AON - Earnings call transcript Q1 2019

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Operator

Good morning and thank you for holding. Welcome to Aon plc's First Quarter 2019 Earnings Conference Call. [Operator Instructions]. 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. Private note constitute of forward-looking certain as by to today's comments in important of defined may Act call statements the is that the some in nature XXXX. It Reform Securities that are Such that cause statements from results actual uncertainties anticipated. materially could or differ are those certain to and to historical subject risks results on quarter concerning our having press release the risk described are in as factors Information well our website. that XXXX first differences been as could posted cause such results covering

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

You may now begin.

Gregory Case

morning, Welcome call. good and you, XXXX quarter our conference Thank everyone. to first

Joining me here today is Christa Davies. CFO, our

start operating margin double-digit XXX in an year, and with FX overcoming growth long-term continue performance the we Aon headwinds. with we the world. our of of increased Aon to their Mike our tremendous the rate have calls the to lines; Eric of Co-Presidents, expansion Their my United the EPS, more and provide substantial on collective you including O'Connor, X% through across website quarter, first presentation all at work addition, the financial points; reflecting work. reflected discussion strengthen I'd colleagues to strong our for Andersen as quarters, the income XX% quarterly across detailed lead these acknowledging time X% growth, firm efforts the joining create to today help by a view firm. our a Similar we key around in posted growth into and session frontline basis of momentum, In insight to previous positive of to or focus perspective two longer-term Q&A start metrics growth; operating our meaningful like solution revenue organic

actions the Aon strong direct to of United. start taken strategic initial success is drive XXXX progressively we've reflection Our from a to

best over clients. XXXX, a and it easier progress X United decade, clients: down X make against; the relevance of and X content began we've to firm, steps a new X professional to and the model with ability reinforce investing Business major to most services increasing on effectively. total self brand; we've through in new took deploy all deliver P&L foundation leadership capability serve Services; evolving been and compelling, our changes the In firm operating previously, for clients portfolio, team; we laying to and this under structural global barriers Aon united relevance discussed to focused broke that our and capital for amplify Aon to As our increasing strengthening our more

and client Ventures group to specific superior by industry-leading identifying with accelerate [indiscernible] with largest innovation solutions focused industries, to then to also New can to more our Group or of capabilities their Aon lead United creation faster be market. address objectives. clients And efforts for time business scale with and the enterprise solutions the development and similar We formation dedicate leaders of our clients client-driven applied organized that speed broadly value more our greater that our to teams with

announced we During Intellectual develop our our QX, first Solutions. Property portfolio innovation to with commitment

tangible balance sheet. intangible from a the more on comprising IP than to shift assets As assets of assets, with ever, businesses majority paradigm recognize important is the the tangible now

that execute team truly surrounding trusted have establishes the the already strong intellectual Our the our recent place, and West acquisition demonstrated IPS maximizing as area will over be business-critical Beginning in we actions, long-term. believe transfer substantial of for develop With clients the data with opportunity for property IP the portfolios. identify our are shareholder XXXX, era class, Aon United. in of value more need the putting both and The global risks foundation been of already strategies in a set Aon we've to risk we revenue an has authority combined from accelerated consulting, and developed in proprietary to and of with XXX asset that Aon XXXX, their evaluation start and manage growth. offerings

As the continue long goal outlook the predominantly be by of driven trend quarter. X% our improved year revenue X% growth and see or greater to to our these driving factor, can XXXX, and And X% in mid-single-digit XXXX in you and from reinforcing for firm XXXX start term. key improved a the the will XXXX, X% XXXX in actions is in of organic growth now This largest X areas. over

core First, complexity. operate in and with in Health inflation as increase growth with cost And deteriorating significant care wellness. continues the underfunded around are geographies employees to Risk unprepared we globally. most a world of world's long-term magnitude many has both in baseline, retirement. pension markets attractive with plans the for

XX% in rates primarily retention average client Our are XX% with revenue markets, recurring core these high businesses portfolio. of across nondiscretionary approximately characterized areas on across of the strong by approximately

market, data insight As they across of the and the and This and today. world size needing we commercial is and the team topics across data and standardized uncertainty unique Inpoint core navigate analytics our advice risk, economic segmentation challenges of lines or of clients view than innovation into our describes insurance, global find even retirement changes has competencies team globally. comprised in a Through XXX of pressure, X political faces the by more developed market professionals commercial increasingly and P&C health. our reinforced our regulatory more set insight unique the the data a which centers team, as

as growth Aon data, capital market an identifying are clients industry rate well which prioritizing size, unique proprietary in in these to $XXX our premiums across and billion XXXX, this to by as approximately annually. client X% highest market than that will in industries global and totaled reflecting Using $XXX billion product, for global increase billion increase solutions, $XXX growth geographies XXXX, detail in the For estimates XXXX insights towards more by research, segments nearly we and opportunities. example,

