AON - Earnings call transcript Q1 2020

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Operator

Good morning and thank you for holding. Welcome to Aon Plc’s First Quarter 2020 Conference Call. At this time, all parties will be in a listen-only mode, until the question-and-answer portion of today's call. I would also like to remind all parties that this call is being recorded. If anyone has any 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.

Greg Case

thanking detailed morning Thanks our presentation to Elena firm by their Andersen, Davies, to Aon start At website. and challenge first Welcome united. other inspiring of is on remarkable good to the by colleagues CFO, am our to and extraordinary support everyone. President. I Like conference connect resilience humanitarian our each joined Christa and lengths financial virtually around and time for this and quarter economic dedication, a this call. want our previous impressive Eric our unprecedented response quarters tirelessly going see the and It world to to posted embracing we XX,XXX I our crisis. colleagues

ever. fully than in at our firm a Our committed to to global more the team clients our need time is bring best help of when they

as firm even comprehend stronger experiencing and backdrop know, The all I'd even to play expect we're around forecast increasing economy come. unemployment and humanitarian to how difficult that or how the X% and are like we're Against shrink we about and economic for by consequences in capable. world. global tragedy is XXXX scale to likely more to to a we talk responding years As emerge the months a out at that's is to

over colleagues XX% committed events And tools Our and productive guidelines healthy, optimize of government multiple well-being have safety remotely. work working colleagues travel all remote and we've well-being. response and well canceled learning colleagues virtual telemedicine colleagues to and to services as available the our and their to and firm around to and well ensure stay now are tools to we're we made and local as our

to communication services enabling secure ensure can of the responses work full team to their firm and to accelerate we increased no best continue connectivity our for a all teams sharing, anticipate our access and required will operational COVID-XX also we're lose can to access ensures COVID-XX. and We've be future be. committed client clients. our leadership platform loss applications that across all colleague remotely that practice job result to of impacts as our deliver Aon coordinate we and business Further, solutions with resources finally productivity taskforce, with no And

results. Turning to QX

strong delivered positive from team disruptions end across with the of our impacts the a the despite Our each COVID-XX quarter. early performance of some quarter key at of metrics

and X% include solutions. reinsurance particular results with health solutions from organic Our growth strength revenue

basis of Substantial points operating gap] to [audio expansion XXX XX.X% margin

brings provides employees. in with for hospitalization expenses recovery together Italy tailor-made taskforce and for COVID-XX with our all for from In solution one clients. solutions a commercial coverage pandemic risk in quickly to and colleagues event the for they deliver employees share the need for pandemic This To develop, partnered experts escalated both unique and COVID-XX firm coordinate around example COVID-XX. own the allowances address with for response to world clients’ our are our and carriers solutions across our as clients firm the our diagnosed and from

our the The domestic and assistance, across this time. team very example we're globe; and solution hospitalization innovating scale a working childcare and clients behalf available during provides critical of cover now post Spain of in to the United on In is including more. and a further addition, great assistance Italy

In occupational risk in by and analyze tool human the more they pandemic on Department time. to like team of impacts Labor model on built health that capital team and exposure. workforce based characteristics The geography uses and York to to risk and assess The analytic to map data analytics job real tool an potential developed location in by New layered our Aon recovery. a another forecasts from medical took over team proximity solutions speed instance, a community's

with The but New for partnership strategies out anticipate the highest resulting just and minimizing the rolling risk our while tool groups we're model we're the plan risk using two in challenging the prioritizing antibody most many ways in York, workers. Currently are reopening helps tests times. of respond these community clients which And and world. it in demands in communities of around we to helping communities new these clients mission-critical examples

global recurring segment. more largely its we elaborate sector highly will our business countries diversified Christa every is and however, given on I results and over that resilient our business outlook, would business operate and and in and highlight virtually XXX financial and non-discretionary

given business, to been XXXX-XXXX. by also compare capability are individual an understanding over by of well can strong have on This cash. by other strong the It's P&L our for exceptionally single place cost in Within to capability revenue, that focus have the by assess we to With of reinforce our historic fortunate recession every our decade. been the for performance to important cash and we a current economic geography, year refined business and ability environment we cash this and line further offering. solution has flow, and embedded

of number time a future. in can one considered our point have no unique to this predict macroeconomic business. impacts At the potential their scenarios and We

continue strength steps we economic scenario. on the for to and best, always will and we've we act areas hope a of our Well, prepare to taken position we control clients. our from can that virtually However, to colleagues protect for any

revenue the areas discretionary data retirement and especially ledger Overall, For more QX, cash modest. impacts and April is on early some within in analytics. we did seen we've see COVID-XX of impact

and we're forward, steps liquidity. conserve three top by support priority in manage priorities is areas; proactively our to taking expenses to colleagues followed our Moving

an effort First non-compensation which reducing expenses we're early in March. began through

paused to we dividend. although and share Second, we're maintaining our committed buyback M&A,

of And colleagues, third, all as in be take roughly colleague protect that we asking In reduction which local job for them up to reduction to temporary COVID-XX. we're XX% and of XX,XXX will lose order with the their accordance colleagues with to result a no will implemented compensation a we're to committed have planning a of XX% salary of support firm practices.

