results placements. every level year-to-date increase recovery for quarter. growth Overall, modest, management a including markets major including growth seasonally placements, revenue

Assets quarter. under management and a trend delegated reaching billion investment the to management third upward, $XXX in continue

& the a strong well Services, benefits activity. primarily organic X% in also from survey primarily revenue services. saw solid pet the saw revenue In X%. was as financial particular health brokerage Health practice, the performance growth from in were X%. strong acceleration the U.S. particular reflect Analytic strength modest partially prior America. strength an In in business. our increase in Affinity processing X%, our following year. a exchange was in organic growth growth in basis, recent talent the including Latin We in highlighted year-to-date business, growth in and in revenue On Solutions, was our Data in with double-digit with Affinity growth U.S. the Growth work solutions and We business employed new compensation Results growth was U.S. as benchmarking project-related decline claims offset by in healthcare continued in organic business generation by Results a and and

investment. areas Clients capital to and new economic, slide world value the Now, increasingly help forces navigating to exponential create converging of technology and has eight developing create needs. Aon client all response of are volatile innovative, differentiated for discuss change demographic turning where are track first-to-market in to a with an businesses. a record strong to combined to reality strategic problems solve challenging solutions geopolitical pace allocating specific for of

the colleague Townsend a In third the we return increased M&A generation, position real expertise services, of business investment the to advisory share announced advisory health; Analytics acquisitions to Aon’s alternative, in areas across billion scale multiple areas geographically offer estate our were and our of and a & Re/View needs InPoint year-to-date quarter, reinforcing as performance of We’re significantly expands immediate double-digit asset and Overall, cyber management we pending across strong health reflecting summary, client and such investment global Analytics, our firm’s and attractive, primarily the & broadest solutions Affinity, in strategic healthcare new Data new initiatives, finally, addition depth leading assets through $X.X in business; improvement we and our portfolio. market by growth investment of pilot delegated our strong operating through and across in in growing driven industry-leading capital provide the ability exchanges, clients. in client recent management retention risk in distribution business growth Latin delivered rates, bringing leverage areas and recent the leverage our benefits investing elective long-term acquisition of estate demand. in with our operational Friedberg; UMG, the approximately in the where real pending with increased of repurchase through portfolio rapidly greater and the growth, the on acquisition furthers capabilities by earnings improving where quarter, businesses; and in organically are dividends. operating shareholders of America to acquisition and profile, the of our real on Univers; capabilities Stroz of focused and through to investments brokerage and high in the set to more Netherlands; solutions, during provider Data priority, In Group, Townsend the estate. and Admix

forward, the next level momentum a Christa value to for wave financial of year over an creation innovation call Looking shareholders. Christa? driving turn I’m to with for review. to expect by unmatched and investment the we substantial the of for continued strong further finish now clients amplified pleased our

Christa Davies

morning, Thank you so Greg, good and much, everyone.

progress efficiency of effective marks and Greg model. highlighted quarter of management take significant solid by noted, the effectiveness a performance our improvement to to increase capital our operational while steps strong continuing operating As and

line, reflect across major revenue operational year-to-date our into year. quarter seasonally results earnings the Our of improvement, growth and double-digit every strong heading strongest growth

slide to the presentation. of XX Turning

the to share schedules third Certain and quarter. prior-year in core tax quarter U.S. press charges, in intangible certain items per operations, pound Our quarter, to versus that core compliance prior-year the per in the from EPS for a charges the excluding restructuring translation share adjusted dollar regulatory and from in a XX% Included in the release stronger on to asset related currency impact. compared increased the a primarily certain the performance include modestly to were $X.XX expenses items, for XX continuing and results the pension overall. $X.XX foreign impact non-cash related was of weaker Page favorable and settlements non-cash and due the $X.XX EPS XX related to matters, highlighted amortization, dollar U.S.