Second, with of directed In areas by that transaction we investment delegated to transaction in and benefits the the the divestiture proceeds the our areas XXXX, drawing across client high-growth quarter continuing record a we from need. voluntary was heavily, name from liability, cybersecurity, first strategic focus the momentum a to level of few. double-digit delivered business where our outsourcing our XXXX, including many in revenue invest with continue reinforced of organic portfolio, delivering growth, of XXXX, management to of

are property applications. areas business other our just While beginning data of and emerge, and analytics as intellect the such to

spirit cyber risk lines portfolios. of across working looking some noted won with opportunities of software solution group we're And our Group, with in geographies And want formed colleagues highlight the Ventures through think from balance creating of already both together many the volatility Aon Side and across our whom claim examples, product and I've in specific through our as working transfer more colleague improve sense sheet. Aon critical well behavior I or United for their strengthening we're a X New Queue, that technology with premium, beyond cyber help have business groups, accolades While clients reducing enterprise to like ways else unique recognized expertise, clients colleagues the that tool of while list. Aon than the has leading more perineal anyone their industry of players it's clients. participants, on to solutions exemplified not itself through industry's the power of approach, or we're third, like With the resilience implementing profile, assessment traditional their that It's effectively solve for United they clients for new industry model. partner to accolade their broker a growth solutions underlying already

data was model. was where With client. autonomous no no The protection, for vehicle loss first with example to no work highlights future an this startup, there there

together resulting future the a encompassing identify product in to capability on colleague Our colleagues capital the a work the risk, for no get the this simply, colleagues of colleague is was to Quite tax an Working highlights a and example power firm, The seller insurance firm the tax solution, the approach. understand No client. enabling carriers programs largest to with deal placed, across identified one the the unwilling our by able was was deal. XX completed. transaction United able in major ever buyer. our to together ultimately liabilities client. bring and cyber across protection, second specific Aon colleagues for My and the M&A of bring to of liability, our

increasing United reflect this summary, Our results are highlighted Aon initiatives growth. by our responding. clients increasing strength our are our from driving and colleagues In as

increased firm content results We in investments continue to financial delivering to through while value and strong capability, our and shareholders. our strengthen industry-defining

Christa together. built for our firm, our by turn about outlook over like we the future her continued amplified long-term Our have value I'd With and momentum team for excited Christa? the thoughts the for that on is call to shareholder which to considerable creation. is overview, outlook progress

Christa Davies

so good impact everyone. unfavorable significant in organic FX and translation. strong while QX operational growth Greg, strong translated to investment and Thanks financial into the across a operational year. much, highlighted an performance We by and results start improvement, delivered revenue from QX were overcoming near-term the morning, firm that funding

on of the as organic compared improvement growth reflect our over accelerated mid-single-digit the deliver goal to greater quarter, revenue further on or I term. trend organic continued our X%, first, As historic we revenue growth long

portfolio towards of discipline growth, accelerating in the our around highlighted talent growth opportunities and capital after to practice the allocation as continues our addition highest of the In quarter. the shape revenue by to organic certain businesses divestiture return close

were while Aon buyer value the not reinvested, these of can to for financials enabling capital disclosed, provides businesses While that clients. the be divestiture with create

X%, Second, earnings total of growth. we double-digit operating of with points operational expansion solid growth XXX margin and delivered basis income performance operating

was significant quarter in approximately a operating U.S. on modestly $XX in $X.XX dollar, in income. unfavorable than material, or noted resulting stronger net anticipated the As the we a FX impact a million previously to earnings impact due worse of

margin improvements our organic and expected performance margin decade. are mix achieved and basis growth the similar to productivity drive initiatives, XX ongoing annually, to the revenue over XX operational core beyond portfolio continued points last to annually Looking long-term XXXX restructuring improvement operating expansion of and

unlock Aon enabling firm total our model. to million quarter These additional in with we on near expense XXXX. reinvestment, term, restructuring on of $XXX before initiatives, but of Services well our million savings growth operating they're through continue of to successfully driving the as operating savings leverage commutative Business placing single track the are $XX more our We in initiatives execute deliver importantly, savings incremental us

Aon is In United another core like activities, addition highlight to to standardization. initiative process restructuring I'd sales

from ABS, then As our and serve our to colleagues best that who global up, them the XXX,XXX colleagues a agreement under around businesses routinely and standardizing more sales in-depth process reassemble organized colleagues acquisitions undertook our our data United to Aon through to disparate instance. we process. and very process. to last standardized it to and Aon. X account and time-consuming multiple reducing total the clean than mastering across firm, sales With client challenging found was we how with single accounts every million client-facing built sales We XXX,XXX spent year firm understand and and through and approach were initially segments, operating X.X began clients into dissect the in across accounts, eliminated accounts, a cover model and data process With an a