we're need we able continue continue full steps to these our and most. us reduction. clients will to strength unmet to of the Aon capability address While pre-emptive at of deliver able no when relevance see position This their a protect insurers in clients a intended is increasing are of roughly to to with we needs. that from remaining firm to our step XX,XXX XX% time colleagues to Taking as continue look now invest to ensures

by is it’s exist. of other potential outcome heightened that understanding the interest seeing we're and clients of areas where One trauma might a current major risk

wealth cyber, which Specifically create climate we've seen events. areas may debilitating concerning future change gap, and the like health

broad client available risks very immediately. match our and crisis. a COVID-XX gives insurance limited address or of them liquidity the required cover a team designed have Up ensuring in the parametric a access to a exposure. in very exposure only innovative to one create for in client future aspect who these addressed program and for assistance natural fulfill require epidemics event our and resolution example, way, The and solution an successful client a to and quake whether provides covers how catastrophes to funds. capital use exposures been with discretion employees To recovery may key catastrophes to product happen of to resilience earthquake their quickly highlighted liquidity our This the now the that financial responsiveness the when infusion is these speedy on

key clients of combination for faster strategy Watson. we can one our Driving and innovation that our plan accelerate outcome Willis Towers a through with is

create. our combination the complex need more that unique clients world this capabilities becomes As will

across focused clients. Our two on their paths firms best to have organizations respective solutions similar on the from bringing been

clients a combined will to become solutions. we relevant firm better more As progress faster and to able with accelerate and our be even innovation

truly the crisis clients. each global in COVID-XX supporting other our team our been to remarkable summary, In the response and has

even our Aon believe delivered from In the even us quarter early strong they a We for were positioned growth. very emerge position firm growth is first progress the effects at strategy of of addition, United experienced. long-term the current and being stronger to well crisis crisis

like I'd turn over Christa thoughts on overview to to With outlook. Christa? financial results for and call our the that her

Christa Davies

Greg much so everyone. morning good Thanks and

and our over position we're retain about value some our the how outlook sheet I I'll proactively ensure our our to and the business firm manage term. flexibility to As environment impacts macroeconomic to and and our stability on talk shareholder provide deliver conservatively continue and steps long also taking to thoughts the we balance results,

Our business fundamentals. has strong

Our geography significant base average. on across is is every has line. that revenue Roughly diversified a XX% retention portion rates solution and with and year non-discretionary XX% industry, renews

guidance aggression and downturn cash our clients of near-term digital and to withdrawing flow single organic However, given economic COVID-XX our its financial we're free mid duration around resulting the and double-digit growth uncertainty magnitude of and revenue impact and the firm, growth. our

financial of future uses taking flexibility and to prudent our the declines in revenue. We in also discretionary of strength cash any expenses and the to sheet of reduce preemptively order are optimized event steps in maintain balance

We to and Aon our term. are our taking financial us these of our protect focus and short actions the in colleagues, continue on strength they know position division strategy metrics from and execute to will long United key

and year. foreign impact we into growth solid performance improvement organic for financial currency translated operational from delivered QX, an achieved the near-term to revenue unfavorable becoming that X% In operational translation. strong start We

of growth note the impacts portfolio each We financial of reshape margin I high pressured COVID-XX solutions on X%. the would higher efforts revenue reflect was we've revenue data analytics from to and ongoing quarters metrics, early prior health reinsurance disruption the FX I in key growth reported retirement organic of and our also impact from described we and our solutions and to divestitures offset As areas. by by some delivered strengthen businesses. and our of first

we improvement Business discipline of growth a per and X%, XX% strong income Second, organic by productivity Services. share growth driven revenue operational Aon operating operating improvement delivered from of growth earnings ongoing expansion with basis expense and and XXX solid margin points

with share in share expect As FX per in $X.XX we QX earnings per $X.XX unfavorable QX. material we share rates noted the our an $X.XX impact for QX, impact today's per unfavorable impact quarter. in in impact unfavorable At unfavorable in $X.XX would approximately and

net was which flow QX The approximately did payments. compensation increase to smallest actions $XXX impacted quarter flow cash and certain note cash litigation. the cash primarily related increase free operating an payments legacy free The we've was $XXX income negatively growth in is for this as to see reinsurance in delay million from as by I expenses. to $XX solutions. We would quarter our organic is taken of in cash incentive by primarily seasonally driven was growth increase driven an flow last year's Third, X% revenue in receivables million strong million million by near-term $XX the due year well

in like is As confidence and underlying much GDP impacted values our term have long looked is rest non-discretionary the and I of macroeconomic other while business of property towards things. factors employment amongst it business resilience of our year, we growth, the the by

how may bit be I that are various impacted we our in economic may providing helpful not we a into scenarios. to wanted provide revenue more While understanding business guidance in insight be

very with average. of businesses XX% on have with highly rates our revenues We recurring in stable core XX% of base revenue a retention

of capital services and are benefits risk discretionary. of be relatively liability, year. and cost cover or XX% is highly our placements, XX% project In records and business, required business is property work book these tend brokerage. like of officers’ insurance treaty Many regulated, this our terms consulting, doing reinsurance, like of human remediation, recurring and or travel actuarial a non-discretionary consulting, helper and pension renews include of on programs every to Core casualty core. and and our These Much of driver include required things more and consulting. also transaction work necessary benefits revenues directors help event more business business. revenues discretionary

some likely be of or is not it deferred to So renewed.

I in economic immediate In We've global in discretionary the started already see economic given a we and the environment as more expect impacts larger mentioned to more some more early of our going see we of to impact impacted downturn, an forward. book. and COVID-XX QX be could this portion negatively expect overall

analytic balance in solutions services discretionary. as core address largest risk, for retirement opportunities More mentioned include see around business and significant solutions the we in Within for largest liquidity instance the more our reinsurance and that crisis, have sheet solution areas of innovative and current the lines are component, health clients. Greg commercial our positively data while solutions to components

confident April. business. not did fundamental we're strong impacts in QX our see to Overall, or or collections revenue We in material in

economic prudently costs global negative investment get uncertainty, given and we're However, steps defer of in order proactively any spend front in manage some taking to to impacts.