improvements year. against million from $XXX savings minus and as $XX points revenue points to savings pension operating before offset transaction million or the XX operational solid increased restructuring minus to to increased points by Turning points margin the year operating points reflects prior million and strong $X investment by other and operationally $XXX XX.X%, Operating income. improvement million XXX to any we standpoint, performance. primarily before margin $XX basis XXX increased XX the to of of basis next $XX resulting reinvestment. or execute to partially operating non-cash firm. multiyear our growth improvements, From by Operating recent This discuss initiatives with related and organic margin slide dollar continue to costs improved acquisitions, basis our income basis has XX% progress operational the compared driven compared XXX million quarter. million strong has in was improved and operating or income prior delivered reinvestment lower operational a XX% Year-to-date has headwind, from income basis core and

colleague the spend making flexibility generation moments business investments global Turning to experience. few discussing These enhanced for to to increased one and like we’re intended are that I’d allows better model our create services create XX. leverage. page next client to and operating with model scalability, operating a investments

optimization, in to real create real expect engagement centers people, expect IT, Our and estate, data across investment greater providers. to optimization. third-party of we application real consolidation. insight excellence primary drive In and operations center are from of we to areas And including management through scalability and estate create estate the of vendor activity, expect people. we and IT, greater In and use portfolio collaboration greater strategic

Overall, these of As part of operating $XXX in estimated incremental the total investments, $XXX These And to expense expect an CapEx, expected other initiatives in million There included estimated reinvestments. in be million in is and $XX non-cash we $XXX divestiture part XXXX, any additional in asset we an XXXX; total an discipline cash billion annual million investments XXXX, million consolidations. $X XXXX; XXXX; $XXX and outsourcing incurred charges XXXX. deliver model as before include $XXX in be $XX million estimated cash plan charges and of XXXX. million expected of $XXX to incurred million an to and of million these million out potential $XXX million invest to proceeds. of estimated $XXX lease in estimated of impairments million $XX in investments savings

million high-margin to areas in capital incremental of from operating model, the our invest portfolio return this $X.X high-growth, left with investment proceeds approximately divestiture across Following we to and billion in our are outsourcing to shareholders. $XXX

We will capital on opportunity. to the highest deploy this return capital invested

year-to-date mentioned earlier, to through approximately billion shareholders we’ve repurchase dividends. Greg and As $X.X returned share

in our Townsend the two coming and acquisitions to announced also business, the We investment Group significant which months. in quarter, management are during expected the close in Netherlands, UMG delegated the

activity, $X of over billion of we’ve acquisitions business. in in M&A and committed completion With XXXX capital high-margin to year-to-date these the high-growth, two

In incurred the initiatives. estimate. $XXX $XXX million primarily general charges, of page. relating third the program the of next outflow quarter, the of restructuring-related year savings XX% of representing workforce Year-to-date, total reduction, total million of to million $XXX we is savings. million. and expected the the cash third Turning of and quarter, incurred XX% representing of impact charges, expected restructuring-related The to other we’ve recognized an in savings for We year-to-date, the of million $XX year-to-date $XXX savings XX% and IT

M&A additional income of slide expense rates in million liabilities net and income balance reflecting capital down would Interest interest to expect depending and certain I $XX we of Now, QX. in share offset million losses not the currencies, the to impact level of operations $XX million on the compared for through let non-functional related re-measurement on cash primarily the gains sale of the forward. resulting Interest million short-term to income $X on expense note of was prior the $XX at income to includes of exchange line balances by repurchase such for earned increased unfavorable Other going that $X of deployment similar assets same of few due outside investments. partially proceeds of long-term assets. to million $XX quarter, but a items higher XX. the me million discuss QX additional of the of outsourcing balances the coming would in from that interest are the year

effective Turning the increased tax items. from quarter. the prior to reflects from tax impact net discrete continuing applicable in XX.X% to excluding income favorable The compared the rate effective year on non-GAAP adjusted impact taxes. net with prior adjusted certain rate in associated to XX.X% The adjustments, tax year a certain operations,

X third XXX.X million X.X quarter A effectively quarter, to in Shares were prior-year Company Class subject approximately Actual capital. million on to dilutive Estimated $XXX beginning authorization share XXst million and outstanding million September quarter. compared XXXX remaining million movement, dilutive The in and in were share million, additional allocate repurchased XXX.X is the QX X% repurchase its Lastly, average issuance has XXX equivalents. Ordinary there for repurchase. outstanding share share diluted billion XXX.X Company we approximately shares million program. weighted shares of count decreased approximately the under price to share approximately The $X.X third as