growth firm Our now clients colleagues operating of to process. working sales greater the for operational of client long-term as increased together across through are leverage with example time well simplification drive our productive, colleagues leverage. great facing A our and more as

cash Lastly, $XX to payments, a $XX impacted due legacy quarter. cash by the smallest free approximately flow million our to litigation. for from seasonally results primarily quarter payments flow standpoint compensation is with was net further incentive QX related of cash million

and restructuring, ways: accelerating collectively think the free highest we It year continued flow million the winding and XXXX uses growth, cash structural inputs progress than to of working Together, as of the XXXX uses cash in and are forward, translation free CapEx of cash focused free up any over $X.XX year prior end of for the confidence base for and for invest of more in wind few X we're incremental operating cash was capital into working deliver upside generation maximizing to annual free in level through our gives significant billion cash Further, to ability cash pension capital to Declining growth going X usage, financial flow shareholders. for restructuring flexibility outlays adds or creation capital the down. term. income $XXX flow cash pension peak value was initiatives revenue of down restructuring on the to roughly in debt the further operating growth cash This XXXX. in us free of these costs substantial Slide over contributions. As or goal about years XX. double-digit discretionary income on of improvements. growth we a pension return improves, certain presentation next in peak our liability flow EBITDA flow by significant as of long shown have expected grows, opportunity providing cash of our

performance to In initiative as momentum continues strengthen maximizing through valuation our bottom United Aon make and summary, including long-term this profile capital diligent strong today, capital and about the the highlighted significant increase decisions the growth our top firm. our for and investments on free line to are by our in on return repurchase quarter, investment highest return flow We cash discipline. all outlook. capital Share allocation given remains

invested capital, over value to few with the to operator, significant flexibility the return your Our take disciplined With increased significant financial flow approach term. and delighted debt combined years, opportunity long next the to be free shareholder back the that, questions. over creation to and over cash turn we'd call on I'll unlock provides growth

Operator

from [Operator of question Dave Jefferies. first our Instructions]. Speakers, is Styblo

David Styblo

to a look second. for at want here just back take the margins I a

points for you accounted expansion. of of savings restructuring guys year-over-year, business. XX expansion which that that's the characterized about in the basis so related have margin And XXX net basis basis reinvestments And think XXX core I leaves more the typically to points point

margin if this to you else the And actually year? line, direct quarter? reinvestments parts And if including impacting want about make how talk affect anything this maybe could moving large So right. the those I've I then, at did those got just FX, were there's all sure margin that

Christa Davies

think we XXX total the a as was in basis margin about points. expansion Dave, it, quarter, terrific it margin expansion,

whole areas. have was of been the in highlighted, back significant into That QX was the high-growth, year you business high-return-on-capital as XXXX. we it significantly XXXX As into investing high-margin, for

seeing you're investments really XXX in significant savings is your of business. contributing And points so then and what basis of core with the core. The the restructuring net

forward And so did then basis we've expansion. And the last XX years, points XX as post remarks, core mention margin Dave, in of my restructuring. going we we of for really a think points this, the I basis prepared expansion, XXX and expect trend XX margin about delivered year and that

year for expansion the outlook. margin XXXX quarter the about excited very we're So in and the calendar

David Styblo

Sure.

taking there's longer-term think it, juncture. strong Oftentimes a in I'm spiked is. the when that of relative for talk at consistent see obviously, it to -- you sales this Okay. is And now, then how a we maybe how time approach items if levels. the business one-off about helping we longer that it's plus if more business is high, been high and that can for a wondering just of business on historical helping and period running been growth durable out being quite understanding the whatever obviously reinsurance. reorganization of single digits Maybe to which extent organically the but might has year be, but

could of the to there the pricing demand. of some market talk side you're about the what from seeing So maybe in supply capital underpinnings you to

Gregory Case

raising I your Dave, appreciate the question.

with did back inappropriate -- the and the period year, is the it's a are Reinsurance, Aon. really the every actually need job. across if over solution up quarter at Aon like because more what's really and drivers core We securities doing really it. think, to The quite of consistent sure, time colleagues to is even X%. growth step about doing for consecutive talk, we're and a solution growth in the prior team well. have business, I Reinsurance we but job about fact the But you portfolio happening third really think on as lines about the in the broadly have they from consistent treaty And line Reinsurance is what some comparable for overall, great Aon and for business insurance across without with think phenomenal this