Our in Aon Business ability we've to which cash not costs only help ensures help us Aon historic stability but efficiency and also and a The and capital further the improve the smarter platform to Business to to investment flexibility. working continue drive gives manage Services operational our margins us and business manage resilient expenses. make firm is across highly quicker, our steps manage Services decisions taken with us flow

was XX% maximum For and supplier preemptively QX centrally reduce steps defer This instance, to us ensure purchase capital. take managed spend we now derived in optimize value to allowing allows us services and to manage decisions, outside our working of costs.

I improvement, like sustainable note margin however, core these some will not contribute margin near-term and do operating expense travel entertainment reflect would to that expansion. reductions

and platform growth, delivered Aon liquidity we return while to cash on operating In metrics focused flow effectively enables our operate prudently past financial and Services capital. to margins, the the firm key continue invested and Business [indiscernible] and cash Overall, revenue cash of run positions. manage operating free organic on our us on

but remain context same. performance to and our the environment, the tactic drive firm economic today's our different of In is strategy

focus maximizing serves enable to environment the conserving highest we translation flow free historic of into revenue cash us as on well level the in Our on this of focus future capital growth.

this we've cash drive on uses before. taken and growth in perhaps and than ever make steps economic essential of income now more are environment progress to capital reduce others operating These working structural

flows areas by been cash cash take XXXX-XXXX. ability analyze forecasting XX the in of cash free to over out by early or of This to markers may this trends statement free flow the us gives gives and instance, country, based business, now years ability lines any cash For to we to instance challenges the hard-hit previous that line for crisis statement. to for firm address have to on by across our steps financial particular and look we've cash flow flow by the daily Because the flow years run have more and the the us of from for well COVID-XX. compare

$XXX collectively I'd also highlight expected that up structural uses of cash in pension, in to XXXX. restructuring and approximately are to XXXX CapEx cash of million compared free

While we the of discretionary have buyback share are our maintaining M&A. cash, our use dividend, paused and we

due debt year. and to through of We're the profile take We in of and we more not maturity $XXX do any debt on very manage million We credit how than grade our coming in investment balance committed with well riding term we're lettered sheet confident strength our risk risks liquidity no the liquidity. manage ratings. a given

facility credit $X.XX in a committed our $XXX in XXXX. credit facility and due have credit XXXX in $XXX from million million due billion We

had not a despite on our committed of have our period cash credit draw seasonally We to lowest flow. need

to continue markets access and also the commercial needs working We Europe. capital paper in from U.S.

We know stronger. this to resilient and makes us prepares come now prudence us out

in proxy Todd we and to As proxy expect vote committed which about Greg file a followed expect by Watson QX. joint our definitive weeks are the and combination Willis joint with and of we preliminary a we in mentioned, excited shell coming

ever we and platform these our in to our well as to relevant challenging Services and we've and react priorities and flexibility are key operational United steps Aon The more us summary, In stability strategy are manage our challenging than strong financial drive times. business taken equip time. colleagues, Business

long free flow to shareholder unlock creation approach and capital disciplined to term. invested stability Our return cash the value on provides significant flexibility and over

With delighted over questions. back we'd turn be operator call that take to and I'll the to the your

Operator

you. Thank

Elyse Fargo. from question We Wells will [Operator Our now from session. is first Instructions] the begin question-and-answer coming Greenspan

open. line Your is now

Elyse Greenspan

organic Hi, wanting the a guys that right now best being Maybe of still might your the impact slightly be outcomes impact the you I do going the sense – of kind what of on slightly health, thanks. the COVID-XX recognized give the think range year? sense negative of the some the we can for us of any question, remove range balance of it's we obviously from business? view kind to how flat, situation is but the of your positive I like of guidance to of Good for the there all COVID wide is is first organic other, range My of kind just extent and time and way -- and fluidity a morning. to maybe some so of you abilities to one have

Christa Davies

Yes.

was described are the on and proportionally X%. are XXXX/XXXX environment as growth of that you there closely flow Elyse, of macroeconomic not the preserve cash macro-environment was firm very stability if the we on managing we expect over managing the that and of about reductions to So in over uncertainty year very revenue would Elyse worst year giving revenue any and margins to the and match we're would revenue you in organic guidance if we course think would expenses the to because minus flat free GDP note reduce but of much essentially the our when long term. flexibility focused I them

So a global stable do very have in business recession. we economic

Greg Case

add. might And Elyse I

are perspective set very -- and If facts to of baseline. about question. it's history important It’s just think the to in the reference sort put the the helpful you very Christa's the

Aon clients business real improvement, two years say more and global place just United in we how we United things executing driving today is have much scales. for business XXXX-XXXX the what's and us. We discussed services and firms describe different. the didn't to we'd mature are XXXX-XXXX from and have XX obviously blueprint, in One, game-changer for stronger So deliver and plan XXXX-XXXX, a is at but strategies different

So $XXX to on opportunities all-time million well and a and all business also spend are place. you're year seeing retention new call these data a things billion that as highs. new around we're it had substantial then in very generation $X and at aware since billion so We've $X.X

We're different. that's So firm. stronger

knows. right in $XX What's unemployment it last worse problem. greater to that don't then know, also for much is months, greater reduction EMEA XX% but employees claims million got the current affected has the one comparing obviously GDP. In different objectively XX%, XX economic is tremendous potentially we than trauma five million U.S. no obviously though now place. unemployment's likely a worst Asia same than suggest amount QX a

in duration normal and geography and do. to perform position how the going recovery happen known. we're a to as the to up going that’s believe particular as also In to out we Until is described we her Christa a what every it set really in script course in be to fast is in by not want sort of play and scenario