outstanding to which to cash XX, discuss increased outsourcing to X.X debt modestly turn related the times. on flexibility. billion, decreased me from Total and balances higher the $X And EBITDA sale XXXX, reflect solid to next of GAAP continues investments sheet similar to slide to a to and short-term the September balance at At the total assets. let proceeds Now, basis to billion. operations financial our debt was continuing $X.X

debt operations driven improvement. range flow tax $XXX of payments $XXX million while transaction cash million, offset million initially the million, the EBITDA operational the sale divestiture, end restructuring an previously, charges $XX by flow divestiture, from costs first the months in with and to cash as defined assets, by by including be nine cash driven return operating will to we operations discussed Cash to cash flow, our primarily result XXXX, decreased driven from in million elevated As decreased the by expect the operations CapEx, of times by operational million associated partially the deliver $XXX related by improvement. to outsourcing of $XXX model. for to X.X to of $XXX X Aon cash million a of decline CapEx, a and a less United $XX to investments Free increase flow to from back

flow flow $X.X record firm to cash free to growth based Turning of and reaching cash term. the allocate substantial in cash free free flow progress value metric flow since XXXX. as billion next the key financial on free slide over the returns. our to discuss introducing We We’ve maximize cash in long free a made flow cash capital XXXX,

Our on we’ve basis disciplined improved maximizing in capital, to focused XXX increasing capital consistently invested each XXXX, since points which year on management approach return XXXX. is XX.X%

operating assets and Aon beyond. this outsourcing our to and the improve United even in further expect XXXX sale investments of We model in recent our

dollar amount of to nearly by Since flow taken margin including to the cash maximize to We significant XXXX, pension X,XXX each working increased free contributions. cash our capital of into actions XX.X% our of in revenue highest points have initiatives and the flow, steps XXXX. cash manage translation free we’ve basis

Looking contribute primary forward, free to to there generation. expect to we that are incremental continue cash flow areas three

improvement, continued driven operational growth is expansion. by first The organic accelerated expected revenue and margin

is working receivables improvements, closing we second focus and gap as the capital payables. on The between

summary, to solid long our the strengthen firm a free cash over the growth growth million operational investments reflecting strong third Aon by And significant in the our high United our improvement earnings We We combined continuing generation working is financial lower and believe on expected delivered long-term. this over firm adjusted cash take over steps We time. tax to rate payments, $XXX capital proceeds to effective and substantial of and flow improvement deliver term, $X.XX over progress. in with exceeding operational double-digit areas near-term including lower In tax from while transaction was a flexibility that expect contribute quarter to of free flow position XXXX. in underlying goal operating in model. to EPS cash

believe More value-creation believe the next the what over in call this our cash that flow the growth is shareholders. significant we ability annual opportunity With questions. importantly, long-term, operator reinforces turn to back the for free over to double-digit we like deliver for reflecting to I’d

Operator

comes is Ma’am DeWitt Instructions] from first your Our from J.P. open. [Operator Morgan. question Sarah line

Sarah DeWitt

morning. Good Hi.

organic wondering about just in decline was Commercial you Risk drove the on Solutions. I growth, First, what if talk could

insurance expect the just you to active about outlook mentioned pricing, And that third for hurricane post I second, you think, timing then forward? do quarter And season? going talk some rebound could issues. PNC you your

Greg Case

do Sure, to that, happy Sarah.

the course remember, the over said, of and about essentially quarter really comparable talked it, first of the fourth QX. As timing this our our was into X%, up is QX strongest we of our the strong heading is QX -- QX last and year the sort smallest I year of quarter, in showing all, from quarter. described,

of year-to-date where from essentially terms and over we expect in gone said. but this try not in of accelerate ‘XX where at kind we overall context back think coming you can in QX a to and to continue really risk of we we QX have overall ‘XX, X% highlight this we believe we So, But, ‘XX, of time. we results, commercial just as the ‘XX, really If the we We what are, as if a anomaly don’t -- our ‘XX, sort anything in is think of and a of see best assessment little to is that in QX. X% perspective, year-to-date really all in we in X% kind ‘XX, that. look

Sarah DeWitt

Pricing…

Greg Case

speakers] Pricing side, Listen, been piece, I pricing and about. obviously on a thought you might written forget lot’s talked [Multiple the that.