And it to here, market clients, not our the more leadership strengthening world recurring our markets you as to innovation driven operate approaching best that firm. Aon retention, one-offs, market United. in, with strong comments, demand the about fundamentally, haven't is So not of by, described really and my I we are if up. on we're it's in client, the sort core client high there's in of revenue, conditions. we're frontline, happening markets essence, these the lot think us firm that which way. we're fundamentally, driven by the still commitment It's in and and scale industry, going complete of it's to we how that. our a ability and of driven We, in effectively clients the is And trying opportunities, a are the we as in don't bringing and And really things advantage serve happened before. to take a operate innovative that have across And all by

so where generation and more connect improving. we're that more analytics. markets So vital opportunity. on really mortgage, absolutely high Think an these are And net piece clients, and health, cetera. delegated, And think what new the doing Eric fundamental in of investments these expanding MVG. again, demand Bank, growth. back winning improving. and of -- underlying so, markets what's is core to just organic you about the maybe World net relevance. end, We're by health fundamental growth And winning this both And we're will cyber, great it, through that and the driving to, again, focused And areas back we're and highest existing is to as -- at clients: idea are with cat we're alluded rollover really to of IP, where as a and et increasing It's Mike, higher life Christa from levels let's exchanges, clients, what's couple and if what bond, areas really that here clients. creating all of our areas with But to ACT, data serve because in doing, then of high new is happens examples talent, acquisitions, to delegated, with business is equation. go it's growth clients sort bring just our overall about really different new we're been

Eric Andersen

drive with X our challenges and were going where we the market, they risks. a of how is product the portfolio don't they Why to was just maybe how allocated be to our Greg. help to able simple entered to insurance can and who to follow. really whether geographies, or et around then staying analytics entered one key able capability it their insight with clients, use being to able the focusing what Sure, example, their actionable had our them with to teams reinsurer of we're just the data allocation to one provide portfolio the is, off and on they by able our I decisions partners. we're that Mike areas how able world-class kick our around property along those They're capital then they theme, and And their alter understand capabilities for where and towards be reinsurance But make market reinsurance team cetera. the working pick insight, they're inside areas at And look to some closely in providing strategy. capital able and the use capability

their as and as strategy well So strategy, capital for it honestly, them. allocation result a affected great created affected their

Gregory Case

corporate the fundamentally before, firm. it of about conversation was beyond strategy the the different we've placement, mean, of a than had I kind

Eric Andersen

done those the and placement you we're working, them that's how helping thing Ultimately, is risks it's are last then, allocate understand It's the to that and do capital what work risks. how the upfront doing. around the all

Gregory Case

Mike, do throw want in? one Look, you to

Michael O'Connor

depend and the challenge team great this the that it has?" that a I really we a talent. great this back on in I the quite attract client. client Yes. were the client biggest was of growth the growth health, inspiring. Eric risk fashion client said, touch in was other covered firm, that "What's job, But Aon serving success had risks, example I'll is and has of stepped actually of of good, biggest client business. on can and mean, found challenge We which services parts so and our going a this doing actually, to a maybe client, thought across this recent space the retain they And technology United's And The talent. I

up the program that it? want us with around, health actually And to sort a a improve we house And we has answer. up can help?" client. So to brought together And they back health. what says, and our learning sat brought our this we button, whole building firm optimal of called Aon We team a draws actually was these practitioners We brought on algorithm millions and and grabbed of click the team, parameters a "Can scientists and colleagues our with side, it?" all differently?" the this rewards. year, we rolled "What And use Architect, from "If center data together the we this an data together that And out gives what And we actuarial colleagues we together innovation of bear said, we we and "What data-driven all with build in last the to performance?" that's which that with can that have we world it all can their in and in We're we analytics "Can Singapore. and practice of machine from use together pull run reached all areas simulations data to from ended and it?" to Can tool, a And that brought our experience said, rallied. we that talent client even set the do we it do thousands, upon said, our data, tools, bringing can we our come health to built doesn't of improve happen around without cloud-based, say, we optimize which client and

but utilizing we've And Now that, a -- And to did data of example impact We into improved their have offering attract we them. be rewards with improved allowed offer will this when coupled more this and for is only organization, will or great Talent that's allowed how to also who as investment a not to Will employees us, "Listen, for optimized an can excited? best client bring improve how our we client, for of market go employees." We competitive got the of didn't and know Will employee and with with interesting to insight indifferent? recognition. they their the we've able we've as client. even think answer That with be that more an program, to more actually what's to and have annoyed? with impact around what's an employees to and with was be got Or attract they rewards analytics of that are going just would health clients their they and can them firm can real optimize react. interesting. different it's able this coupled to our make be. and they practice, We client sure show perception populations they answer to make We in coupled their need recognition went client, colleagues. at have different that a populations a to research about, the said, was and as the & their before health But them that market, combination employees how me, levels different on a compelling retain employees. to for that react they Rewards with database. And make offering they be changes had

Gregory Case

clients, know give of, we're do I to calls, and the trying to it of to what back picture long-term is standpoint, doing before. accomplish of we bit the a on a trying this again, with about approach Okay, much, extended is to what and growth ever wanted stops everything broader the spirit with from future anything answer, but and starts and of than really a firm fundamentally little these much sense a an we're we've we're underpinning you sort taken

background. you gives some that hopefully So

Operator

next Elyse question is from Our Fargo. of Greenspan Wells

Elyse Greenspan

My question, growth you this remaining -- kind free litigation-related did the contemplated basis the have cash an guys know adjusted that on double-digit QX had quarter. quarter, on cash just an Was year? when quarters. for typically you the free you growth that the lower flow but saw of just outlook on of guys a cash legacy the set give over first in is your I payment. And the can X low flow us trends you kind