Elyse Greenspan

side, you you Okay. are expenses. focused on guys And said margin then the -- managing right on Christa

continue show it's but outcomes message maybe you that will happens of to the continue would a organic So expense on management, the improvement? there's with to range expect some do to fluidity margin of regardless guys what

Christa Davies

not what we you would we we've that what tell control we've the year can margins revenue done will margins of is, reduce on predicting will on the and haven't impacts course we expenses I given over we of we and Elyse the acted strength taking and proportionally guidance nor position manage actions from we expect direct giving on year future. a revenue and So but we're for are do early Elyse with full the

talked greater and actions the for outcome I we for in reduce best planning in Greg to we economic are them. deliver are time hoping impact remarks that we make have so every taken a as economic to are ahead but of opening want about We our we of out come and for expenses we to need ensure any see able for and stronger we to clients sure

Elyse Greenspan

last One one. Okay.

of of up the the deal guys kind growth and closed, announced combined or view of firms digit acquisition of or this and when isn't before still that forth now slowdown, to the economic announced revenue that come mid-single of March next acquisition? we going You digit be the Willis when put getting the back start would so is year for greater slowdown you you the of picked the half long-term greater view combined mid-single the of so kind deal at out target merger with into that organic organic first had that of growth

Christa Davies

It it we with Xth March we Willis certainly combination is that we though today were we We announced say, about Towers more acquisition, and our would Elyse. are than then. Watson even announced excited on

much Towers incredibly client and are As and and strategies side believe to clients remarkably that the with clients engage mid-single over and for complementary commitment Willis deliver be similar capabilities very the time the meet the find and we continue line certainly the term. greater needs Watson digit in combination excited we and that firm so the the we is about or up able we to revenue we to to with unmet long to the to of see DNA opportunity are has over upside do that

Greg Case

Christa really Haley together now from Towers within two and day and thesis as as on that Aon think as a potential Willies in talked firms you the tremendous complementary the do Elyse combination geographies behind solution new in bringing lines client the really mentioned and combination entire and with leadership about better one, capability I Watson I the is John centers impact and standard set opportunity. described about think the segments of we

really so in better come client doing really now, create no been to etc. now able working are change, things on capability, Xth market having current would solutions, team, our future and with climate better time just John digit this reinforced say like I health, the something our of next high March which together had value the Haley combination ability in your expectations cyber, high expectations and to pandemic, or trauma exceeded better looking challenges up clients think ways, not many really for agree back has better sort and would new the one's wealth. these do to risk spent we understanding all need, more the forward address in to point analytics of and to with the we mid-single future we're we greater, and just major the Ironically steps. But of

Elyse Greenspan

Okay. Thanks color. for the

Operator

you. Thank

Our next question from KBW. is of Meyer Shields

now is line Your open.

Meyer Shields

Thanks. question revenue on stream. One quick the recurring

XX% is don't Christa sort I of you that think out a in talked have current that when that expectations? being of business about the recurring lot or a businesses of We normal going scenario? small of framing is

Christa Davies

highly Less That's our much we non-discretionary would of than and and have and framing current resilient each do is business from more expectations different business. more of property pension a discretionary discretionary comes client countries, casualty, but plans, core the of the Meyer. of revenue this stable any business XX% is recurs our year on X% XXX work tends like very cyber of industries, We be economy. is segments operate core actual renews DNO, our things etc. so and treaty, and and in to single different say we XX% recurring, and

the of our resilience feel business. we very So good about

Meyer Shields

employee Okay. could Greg, on what big-picture helpful. and can a the for No, imply perspectives that's compensation talk that reduction you retention? about

Greg Case

we perform taken we're it proud reflect approach the world bounce-back, for the what our no to made of for everyone's of we one everyone to you, a lot tell and major a firm. our of scenario as taking in any care back what -- before. I anticipating we will really it's principles say is look Well, has knows clients as and we in look to humbly recession, way but bounce I focusing the stronger got and on to will behalf commitments back creating take going first to really value in and the the described colleagues on clients going we've emerge listen of to like by and a and happened a really that true it's ultra I step is and how really step Meyer come we've the and behalf guess now result back long would standpoint, on colleagues. based while we're from hoping position A be a be

first for a and upon just That very us, which unique ask to this the for Business really and a really we would decisions with ability we made decade. time and all where a Aon board. stand metric perspective better coupled aspects you all close part cash any I to And on the Services, is consider execute at is foundation performance important aspects of across of

look quarter, And the in that by at We an well. position. exceptionally all measures, know I very know the mean at we look results, currently we strong stand and that

place now to priority potentially clients look of also difficult our protect firm like, steps to as you the entire support scenarios requires the scenarios absolute We what and to sustained to and this colleagues. take it you a and priority economic in know all all Christa an downturn irrespective historic how if remote for XX,XXX and have take it's seriously highlighted us

investment way along very current time outcome downturn that if really is to alternative by doubt colleagues. our place sort in it comes comes need to, at absolute revisited to anticipate Aon way the is can really And we the fully an it's clients that's stronger decade in we protect said, hope the highlight every no by client we out unique have what back there's firm things most that want not to and that's going hope the client help desperately to our this a the And listen the the coming be might fully the XXXX-XXXX to you of essentially lot back puts over risk we're would path at pristine over and and we I and but succeed the last alternative hope of take to United. so, shade and in way much a the respect easier leadership and our

set turns us times it difficult to in can global Aon and about Aon tell decade to we is will of but every often do equally global a we in our know in out team, a be in meaningful position I'll capability means investment for take support this for a us Aon something set maybe that talk challenge for that we and but actions United clients United times of of scenario. puts in really the others it you actions United positive of

clients our have what around unique So done things we're and right to things our about and the irrespective out. comes help colleagues of very-very in ability excited that now world very-very need, times strong of

from our be that take, standpoint that or for it we the coming so answer we're So of happen. it’s important can stronger to taking us steps, we to know a right firm we're make that going out and