on I described basis. event these they’ve invested just from look, of time, uncertainty particularly look unclear losses, I view out to event -- of a substantial amount great we of and a to from at a over how would been -- analytics of over to Aon’s ranges would very client But versus by balance We client just perspective, time a of an sort us of in time be say, come kinds Our continues sit where in clients, in there. of out position help a is environments. all from is substantial, in overall. kind put this is a much there look, time. see where of of to The published, the sort our believe highlight they capitalized we tremendous shake in earnings been data well in. terms our we what We’ve very still industry sheet while astronomical terms they’ve sort in we’re standpoint, ultimate more

opportunity going look take that, client we’re we types evolves is you answer and standpoint, going this create Client them. Treaty risk the time. it point. frankly, over to to it these out time. client with From Aon as specific our by Sarah, over If it’s reduce play at there example, no for for investments And work what at are do for of clients

Operator

question Jefferies. comes Styblo with from Dave And your next

Your line is open.

Dave Styblo

income. to to operating want back just I go

right the underlying a XX.X% pension I from if basis, you cost and cost back $XX $XX you to the a Is So, of which year-over-year. the expansion. get the would if plough around that flat guess, and sort we million I take obviously, of it, think core margin transaction about savings, unfavorable margin should show And on XXX and or that, costs, the be guys for of M&A some adjust out savings? way did did adjustments million some back of

to on what’s basis, exclude happening some when the puts we there. understand a trying just fundamental of and larger takes I’m So,

Christa Davies

I think about year-to-date basis lumpy And this it’s think because quarter. frankly, a a is seasonally I on quarter-to-quarter, little QX smallest Dave. our

look And at year-to-date, that you can it so, million. if $XXX see you OI is up or XX%

that you came improvement. restructuring look core from If million of it at and $XXX came million million, $XX it of operational from $XXX

and got So, expansion. from from XX% growth you’ve basically XX% reinvestment in and of organic growth before of savings it the core revenue OI restructuring margin

So, we are the the up really points. the good year basis and for about operating XXX year, growth for margins income feel

so very the far. we’re So, pleased progress with

Greg Case

might to that, I add Dave.

of we’re look just to better -- metrics, each in did you you against QX, highlighted it as QX the from year-to-date one QX. If same Christa you at exact really results, XXXX, if question go QX those QX

So, XX, points the QX, that QX, was in basis it’s XX%, XX% up points up number was and year-to-date up basis XXX year-to-date QX, same year-to-date that XX% plus EPS a was year-to-date we’re QX. QX a as XXX Christa described

continue where we invest to really global in overplay, So, of actually quarter performance services nice as core as but we platform. what it, is of you’re terms a in seeing described and And business And operating leverage the it’s progress progression. a increasing we’re. don’t

Dave Styblo

you should range. sounds savings as I progress, that unchanged your run rate then, from assume it kept $XXX for increase. trending, into that’s guess, And year. of just to cost it. I But, at above on going how the XQ million you’re same look your you And target, XQ, savings would got the things are you if if cost that be actually Okay,

come you for be quarter? that are is might cost guys above something your actually in year target this trending in down savings there fourth position that or So, the you where makes

Christa Davies

so Dave, good we progress we estimates track the really about with on the exactly and feel program far. are

Dave Styblo

million. mean, we is -- sounds the like So, are why reason there It like it down? holding $XXX I sounds a to you come

Christa Davies

will We are holding $XXX update we million year-end. and at

Operator

you. Thank

line Our from Blair. question William Adam comes next open. is from Sir, Klauber your

Adam Klauber

and you’ve like billion securities It cash you on And sheet. historically, looks got to like $XXX more of so short-term $XXX roughly million. the or hold balance million $X.X

you So, for $X.X the that you XXXX that suggest then versus what XXXX? about you have what top to would for roughly that Is have year, think next to extra way have you and billion on deploy of cash generate.

Christa Davies

Yes.

I publicly think that’s quarter. Adam. to you We what sort at And guess, $X.X the we say is, committed those deals, of right, the I would the million did in of is look $XXX M&A two UMG. I announce billion, Townsend it as did and

So, QX going $X.X free billion into you cash flow left have plus XXXX.