Christa Davies

what Thanks, Elyse. outflows quarter, free to we XXXX, big this Yes. And In would in of We have due year annual guidance, of this litigation and track cash say and It's full that flow exactly additional we We of outflows cash. cash quarter. outflows had was legacy you definitely in are QX the cash for QX. always We to Elyse. smallest on big our to litigation restructuring. seasonally is double-digit had related legacy encompassed incentives. what said about

free flow excited cash flow given just free and of 'XX for the and restructuring in the about really in you on flow double-digit cash course to cash of what is the XX free XXXX. we're pension $XXX And 'XX growth so we're declining the million track particularly And of months. and see adds uses CapEx 'XX, over cash next

Elyse Greenspan

timing had year? the from QX or QX. other Was this of there terms the a QX then were first some segments last business your think quarter on any any in timing quarters when there to of shifted in some Last thinking organic. of organic sorry, of impact kind the Okay. about that quarter about we where should rest few QX, And -- of

Gregory Case

There really wasn't, Elyse.

things we're the growth so we're to described with talking interacting fundamentals drivers we clients about we're terms the in bringing the of table. of the how And and are before the of what

there -- there is no that affected So was QX. nothing it in

Elyse Greenspan

Okay. of organic your have mentioned then some helped you've terms that in acquisitions Great. growth. guys done you And

flow deal and us you on sit here you geographies just give sizes deals are and can you we As things guys there that looking of and at an of types that today, the updated see out and view contemplating?

Christa Davies

Yes. is had the the I we are our we in excited about M&A largest have company's pipeline. Elyse, mean, incredibly It history.

and I on years. highest on focused it in revenue think QX have I on investing in return highest areas. our mentioned that been highest we It couple capital margin, the of growth, XXX% is And last mirrors organically the call. areas the inorganically

So it's investment elective property. benefits, data things health intellectual cyber, like Affinity, delegated analytics, management,

pipeline, return we're Elyse. incredibly M&A Having that, we share highest disciplined on on exactly return across repurchase would be the firm. basis, say, across on the so on really about cash the excited capital. And Aon. a capital And about And to that's remains how said return I allocate capital continue we

the And excited outlook the we're of year. share very Aon the balance repurchase for so in about

Gregory Case

the some that's we kind call, and these now. think it done a of are we are in a Eric, the direct terms Or Elyse, side actually, just think This content share about out we've for piece clients we ago, we're of that data seeing We're we've can sort it to in content of to examples insight. a these and of and side capability who've action they've in us broaden it acquisitions couple done And the side, actually from and we've that come [indiscernible]. mind, maybe opportunities, the as talent we've difference. we really some is scale. kind we cyber capability. you make starting, these thinking started back analytics we about Again, health talked about And days about how opportunities sort standpoint. to to I bring things with a how that take in really and risk that things that as about, couple are group this of of particularly client these this response seeing asked of done in the of of and the was to in to talked the that bring a the spirit of And and

Eric Andersen

outcomes solution large lines of and There -- but around new points story how Latin a clients. the pricing able all improve their employees a a for better Sure, challenges And for manage sizable them had ultimately the having just volatility health There the added was to the data actually globally had the were We Sure. to Latin integrate European their use to teams, their them and was manufacturer solution that able Latin need care we American we're to leader, some wellness. to just then health American drew different drive quick European underscore presence on And use of in to is the Latin Greg. global trying will the a capabilities. the able reduced that volatile upon helped being a -- tools of collect around who employees, America. client the were a give with solution to provide outcome, benefit which the they an who we

be them ability that for really exciting our And gets like employees so able collectively own to to really that, going. for and work them

it's a a I great was -- So been example, thought.

Gregory Case

client scale in These we we content by taking Again, are this Elyse, driven and to unique it when together approach which colleagues outcomes around fundamentally really to we're scale, different needs help understand, -- groups. the is that's and trying an is you kinds it bringing of and responds about clients.

that's our So appetite. acquisition driving what's really

Operator

Raymond Greg question James. next from is of Peters Our

Charles Peters

swing a I'll two take at questions.

