AON - Earnings call transcript Q4 2021

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Operator

Good morning, and thank you for holding. Welcome to Aon plc's Fourth Quarter and Full Year 2021 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. It is important to note that some of the comments in today's call may constitute certain statements that are forward-looking in nature as defined by the Private Securities Reform Act of 1995. to to and results differ anticipated. subject cause that or are results actual materially statements certain uncertainties risks could those Such from historical concerning posted and full differences XXXX results cause press Information as covering website. year that having well in been release quarter described our the such fourth our as factors risk on are could

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

begin. may You

Greg Case

Christa morning, good call. everyone. Welcome our fourth Andersen, our Eric conference by and to I'm quarter our joined you, Davies, and CFO; Thank President.

financial reference, As website. on quarters for in previous we your posted a detailed presentation our

over and Our XXXX our gratitude term. driving strong more, deliver in is for and and results top performance their win around more and well do that important, performance taken of for the colleagues direct retain for performance bottom steps to and line clients deep Aon we've the deliberate to ongoing express and exceptionally want other. continue XXXX to to they've enabling each everything are more we results We're year long us positioned done this for to world clients. are and result in Most the with

retention. very a driven by in XX% organic net new strong business delivered and Commercial and Commercial the net world, new generation We Reinsurance, we and In quarter, client driven in Risk, across Risk the the retention to fantastic colleagues with year. QX fourth revenue an outstanding Our in saw finish of a by achieved growth double-digit core. strength and growth business

including as in continued economic Within Health more project-related discretionary in activity of demand. in investment and Solutions in, in voluntary in as double-digit of flow client the portfolio. part delegated growth increase, in teams increased we've we transaction our an to remains solutions investing growth Health benefits double-digit client and and responded M&A in Solutions, saw and and disproportionately which saw years, Wealth in portfolio the work, to priority also strength deal essential We several Wealth management growth our that been areas areas last including Solutions,

and reflects to results. organic Our our designed with increased XX.X% and growth full strength bottom drive is Aon points a of year and the year; that fourth in of the basis top per strategy, net of efficiency XX% of XX.X%, United ongoing quarter, reflecting the long-term of for value point, completed buyback operating we of in which to operating line share year expanded momentum full XXXX, earnings the billion; firm. To flow billion year-over-year; investment margins improvements, increased margins free in and income XXX revenue X% full growth; our XX% of $X.X cash $X the confidence long-term exceeded indication share strong

to organic we growth. XXXX and Looking digit growth, free improvement and double-digit or revenue continue beyond, greater forward to margin mid-single expect cash flow

the 'XX in on we back performance observations our offer would XXXX. X drove year, strong momentum and Looking reinforce continued that in

the decade-plus regulatory never supply retirement in to better been relevant. as partner ongoing and change, focus greater property, increased decisions and us chain, our confidence allows deliver businesses. In the that challenges clients capability that and concerns of XXXX, capable complexity uncertainty continue around world, make and changes, over protect Against providing commercial to face growing the their them a backdrop, Aon content effects to resilience. are has on First, resulting of grow and climate clarity will individuals readiness, workforce and and it COVID cyber has organizations demanding more United

this to engagement know solutions way our and what incorporating that experience recognize new data, those value us impact they're a by both them and or we bases, our bring to unmet and model an opportunity Second, expand to analytics innovation new clients and successful at clients needs. the firm. top-quartile bring ensuring employers. client allows of by external all-colleague and previously know creating in our colleague to more to addressable solutions experience, create new of solutions relevance, our for focus. third, this line which more at better feel ability seeing translate colleagues They pride Ultimately, survey, clients. with our we We strategy existing challenges better new the existing and existing they highs, to United our market. And Aon we're and operating performance is these our to This better that and serve using capabilities take applying remain exceptional to for existing to client ways, In that into why great of to facing the grow deliver paving professionally. recent more for feeling valued. relevant, engages our replicate continue levels clients our We're client And connected capabilities in innovation insight all-time colleagues in and scale. sources direct customized accelerate