Adam Klauber

were that I free cash much tax think you this How mentioned reduced quarter. those? payments

Christa Davies

Yes.

billion. haven’t of We were that number. $X can sale we the from the outsourcing the assets given But, what approximately that say is after tax proceeds

Adam Klauber

of done to have deals or Does it to sized those see that deals is you’ve in digest a mean and already good do you growth couple a then, some pipeline, good still good possible And have Okay. XXXX? areas. in more you

Greg Case

see, described, listen, year-to-date as acquisitions M&A front. a content over capability on Christa the actually From our done, real the We standpoint, here billion committed XX to again, add to and signed overall closed portfolio. $X we’ve opportunities

heard we opportunities very you’ve say a that us place to gets As cash exceed which a times, very, when return we put a multiple that disciplined But, through investment. repeat I’ll on in Christa has approach it very invested again on this. today, very, capital so take here benchmark find believe cash the return; is buyback, framework. we is the And is framework, of very essence, attractive in lots of example can kind of opportunities robust we capability of that, terrific a a terrific these a as out substantial that UMG’s add-on of is Townsend there we invest scale. example content terrific and in pipeline, America Admix we those. that. that And there Latin that see family buyback, [ph] Aon a in acquisitions and is example nothing to

out along different to lots framework of opportunities I you’ll the see us there continue and described. for So, invest us

Adam Klauber

the as overall in quarter? finally Townsend, fourth good And business not margins on this generally deal flowing at the or better line, business. as be are the will that in And

Christa Davies

Townsend And won’t margin are expect are about that flow fits do months. and portfolio. than high the cash And with timing both generation. they they coming close We of evolving story high We to and how that. are are growth, very the be in we more They the businesses. really they free -- high are that’s overall specific UMG attractive

$X that what and of M&A lower exiting disproportionately businesses, We’re that’s we year-to-date we’re margin, about flow have lower over committed and cash that. free we very you And lower investing. billion growth, have generation the are excited in seen

Greg Case

And firm. And in do is strengthen into Adam, then underlying it like global another catalyst, to side back the are financial can of table only and to business the if of put really services those as this both acquisition the we level which really characteristics. as capability across to generates see outsourcing the we a we our business, across the the going the drives we Aon business, -- is well capability but can the idea to is of and is investment on back firm. -- the on what behalf bring that saw And we really investing unique the not -- that content the characteristics each like, client we

deployment. So, over it opportunity years, three unique think really when is we think two to coming about we capital the

Operator

line open. from Sir, Kai Stanley. Our is Morgan comes next from Pan question your

Mike Phillips

with in decent one margins. questions, quarter, lots In basis-point impact to improvement, FX Couple improvement. here this of the the behind that, of guess, margin Phillips much of of moving parts Pan actually place FX. Kai on the is XXX one It’s improvement? Mike morning. the How I

Christa Davies

for So, FX quarter. margin the impact no on is there

Mike Phillips

on grows margin, you if margin more? that was, thing growth the with that mean X%. the same what can then, it being And organic expand Does organic even

Christa Davies

Yes, we can.

what low are have the margin our the model can so, we in last And due growth. rates you is to United seeing, at in growth, investments margin areas higher over higher operating years, few we Aon grow made investments of

And expect we where the should based Greg as so, on margin And expansion. said, expect made. we accelerate investments have growth do accelerating that’s to you

Mike Phillips

pricing about you risk possible take maybe are any and possible they of possible not can and closing there? changes they price the changes, talking you opportunities excitement are maybe of coming and can talk guess, have brokers Lots the difference. focus on advantage the how disruptions of with because maybe guys you I any brokers that, and with you’re there is to to the the restructuring possible possible to risk guys about doing,

Greg Case

of First I just back. all, step would Mike,

when in question the is of of and for on. uncertainty her what’s asked terms at for have in we is over Sarah The capability, clients there tremendous actually described us, literally a position. going time, out a That uncertainty in puts analytics wheelhouse of I the that Aon. content beginning, there means invested lot us our As it

create a we estate And the emphasize, mitigate and our making greater are understand clients investment. real are risk the also is of restructuring a what strengthen in I front we measure investment things areas really colleagues to risk, that’s client back in we to into areas the to bring risk. but also Our doing is substantial our on investment want together. doing. are it to number It firm involves firm, technology,

across lot a to But So, stronger on all clients. is Aon. firm it fundamentally engine, make going serve a Aon is to stronger

to very we this them. exact stress our are support over time to we is doing So, the for so another I’d clients, clients opposite. helpful example of firm, can be What go high and strengthening a time

firm. opposite. fact invest see So, I the opportunity what an To we in doing. to us, that’s exactly this exactly And strengthen are to is the