First, expansion in organic XXXX. about comments, beyond you growth driving your margin talked

you average any margins? XX the considering that have margin I just think an bps increase you many years, of mentioned, a type have guys expansion, to structural on XX at of are if ceiling annual your competitors bps. if you XX that exist over lower last curious I'm view look about might of running you

Christa Davies

so things. for see by X for we say would expansion substantial term the long really key Aon, I is much, driven over the margin question. Thanks What Greg,

is organic revenue first accelerating growth. The

they investments is in the And margin to ABS. of impact -- data these we a and huge greater model, businesses. higher shift we're third in higher the now, mix And getting the XX the through question, operating of provide. is $XXX one clients driven business value the are the operating your analytics, the that leverage heart having made in years by a productivity really a greater driving for The kind we're due ceiling million data as data business we building growth, second things terms the to value clients. on analytics margin Aon to solutions because the is into the is for at that analytics observing year last of of are and And we're

Gregory Case

us of new sort examples that get new -- we the we're And very of back gone examples. way into And massive that drivers quarter. and us, examples the high Eric really definition for have you opportunities. is ways for content If out that Mike We're of net traditional in with a Again, thinking really and kind back capability create the markets. frankly, we really for new about aren't add are and, They're sort in it, we growth respond clients both adding and to examples of that to Greg, there's and meaningful this net to think through a value opportunity. clients. how client value need client recognize they're to there. in paid today creating because the It's value-added need,

what about think new a $XX -- a $XX -- billion $XX in did million, $XX doing substantial taking a forward This You $XXX of cyber, very, opportunity. we market. over net $X and hopefully, driving mortgage, a more net to million, we're million, very million, $XX What million XXX is million, that's time. business business in it new

up. for and going we So to be to compensated to continue continue clients, for we us, it to add we're are as go value to going margins believe

Charles Peters

have you been and the about on different global including the And recently business. your I'm that a business I perspective insurance curious U.S., your also, landscape in it guys considering I'm And in there's a Okay. is lot And political America. health political health a attention the bunch arena business. your about of leader private health North Medicare of exchanges. For All. in business realize know been curious initiatives, perspective I around on a the is changing, long-term

Gregory Case

decreasing Aon, health you addressing when need. of us, we point happening around population And clients time. we've becoming client your all really clients in and are broader this else, But to set comes health choices and as is globally a of addressing healthier everything all to we with at cost broadest the care. there. premium these back the nothing different options, the you serving does full if that really -- question, the For funding got of with spectrum think industries, of questions -- or solutions out And back, our what's start are sizes, segments, is think about fundamentally of sort

half outside business very, in like clients support very frankly, existing U.S., growth is the roughly said, you single-payer and in As systems our including, Canada. areas that strong productive today U.K. the

the do successfully all their assume in happened, extremely markets. operated and employees companies let's that Why, can because on in is we to side. going demand succeed And that help we've So helping were better those marketplace. succeed continue that health and

describe voluntary benefits, Our and broken around executive U.S. pieces. advice you it, who you're clients dental. global et business, and serving what One, benefits, as question into addressing the is solutions other, And could and advice medical cetera. for really the specifically, asking with two benefits, -- clients solutions

difficult their see really health. tremendous topic a help of colleagues we help help employees their So on to this really, or opportunity clients

we if it sort their inject the that this would very always would come to and improve to the ambiguity, be which success will observe, have whatever for also we're massive in situation, be them creates choice, transparency going are back We monumental, would the we're if of also accountability that I breach obviously, can help to going transition confident in trying employees, through. and uncertainty clients we we to state anything up. sort end client help monumental, ends happened, and and

in the confident end, the the in very we're we state, in are So and confident end transition.

Operator

Credit of Our next question is from Mike Suisse. Zaremski

Michael Zaremski

have a follow-up. First, I

the mortgage, you insurance potential What do insurance pioneering about are is how the us demand And Aon lines that frame long-term size areas to today. and Intellectual for help their of maybe Property for. those is terms Solutions which size. of think businesses of estimate you In can

Gregory Case

intellectual let's actually, property. Well, with start,

of it, in I think with. out in there, kind time think start priority And to area. We've quite sheet. New XX% Ventures the assets got kind back of of but more a value it's one helped truly it how clients to it, cover identified cetera. If our think helped does then, of something you, ways and against We're XXXX actually intellectual step get collateral. do bad net they to infringement, XX% focused in steal whole was an And help Because, to a why how this as IP new doing and Today, again, our it's assess someone quite, you do Group about and to copyright, been idea property good they have how liability, value This the XX% kind they on before. of of out trademark it. answer this yourself is we industry it how that? have it. We've how never it sort back understand the property, around the obviously, patent on the do they clients to you you responded, against intellectual how And always plus. think around if it? how it's limited. overall the create about for how horizon, it understand has , back assets question, how sort protect asked about we do you has balance it's of also like value et asset, their them things understand -- actually they Thinking how is about benchmark as if if do protect to

are clients, be market We've clear, we're we've a front emerging this of to couple a the Pick to massive actually want way. a underserved. got interesting day and ready-made clients a Eric And I So now. think for meaningful is largely at really that us, the sort living we're got in very opportunity, about. -- doing we line. talk Mike, with guys real you -- you think, in work Again this every that are