Eric Andersen

Hey it's Greg, the jump on the HXNX, time whether fourth XXXX of bit taskforce opening is your it about activated to COVID-XX a little the but talked in that we Ebola. I we've going early group, important recognize, in think one back to examples, just this to was SARS,

can't until from clients to so advisory able of on firm while trying through how and importantly, across how on, employees, part one affected capital they with practices guiding about working the you innovate help risk that that the you and trying capabilities on together through of that and new to being firm liquidity experts from to salary really on help this there is So behalf their credit think learning this share is to we're the innovative help through the one I think an a actually it they're way what on is whether be best the principle a world capital firm get challenge. of thinking that able different with so capabilities do to to working those they're the epidemiology essentially working to was world but areas solutions entire we're for and early sure the is consists pull the do all trying the is of they're and return an to part liquidity; work, trying, more around get how them clients piece there lot pushing of are innovation clients, were to across whether solutions from it's they're everything group group of all for dealing and it

Meyer Shields

Yes. Completely you Thank much. understood. very

Operator

you. Thank

a have from We Kamath Suneet Citi. of question

is open. line now Your

Suneet Kamath

just obviously on has been? Thanks. up I how employee some seems follow dramatic the a you give terms reductions. the pretty steps. just It salary Can feedback wanted in like of response base to

just what hearing been curious you've Monday's announcement? since So

Eric Andersen

really on prepare imagine has at recession we globe on alternative now behalf and the again leadership Aon that as Yes. reinforcement we're and back and I essentially actually by current a It to would the about. of ask how Again our scenarios us. the clients and been being colleagues step Again do when United I all the up we our incredibly come around the team, what [indiscernible] positive for back right strong too. looked and us downturn of ends way which hope all we hope highlighted is we for sort

serve not you extraordinary XX,XXX a way clients protect we is if was case realized that that hopefully do do we have time, so take colleagues in we how you difficult recognize we wait and actually to more downturn and the that's the to collectively XX,XXX continue in the how becomes choice support and to protecting at you effective are addition again but that supporting how know there, because celebrate do our colleagues is acute all you the you took We the that the to steps most jobs, made piece. clients to and going the we them ability that do decision the

hope we're took we no could and ends recession actions, we our on problem it wrong that talked perhaps, other world being wrong coming would the for it exactly wrong colleagues this take before as through we're happened end steps if wrong and been what's whatsoever something firm I really support it our and when no basically since know all to embraced hope done obviously, that stronger has around understood if our remediate I have say about mitigate actions to Sunnet, said it a to was do. Monday we're the and hard and they've take I what clients in we're we're trying we're colleagues a It the way, be we we the we by and do Monday one would up people else if

described as else has the things one of a in do we colleagues across Christa ways in other as in any a Among number have under pretty reduced And expenses that incredibly could really other scenario. and done that to the is puts have firm firm our package actually invigorating unique this things position no perform actually Aon could fashion our we fact been and act it in United put unique place.

Suneet Kamath

size doing Got there you just through help think impactful are expense be us way that as may it guys us of help total just frame be? reductions will is and can what of percentage to the the that a expenses how you any

Christa Davies

say I if given margins this. the would we've come that and a revenue haven't firm. very and were way modest to expenses that guidance reduce of we're also say always that far focused taken earlier guidance and we to cash maintain but It's we so strong not mentioned making as very that would cash size the been or giving the reductions run a would down revenue proportionally expense We sure Suneet, the we we we as on position. we're on

flow taking statement, taken expenses solution party on advance strength We of and much say a things we we of a spend like so our into things action the the impacts did a and reduced third T&E, insight We first. number by in for like actions of in observe. position is would of are that earlier visibility QX I and of we have number flow we've byline one cash of and line unique non-salary side things the cash

Greg Case

in understand when courses principles to our get of highlight our is out with [indiscernible] how them aspects played all geographies serve things we different difficult just described and clients, and similar over do sort what the it in in up thing different to world how other around United to client foundation make to you recognize and for are together for to on clients don’t the we've we you has decision what them take out sort grateful. come long been in the our Suneet clients on other an to whatever said doing decade, do to playbook. incredibly of is the we're different of built the They as each also board to surprising inability the and One a have reaction of this us we done work if it's this when asked based those clients about, not behalf. colleagues month on them get inspiring happened. ability support They our how the times approach are understand what and the need our Aon what time to global then context talk discussion leading across frankly They seeing support explain their some time over as we've and candidly

Suneet Kamath

Got it.

Okay, thank you.