Mike Phillips

get pretty any you see brokers are confident -- by making or that the won’t restructuring distracted risk like don’t you there? It sounds and whatever

Greg Case

think focused on all concern Again, Quite there all. see at so about, don’t and reverse. is what Aon XXxX team that’s our fully any clients is the I

Operator

Thank you.

is Paul next O’Neill. from comes your open. Sandler Our Sir, line from Newsome question

Paul Newsome

next or was wondering current next accounting view, financials not I going system change that about year have a goal a year? to we’re X.XX not where revenue And next revenue you the the exceed or an your upon one the year with recognition or just dependent view update whether change the recognition? might in maybe the how get is to

Christa Davies

change So, be re-phasing quarterly but largely solutions, changes immaterial of there by really going quarter. XXXX XXXX. accounting to will year margin; revenue revenue of a reinsurance recognition really within revenue the to given within particularly to significant and year be full There will changes the impact it’s timing a is year, full immaterial

we year year QX is at full note our quarter would full I the actually XXXX to thing other full XXXX by day, XXXX for detail year restate The will that earnings and give of you benefit shareholders.

Paul Newsome

how well? organic in change it any growth way as calculate Does we

Christa Davies

going we’re restate XXXX, to Because no. and XXXX

Operator

you. Thank

Arash is from line KBW. open. to over Sir, question Soleimani last your Our

Arash Soleimani

lead business? a the events and think within lines penetration get extent what in the third to wanted saw insurance thoughts you insurance quarter of I just protection actually gap could to to higher certain the in we your

Greg Case

individual customer, for with deploy products it deployed, literally a the how and And that. would the of different as, companies times It’s little efficient protection think more gets a we quite and sort think across to say, that of and think a at a is you types differently out events of These about if sort side order at from we’ve we just client this of look a Because talked are it that industry innovations about, saying, the literally our terrific differentially. trauma. are actually I you buy product. risk in events there of gap there actually capital spectrum, of We believe highlight kind look of we’re that. about is. question. individuals in a -- more Aon, come uncovered ways that an has we about from there talked a gap. And it We at be in bit there or have and better position, literally to essentially about

there risk sort so, out of not loss I view about you the if loss world, is right U.S. in billion and is build an the tremendous we The little cyber kind clients is, again, respond June existing different was recognize about and one $XXX new obvious and cyber of a the strengthen risk And actually right how of XXXX reported of industry. which we are to in we’ve just you like mean, as is the function our support more in Europe, is around another risk there there an innovation when current the cyber. is the respond how which you also now, of that, product think like and like effect upon of of world It the going May, straightforward reported just innovate in got but flood penetration or to loss. think $X.X last into or are to going year, with we in to attractive, true that to wave really that that How premium. laws which $X actually for to billion than now. billion come flood more make the coverages got opportunities create

very to So, is mitigate there clients really going the opportunities they a to increase we penetration, of in understand, and measure, to believe innovate but to risk, set happen. industry as our serve more that strong order require it’s make effectively

Arash Soleimani

going $X billion is my and up cyber of billion you just heard of lot we -- since years. $XX matter I And one other question cyber, in of the to a just from know estimates mentioned industry

that opportunity in what next do at see about do you books, how level in the based growth demand potential think So, increasing years? the few potentially or on seeing your you been own you’ve

Greg Case

it by at needs. client see we -- growth look we driven do fully Again, substantial a

literally the it Europe? cyber I’m -- because that Obviously, mean, saying of U.S. virtually again, reported is of $XXX you is. I begs think was So, no the question, just there the if U.S., reported, about there billion in U.S. from loss just most

a So, is It’s function change. which it -- many of smaller? Therefore, cyber those so some number go to multiples is the that. of are much laws, a going is why to going

of And us. help be cyber. So, it’s source and we to growth of see tremendous for will a for deal opportunity us, with to understand growth continue source clients been a

largest We’re privileged category. investment it. to clients Having be down and our continue around our world this on the Aon, said innovate for industry on place we’re of that, in including to the this to doubling need behalf