Michael O'Connor

of client our to it you want about this is all all those clients sophisticated agenda Sure one engage clients Greg, on. financial have And I'd start a basically to about to is reality around to had the spending our and client talking down transfer had really use offense, whitespace. add the me, with how be United risk example perfect a them grow. have. that's around is than it, the building both underwriting strong you've they portfolio transfer defense. it turned that literally flip together And led the quantify as, capacity noted any really world. actually really IP And to this back, we was you were And and offense in to now risk. it if you that organization, about within that's spaces sat is the to On and you Then and Eric, IP managing make when maybe the relevant think said, leading really needs How about actually with where grow. start. if in we in get they as they That stronger and can their internally, they then industry services London. strategy we do more firm, was firm And is should how this, And relevant. strong client a of was I I'll we brought, And the The talked Greg, in the risk. to lot you mean helping with do around us an we their clients in over a actually that that, And clients. to to the offense responsibility that. they was has brought actually IP IP year, in IP very in and and "This a And how step their the about one up do was of how quickly engaging Aon is quickly was been way, the of community we realize And do past." ultimately, what talked you stood solution Solutions think that top we thinking example, to just their we they it, for that I them, define play really sophistication dialogue that landscape. And offense, their all engaged We business the were them defense. organization map around they a think conversation. How relationships. interesting an One were IP of actually do and me, sure last defense. with that to, The defend how then it just liability interesting. you've buckets. where them the about two and different team, team, some time current quickly was, there

Gregory Case

you the minimal. We market so from the real the would us, this So have they're And issue? most. it? today are world standpoint, Mike, see again, there say around that What companies how that them solutions in many help address

kind be area could this a emerging think And we that is see true we so, substantial. of

on mortgage. quickly Just

wave a roll of over greater were of the funded about is, of really a instrument need. some of premium, XXXX, you billion to insurance which into $XX sort We literally bring capital single some and next and behalf on we sort world, that now created sort mortgages is in phenomenal, in are creating time, way. instrument, it U.S. to XXXX, that's single-family. than once financial had trauma in market And the in largest in what the originated XXXX, in and was upon about time, really multifamily bear in the that. If We a and it, actually came mortgage helped think of certain on

to marketplace So can bring capital where improve bring to opportunities real of operating on and real you these performance. of reduce this insurance-linked pricing volatility, client a or into solutions, sort of volatility insight bring to another behalf example are bear that reduce

Michael Zaremski

the practices helpful. for In Okay. That's practice essentially feel study towards you facilities? follow-up. Do broking U.K. trend the speed okayed wholesale published risk up their Financial One Conduct February, and Authority industry's will the that part. most

Gregory Case

frankly, highly a a look for work We overview, This every reconfirmed really done, the is Yes. essence, we that In us, the market. just at transparent see market day. way. was what it -- that what don't competitive market,

with in well. can. but capital we objectives same. way any world also nontraditional exactly match the that that's risk capital to world our insurance the focus, capital And And traditional-based the is Our the remain as around from

so And really it or us, form. view any for point way, shape in our didn't change of

on and focused risk understand, absolutely bringing and to measure any mitigate are solutions in bear We helping we can. way clients

didn't anything. it really So change

Operator

is next Brian Meredith Our question from of UBS.

Brian Meredith

take lot been E&S picked particularly market recently Eric what's Are of things? given just if Mike, market, going a things and kind could at some on of in of the market? about what's stress seeing have discussion with P&C you that now, pricing carriers. wondering And Lloyd's and going to commercial in respect really E&S? talk kind other I'm same you on curious, the your in I'm on right up what's There's commercial markets, the

Gregory Case

Just quickly, Brian.

And performance. really, really pricing. will the with day, had When with do the we've I quarters. that's have really things about piece we've the every if overall. insured the market really to our for the of driving for us standpoint, standpoint marginal. overall number last about pricing really sort clients on back to factors think It sort the underlying Same the about it's it's do values impact and pricing around call you from talked today. So how it. where from of is sort top overall in we been has are, pricing The growth, been has we minimal had really and and of of -- really pricing relates fundamentals what's on It's marginal is us. of it results impact, of come conversation at as of affected all, This

that's or add you'd to like anything And overall sort Mike, of else Eric the market that? view. to

Eric Andersen

The would risk at transfer, That they risk best program. risk work as risk transferring. and risk client-by-client opposed ultimately, lot managing Greg, to own look take for we make a thing when make it, their I into A trades to add the they sense? they approach, goes of that only their and own portfolio them. But is

Michael O'Connor

effectively. and And second And part think to actually deep the represent we dive Eric, global that enabled with is and only our is a each have into I to the client thing add, network. basically we've able I'd data be field analytics

it the solution is need match wherever and We with world. right in capital will the find

Brian Meredith

Great. big And is China? just you talked are percentage there are Greg, about kind in care. my then for us question, growth health your How of China second double-digit kind what of where in you Could the of And business? the sense in I a give just noticed all? you presentation you opportunities that of as a overall