Operator

you. Thank

from Our Jimmy question Morgan. next of is J.P. Bhullar

line Your open. is now

Jimmy Bhullar

morning. good Hi

So had a I questions. few

X% of the to been First or your just the X% impact risk but of but you was discussed it sensitivity past on March the decent tougher that had actually in it the the that business, commercial turn and X% the in the reasonable of is organic COVID, businesses is the in potentially negative exposure like on years that's business is various term? couple a assume and more near it comps just decline slow down could to or just so growth

Greg Case

Yes.

doing. risk to we're we in that of clients. the the they currently sort as very it's before. but the each our sort we're place. those on with we happening net quarter. new a there are all-time where of impacts as of our We business well in put some new talk ability momentum I described some we're And over new particularly exist we connecting all-time as solution at the in and as little a in overall of board of number business seeing in sort as as feel tremendous all-time we that end bright across spots come bit the of well of standpoint in are net here for things across highlight new you of high lines that candidly are now about things Maybe solution field are again the the first high, the net just terms us initiatives quarter across strong Net Looking the some my feel generate we playing momentum were retention can of of to as lines roll in business touching the also high, commercial there's Eric,

Eric Andersen

optimistic also through the the can clients clients themselves are we're other first perhaps work doing of and we're came our say us understanding perhaps balance to very using trying quarter. the in programs with the liquidity opportunity lines. certainly say bonds, dealing business but how or they where lines those financial do in for has letters how Sure more would interested some in things around couple surety protection But Greg. liquidity that take we're different distressed sheet in areas risk honestly pretty with just areas and a helping created There's the in along combined particular DNO and the companies and just the are providing particular place providing create along I would to as really credit advice things area and it traditional structuring today also business I

Greg Case

we described new that XX% at over powerful a plays core, that the working these out You very very terms areas are to Christa business. strong, incredibly XX% time net momentum the of the but are in build through of look strong how

Jimmy Bhullar

well right? But you short in that the slowdown would as business though, In the commercial? expect term in

Christa Davies

We said and highly percentage business as firms Eric of higher they're and our rest non-discretionary offered the our call much health the our businesses risk, talked than required components of is a recurring of we cost regulated and commercial have to a expect because are would in about financial expect necessary I a the would our as of even business, doing and businesses business reinsurance distress.

Jimmy Bhullar

to Willis. Willis bid? many on the you or at they there were the voting deal, Willis of not you you a from investors offer actually of that on there was the be of modest the of requirements part of think Aon stocks just with given is shareholders I sort premium super through the takeout if you possibility raising away disappointed also deal proposed, Okay. especially you declined And the it sort Can somewhat would and sort as a discuss walk does then offered willing that -- the obviously and top are concerned higher your a consider on lot on about potentially go but

Greg Case

behalf started been this Jimmy, feedback our be listen And do combination been understand on exceptionally shoulders John my and shareholders to it's positive. to their very-very solution it's our extraordinary the to there what’s for segments we're described and positive. has a with I from Again shareholders extraordinary inside can trying when engaging Haley the as It's starts what are to complimentary geographically really in and describe line it positive, we've very just on team to very-very [indiscernible] what of terms and extraordinary in standpoint, now the other and clients. with of do our bit understand way no is pieces Willis the positive,

that client markets understanding capability analytic extraordinary. us creating lets that with stronger or strong that equally future and the are things Obviously do around new need

the means incredibly So share deal down extraordinary. movements in the I same of think are Watson our the about see incredibly Towers at it, relevant the potential so investors is structure terms see less of we about price where that's Willis and obviously really are excited all excited are opportunity it that and

highlighted in and synergies we that or isn't any mention, to shape not in changing form. obviously million way XXX Then in

and really and octane, be to is talking go So about. I revenue higher you you from current we're the need Towers pandemic, in that, ironically upside about that's about before about there's Willis our incredibly it the it's said insight as what thing higher and really new Watson want higher for crisis, this solutions the capability, it, client Aon potential standpoint, highlights really and for to we're this one excited continue if

we observations with So engage shareholders the that's have and it's Willis as a them. one Towers so of our really Watson been made

Christa Davies

we're just we as combination. think would I Greg, the add, I look about excited forward And Jimmy very

will the excitement for weeks on March we two terms follow have file to second we're up first announced proxy QX the expect sort than it proxy hear the of we a in and were we big milestones; votes. preliminary and going today we coming Xth and excited both is defender could You shareholder forward in is even of more the going in

So than we're client better combined those very do to we milestones looking needs serve forward today. and capabilities to the for able looking be to much

Jimmy Bhullar

you. Thank

Operator

Thank you.

from is question Styblo Jefferies. next Dave of Our

line now Your is open.

Dave Styblo

assess time questions. Hi. help said and -- Good the clients that for same survive. smaller at during to standpoint everyone's and that discretionary can time the that to global this may companies impact same out I from companies the time the morning. back dial diversification what figure trying Appreciate the of the and provide and the might not solutions you Thanks at larger can able guys down insulate be business, able

to is sense can survive discretion, pick to make up X,XXX employers XXX about the bit us thousand a less, a breakdown that what versus of in not like able that there be sure, contemplating that there I already comments they're it's though employer not to just employees provide span by a not that a in much XXX it's of or you I'm anymore I'd not, at plus to size, color be more how risk [indiscernible] revenue understood little where whether with from may or companies give between curious a if bit situation more that's to that is non-discretionary. even book. of to little just might XX% business the

Christa Davies

Absolutely.

operate across about we're do clients, of have as fortunate we geographies. diversified countries it is business. So no one industries, globally resilient a our X% even actually to very and over It's makes so We diversified. very in client XXX revenues up and think across across business

real potentially clients still are entering financial liquidity and to at bankruptcy, have of are solutions As clients of XX% these distress, distress. even recurring, of for are activity services clients many even business required, so of non-discretionary we on necessary in cost the provide for where business capital who required financial that and actually of we it's these our for look doing regulated in core, opportunity services highly many

capital consulting, each of risk travel liability, business have did are human things and actually the more business well consulting, much work, up recurs we QX like may slightly The what our renews we about we opportunity data to feel think in our it and XX% businesses. very and business of resilient. Dave project And good is we being the discretionary. revenues is size, about of analytics retirement just see in core client deferred so even The our as transaction part and diversified there include and events too which this year, discretionary extraordinarily be so in

Dave Styblo

Right.