So, of because a we see opportunity clients. substantial as source substantial for risk our this a it’s

Operator

Thank you.

question of is from Fargo. Greenspan line Our next line Elyse open. the from your Ma’am comes Wells

Elyse Greenspan

mentioned -- bit was know, would better to quarter? in hoping there? the What’s saw spend obviously wasn’t you of a I -- of improvement was growth think margin then that strong get and quarter, kind quarter restatements the as of point then, rest to? of pretty you level you that timers at helpful that any one doesn’t more growth. little to I It’s the It And this was terms in we the I there a business. improvement reinsurance run margins the your margin outlook in about of saw there second that of lot you color would typically, think business, reinsurance there.

Greg Case

the start on look of I side, margin we the kind much sort the we of side like all, Christa don’t the at piece? you look and don’t pick First year-to-date. Why up revenue -- at can talked we on of revenue about quarter,

just have are I that’s over come clients. again, a back last well-positioned highlight just the We we on and tremendously great reflecting years year-to-date. they X% reinsurance to actually multiple superb of kind would side, support on think few calls progress. the We’re team

to approach, helping this And ways side. clients overall about on treaty was saw business we’re number and new like again this to et one as existing number facultative it in clients volatility. record we understand Aon like in placements, the arena. quarter, also essentially securities number but And on in our share agnostic one new We’re insurance, this are treaty, control in Also, think really with the market one you gain with is cetera. clients we and what

efforts position. just expand So, exceptionally team also we taken the great marketplace. This to an got strong has

existed in done side hadn’t what mortgage think markets and literally If area net we’ve the created that on an you before. about new

there reinsurance over from increasing an the So, again, as I deal what exceptional out to clients time. volatility, you team. and understand see is just said have front need continued is of on which lots progress that And with

been just a very, context. progress in terrific it’s this So, team from very strong

margin, of terms impact Christa? on In

Christa Davies

Yes.

operating growth Elyse, whole margin five XXX It’s driving Aon investments growth expansion is So, really areas, model Aon. of basis in across each of savings say then, the are the lines the the in would each the that are of United new from a and year-to-date driven we making in those we the we revenue that. underpinned strong we have by and points by margin of

So, the isn’t area particular of disproportionately by any driven it business.

Elyse Greenspan

in And some more several into seeing quarters guys laid of few and saves past, how savings I had good initially you that the know a plan. record you have out plans. than had have a track for then, you are this exceeded prior your you

see we with So, could road? few you there you is in, I how going a you’re be the as a potential program? seeing are that along down this And up guess, do the quarters things revised think

Christa Davies

would are we say track. exactly on Elyse, we

$XXX million earlier said update are call, we we good with next But, deliver to will year, -- very on the I $XXX certainly say, track As million this about $XXX year progress. feel we year And would at million year-end. in the exactly we the and after.

Elyse Greenspan

you near And are obviously pretty then, going in flow have in off these was divestiture. following think of quarter. in we the obviously negative acquisitions level free the of quarters you cash How And buybacks, to you do terms here, the that high about buyback the of that given come have two buybacks two term? close

Christa Davies

$X we $X as committed year, billion so said, year. have over what between and billion And buyback this far billion of returned, have Greg I we to Yes. done have far would buyback dividends. I so and is say, year-to-date roughly to $X shareholders mean, M&A we Elyse, this

and QX see all in I more by buybacks. think return And it’s driven on capital. will is more you what M&A

left generation, amount we balance got you which sheet, cash As or flow you year. so deploy, seasonally billion have free with the quarter $X.X QX committed M&A about the of plus billion our with can balance XXX, M&A, strongest spend think the the buyback on of $X.X you’re on it’s cash is whether on the an sheet

repurchase. M&A, opportunity across about to capital the And so, highest opportunities, are on share and very in our organic in invest excited we Aon opportunity remains return

Operator

now Greg to over remarks. back call to turn would I the for you. closing Thank Case like

Greg Case

I the very just much. want today, of forward quarter. everybody being thank to part conversation call Thanks to our for and next look

Operator

you concludes Thank Participants, that you, speakers. all call. conference Thank today’s participating.

now may disconnect. You

Aon (AON) 27 Oct 172017 Q3 Earnings call transcript