Gregory Case

partner, a There's China tremendous COFCO, a We've we're opportunity. with in expect. substantial of been and decade, set joint our making of venture you very as joint And there, might investments. venture in Brian, tremendous for opportunities well successful over China a a sort

New is China key side, on areas on In side. see see opportunities, Group retirement of we side. health Ventures side, We the risk the focused at. we're way, our as on by opportunities looking on one the on the talent the And the fact, the investment

going intellectual promise much forward China not across while results tremendous a going like of be and us part huge the huge, upside So a but results opportunity a the and it And big to really the big of today, focus. with is see board. property, for forward, we big not overall continues part

Operator

of next Deutsche Bank. question Josh is Shanker from Our

Joshua Shanker

And capital flow in sense also, area. better market X the above year? I'm regards just Two understanding to looking a think change over questions first get the pensions to trying to the expenses the understand quarter about next basically in with a your into around and going income XXXX to trying the contributions of are same of working how the needs to year, rally how statement. at to cash the months

Christa Davies

Josh. Sure,

capital. from for working cash on working Firstly, capital. improved We see flow opportunity

of sitting working to it capital neutral said I've the we've believe excess get that million long our in going to balance sheet. We we're term. As do over got receivables about previously, $XXX capital on working

over time. And so there's of about $XXX from million working coming capital of cash that excess period

presentation. to can cash And the then There's on working XX So really on that need see increased of capital, we was your do working flow Page improve opportunity you pensions, no for capital. see question. if the from

coming are contributions down pension Our significantly.

$XXX the to down if were $XXX cash rates They're in saw, you see which down year the that a million. by contributions could of come discount is And continued the million in rise, rate, so substantial XXXX, XXXX, coming interest even further. drop. obviously of pension impact peak contributions, to You pension

Operator

Our of America. is Molloy next Bank question Andrew from of

Andrew Molloy

potential the in financial really My We've the your that's question finance financed and to using policy. balance X is follows deal space and the M&A X.X recently wanted your on flow of and Elyse's on presentation. sheet seen question a pipeline to balance debt focused commitment thoughts and really pickup sheet leverage to in the and philosophy know to M&A rage

Christa Davies

Thanks Andrew. the Great. question, much so for

grade Our my and revenue, in is driven leverage current We investment do important growing operating remarks, debt-to-EBITDA mentioned prepared We X.XXx rating incredibly in expense more by basis. opportunity right the GAAP as a keeping leverage levels as us. levels EBITDA think to debt, have I growing on same. for restructuring management leverage, the the are expense decreased disciplined about given

given will cash remains M&A capital mentioned free repurchase, return I return on And firm. on the absolutely a based that see capital. to utilize as opportunity leverage terms capital of Aon we and And we're substantial grows, share for EBITDA we're we on free in investment on across on valuation remain how our of repurchase organic Share return the flow cash basis. optimizing debt flow our highest So but same. the generate, going deploying we're opportunity increased as the

Operator

last KBW. question Reitenbach of from And your is Sean

Sean Reitenbach

expansion, strong Obviously, matter, organic be Aon or stronger for has as an without growth Would recently. overhang? margin posted Brexit growth that organic

Gregory Case

but for you drawn on clients. that, It's sort doubt our from Yes, of no protected of prepared work know, every be to way we if we've net-net, tremendous, scenario. leaders our and we world, clients an investment, them through frankly, scenario it our great going what added And to to about protect Brexit, gone to implications our and clients, Sean. leaders every around to in be, and in going senior frontline pains whatever attention When it But frankly, you and for for can. that us let sort added in, behalf of to we've want know level the our us, expense has has down we're obviously, think of around about every that's trauma way. been then efforts and

very feel work good about we to that. us around For our ability specifically,

Sean Reitenbach

expect each up for back finally, have whether wondering deceleration driving Okay. That's know to 'XX. share the decelerated you it so investment, on have pick first return just as helpful. quarter And rest quarter I like on you your it the capital looks then, of since mentioned XXXX. what's repurchases it highest

Christa Davies

Thanks smallest on have as QX, to expect it's on We of do incentives specifically, for additional the cash big had up And outflows back question, our annual litigation outflows traditionally quarter. Sean. We the in we think certainly pick legacy our this cash And QX. of about we it balance and seasonally year. flow cash QX restructuring. the in

free double-digit balance you'll the the highest cash repurchase flow and return for XXXX, track on of for opportunity, for year. remains on are up We share capital so repurchase our see share pick

Operator

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

Gregory Case

and for quarter. joining Thanks this quarter our everybody discussion just much. look next to I wanted us thank forward very to

Operator

conference. Thank you all Thank and participating. that for you concludes today's

You now may disconnect.

Aon (AON) 26 Apr 192019 Q1 Earnings call transcript