Okay.

Eric Andersen

little point It's to shovel to on just of it liability the for like transaction being just maybe bit Christa, is the on that So a in deals tied that to putting it bonds. a construction a closed to tied on ground. up projects in drive come

deferred been deals So back eventually until will come those They're those events just in. happen. essentially

Greg Case

Dave, this is as also static we evolving. a position, remember keep And described, just Christa and not Eric

need the client So offerings before change. new Eric described new the solutions,

reinforce we So we then and XX the actually and build XX. change the

any game isn't the and of it we the going make do behalf a clients So clients in behalf zero-sum to work very make now investments scenario the and can is of on is to unique position. just in we're be a we on able

we're get the great and and that in where they great of quality, a the and come you particularly service times seeing very why can like literally we're the results stress too. end and up of know that of just clients places also end fortunate lot to It's great capability in seeing they

to in So other exceptionally imagine. well can that perform in lots put are environment unique there think frankly of environment actually one or a current position any things the us we

Dave Styblo

Okay. Great.

Eric Andersen

pandemic lot globally in quarter. reinsurance. particular to capital access reinsurance saw that saw models, in a some in we think ability I the this you that Certainly think I of with so the and

Dave Styblo

Sure. coming then you your that decline margin wide as you've back you end a on thought for but a can pressure the under of long this pull appreciate Obviously conversation year-over-year? absorb of side, revenue and through comments how modeled outcomes I how levers that to can Right. without margins expenses. the much and through the the revenue pressure, maybe manage to flexibility a there there's That's And operating and to range helpful. shift through

Christa Davies

somewhat steps revenue Look guidance and duration to say is it's that impact question we're reduce on investment for in impacts us reduce we enable there taken on strength you T&E, if have need of obviously seen Services and potential more we've revenue clients and are we in air time proactively the macro us and very uncertain also we with to margins far that delivering we're more non-people far ensure have etc. those or and to and comes uncertain that Dave both and position stronger, this as the it's this and not proportionally. quickly terms environment third-party a in would giving expenses, we continue really our the a we until finished we've I'd QX described. we most this acted and they revenue what in of expenses What discretionary great by in come handle in out of to taking saying providers we in effectively whatever expenses, will on can QX our ensure Aon early early in steps Business and platform third-party is definitive do do the done then

Dave Styblo

Okay. Thanks Christa.

Operator

you. Thank

of Our Piper Sandler. next Paul is Newsome from question

Your line is now open.

Paul Newsome

for the Good morning. call. Thanks

has a the made recurring How You of made have divestitures XX% crisis. in a the Aon folks lot, and lot acquisitions would financial

compare and the look change two periods? compare to contrast the and from trying crisis and we're mix the number if business financial

Christa Davies

on QX. question portfolio and of today time of Yes. of our so Look able the the our revenue reduce of on just the procurement platform platform terms overall deferred and recurring really immediately we've quickly, turn financial a non-discretionary us slide our off the the lot but of it allowed expenses we in side that the and not our terms is, Paul. online just thing spend crisis. of stronger on very would centrally portfolio non-people good things far for to a the is third-party versus And nature is and it's where payments example comparing cash one Business is Services XX% and too spend in which Aon margin on actually XXXX/XXXX spent actually the both and we say were financial we managed are has business to in all today through The crisis versus

flow better the because over also company free we point us business view view very of revenue the years we've years our portfolio to versus crisis flow of from so flow for about well overall cash but compare And by sort a or margin and over the of on been of day, including cash managing how crisis. by the equally flow impacts line a which feel good point financial free from couple last allows see cash cash through business of financial are by worse and statement, the to XX the

we to our So through. the strength insight business feel of good manage It's very about and extremely resilient. our

Eric Andersen

we're way crisis of as investment to on overtime. trying up things described Working And that which return capital, free what you're cash allocation of cash higher done to kind based the about thought period we've calls, since higher really it in about remember thought our flow cash meet been of allocation a cash Paul as improved of businesses overall changed if that crisis, in margin the margin, we're to and Christa to terms hasn't growth, also back a capital before ability what businesses fair by do. margin, flow capital our of been time of on brought capital higher means our sort investment creating at as capital pre-crisis, cash going really on these revenue of return, in XXXX-XXXX we in terms against of by has we an post-crisis return we the definition

a of also translation dollar cash from of the has revenue So improved.

business cash and ability of time. strengthened period our over generate mix the changed we've to So that

XXXX/XXXX. So now all those in to contribute we things Aon than stronger a were

Paul Newsome

the that would opposed how and statement? dramatically I delay particular they just My cash back are on examples to have guess insurance higher more an that When is question obviously? was that I accounting margins there than were to No customers for resilient companies your margins second been the question payment have looking income flow as does allow been one. higher changed dramatically through they but run

Christa Davies

also seen So think that we've like they in we seen allow I that in were because yet lines is consumer or our certain business but full areas what but haven't to far. so actually haven't we seen things it in the if

Paul Newsome

accounting Just you yet? how know do the is

Christa Davies

So pool still collection cash we revenue would of be It recognize we'd because placing then business. issue. a be would the

Paul Newsome

much. Thank you Great. very

Operator

you. Thank

of Michael from Stanley. next Phillips Morgan is Our question

now open. is Your line

Michael Phillips

that some your part and talking there is difficulty you the examples taken, to you're but do? Good difficulty refer assume in that guess a of to Thank of basis could Greg, you're you've other couple of that global comments have morning. you. -- that that mentioned others I times you're about difficult you salary for I give cut the competitors some would be a things on the steps would

Greg Case

Yes. I I mean on to we start make just actually, a it like with comment others. actually don't practice competitors or

Aon know it taken position where in protect highlight we put would look in and to form. every So in form. the position any the and and where place able that steps that step day firm shape a circumstance we our we can really clients global I would decade for way think Aon to our our our it's we and XX,XXX teams to back on really that's shape with or serve firm about investment every together on what place last be across colleagues, in is any in has a in well, United them we way the sit shouldn't just we've us say But comment and is focus or

just know because that's this now, we've They a and of the but come it can step behalf know that just because view because one it's thing not they execute of together. do we clients it's right right point to come with they up on

each We haven't in ways we execute Business allows actually are supporting and other Aon before to us it. Services

step the given the when scenarios scenario overall do and So looked one pieces the related is and under imagine, are package, Christa that every about is particularly how the we back, ready way we about Aon its by [indiscernible] can said the that economy sure that Business think talked we're best. Services you at non ready at expense this as uncertainty it’s make and the evolving listen the

-- that had to you used take instantly I time. mean things doing we're over us to build consensus

to obviously capability on very Aon is way M&A are United. more much it extraordinary together Our teams that what the form but that's how Aon productivity, straightforward what's did team, and shape every are we got it what's what as buyback we really really there. and services where about on come and in been that's in of terms unique but of We the efficiency sort around do really we and we're different supports things what they up do business unique as or and and

Eric Andersen

business, connect able that a virtually, markets, a risks mentioning global of today really move with that, with the I out Hey is also we've capability them way and clients leveraging to component being being another clients there's deliver lot using getting think done about that's so about technology, actually to globally it actually client our to capability in to worth understand connect had. we're with our pulling in ABS their what to a forward for and Greg, allows they've able able to

the things the property type liability move it's get the trying to coming in in we're technology what about it's as work on people forward continuing return working product whether NGAs on we're mortgage in we workplace. whether investments front of market, of it's what client the also to business, whether we've made historically to is using there transaction creation Certainly we as past intellectual continuing perceive terms building today the but think we've that's talked to an need

that that we the the we've using investments technology made It's the leveraging end expense not just and it's in are value side. So business creation actually front services.

Michael Phillips

you appreciate Okay. the much, very Great Thank guys. color.

Operator

Thank you.

Phil is question Our last Bank. from Stefano of Deutsche

line Your open. now is

Phil Stefano

a you guess, discretionary volume something Yes. way versus Thanks. proportion around business. number color dependent exposure can those discretionary I any lines? along or of units commentary that's I us the help qualitatively the the more appreciate understand of maybe the there upon of business is breakout

Christa Davies

place with services business highly is of our and is or many core and bankruptcy. cost potentially distress XX% into regulated core required business businesses your and and are for even the start non-discretionary our mean is necessary recurring, financial I'd of I going of revenue doing

could of business. actually And of work It's so so year by renews which XX% it discretionary quite client, It's and this see recurs business some in is as resilient that then and say project is stable the we'd strong And There be etc. segments, do globally for Eric diversified and is described. we there industry, much every being too. an incredibly more diversified. deferred

about impacts values we GDP circumstances risk obviously the them. often may see impacts we employment in given think see to or or exposure but go GDP do I to levels as buy mentioned clients more is there are crisis from that from the down highlighting current we As asset and these increased

Phil Stefano

that just perspective -- certain this? in the the other flow us from there timing of through complicated comp From how perspective? can Okay. the timing regions maybe reductions, just a regulations of about how about you regions this there Are help maybe employment think versus think we might

Greg Case

The Phil, to Aon be answer back able on overall quickly support XX,XXX years and firm executing United is very, very are. No we without plan game would our under XX sort do the what an to prior we're in of way colleagues. a around to this no question ago, we

our one we So and every support single clients imagine. can can scenario

and frankly is volunteer in seeing sort exceptionally together we've EMEA world. what with world done in U.S. leaders actually and Canadian, exceptional in the in doing towards our and course around work it's on around our been Asia of place the of no America, work Latin leadership So actually we're country these voluntary [indiscernible] and kind done essentially well just coming by all amazing amazing astray put an of where it's

the are. And but relatively months timing so sort days, not where of of in we've are of we tailored immediate is sort weeks, of terms in immediate, to now local markets terms

it's something done XX couldn't impossible. and quickly we do have that ago, years we can very So happening very, now

environments the a wonderful why been positive. firm earlier which us gives investment with in United And can good as described the in this in have candidly only, really and impossible. colleagues Today scale coming it position things United, not We're this of I taken accredit out environments Aon said globe, that it's to is is to and we couldn't been do, actually some has it challenging actually the actually more Aon we executed around Eric crisis, we can as do around and incredibly our powerful us the that our in that world. can protects turns strengthen of way out do can and and it extraordinary. We strengthens really it environment a way a shows it the our builds well colleagues They've way in in and actually a the the firm firm. in that our clients do we them is really just actually

Christa Davies

other we're focused through of as revenue described we our And incredibly so we are uncertainty decrease stable revenue base revenue stronger. we I think look, will serve say revenue will, clients during on or expense not helped guidance we we've any have control very it and with measures if to out the manage this and as would along come business as we proportional we Phil, do declines this expenses through give to the about margin obviously the going navigate have we see we this year but resilient with and

Phil Stefano

Good.

well. Thanks Okay. and be

Operator

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

Greg Case

truly appreciate you much on everybody the want to today we call the just I excited through much. other again be that and and Thanks soon. and this you to push stronger say environment Aon world colleagues our very emerge so side. the to to around with on participating Talk

Operator

your you today's participation. concludes Thank for that conference. And

now may You disconnect.

Aon (AON) 1 May 202020 Q1 Earnings call transcript