and Let sources. easily me in us our efficiently demonstrate you access we to new highlight Historically, both to scale help innovation heard Lloyd's that and every then more designed around we growth ways this designed across and used about program offer the to capital parameters we and risk new enables called could for ago, Aon our supported we more clients investors One we talk clients enabling efficient classes solution for this that analytics by client not backbone for opportunity to quantified Business to to capital analytic capability, at Aon from to Treaty insurance been across that reinsurers opportunities on a proprietary Treaty, on the few portfolio. and replacement This which future how risk a ongoing clients pre-underwritten and we risk established Services. using capital have our build a geographies to provides by over markets same access Aon. designed global benefits without Client different risks. solution and analyzed team prearranged provides and Marilla, derived apply clients, broad those examples years more This point invest business entry we capacity back reinsurance insurers, is placement, from see this the proprietary see Lloyd's Aon their important first-of-its-kind historic into Client access offering a placements. directly to concept reinsurance new data this capital capability global X platform When efficiently. and

where Univers example combines double-digit from capabilities care user is active innovative our benefits, we're at exchanges solutions enrollment The Farmington. around and driving scale within health offering to growth. from Another developing and highlight voluntary and acquisitions like insight

how challenges, Within further bringing solutions, has with and essential. never end more turn increasing platform access years also in at biggest clients features, demand usage, examples never our bespoke insight strengthen solutions million time which product and and their X in understand that experience and enrollment demonstrate not for our more changing overall closely been from help over planned been we that reinforce total and assess rewards enables a capital work clients develop to backdrop plant offering performance, existed Our illustrate working guides we're This innovation. claims only formed their and them participants, to human providing which clients data XX of satisfaction. dashboards has strategy our their rapidly by analytics into this we're that better These before. of employee risk, when markets us capital ways

distributing experience scale innovation building deep focus meet to solutions innovation Our across a connections year needs and her Officer. year summarize, exceptionally our on is the ensure XXXX. XXXX Jillian to performance recent digital of innovative new growth, that highlighted for clients. across that clients' of momentum us for also Aon incredible Jillian's capabilities appointment To Chief our rapidly industry and position well that was our we're Aon better positions as a to with and and by Slyfield

our global make further economic as and value forward, resulting that protect better this ability grow built and clients, societal our shareholders. relevant strategy clients and for we more United The our and gives the is becomes track and further in drive to opportunities As challenges record to society even that momentum means we trends look for which and colleagues, by their our decisions Aon reinforced us we've businesses. clients, help confidence capability

Now our I'd for in Christa? her Christa QX over outlook. and the turn financial thoughts long-term progress and our XXXX to on call like to

Christa Davies

Thanks so much, Greg, and good morning, everyone.

double-digit across revenue Greg momentum performance we we another of In growth, into our adjusted to As income quarter growth, per metrics share head translated adjusted operating as finish the our organic and into double-digit growth, the strong XXXX. organic the year. key consecutive XX% of quarter highlighted, delivered continuing we which delivered earnings third quarter,

revenue impact year, Risk Solutions. Health growth double-digit the Solutions favorable within first, on I revenue in I shift highest impact organic note certain results, XX% that change most by would total full FX, business, in our opportunities. reflect continue a we growth Care Exchange of return growth to as growth divestitures includes offset our As Health completed from portfolio notably, and towards and Retiree Commercial modest was X%, of partially including the the year

of continuing look stimulus; employment; our the macroeconomic values, and drivers business. inflation; COVID and corporate various the which monitor we government revenues As impacts we're to impact all clients to including underlying and of our XXXX, asset factors, variants, of GDP;

XXXX organic the We over continue long or greater term. to expect revenue and for growth mid-single-digit

points annual adjusted us our We that of adjusted margins. Moving to record a impact of give to decade. approximately XXXX, operational average which to and in points no year-over-year on the XX.X% have The improvement, within ability we operating basis on margin confidence described XXX the record with performance. We operating investments expansion growth delivered have further margin Services track XXX Business basis expansion over substantial Aon operating repatterning made of income building in margin. expenses last our incurred previously expand XX% margins,

repatterning. from expenses not may move further expect quarter-to-quarter, certain do we While

an patterning We before expect growth. forward expense be patterning right the XXXX expense going to quarterly the

and communicated, year, revenue growth as investments. expense During the outpace we growth we previously saw

factors do growing think the over While as and of such in increase a certain we investments to T&E, of to XXXX the reduction colleagues increased in expect year. we course about modest margins full expenses due

EPS our as adjusted double-digit growth expansion and continue XX% We expect cost investments basis. growth an adjusted managing in EPS to translated we building of the We adjusted ROIC for decade. track over of long-term income full into margin of our last and deliver discipline growth year, on record the double-digit on operating track record growth strong XXXX

As noted roughly for a share impact favorable materials, of quarter $X.XX was year. $X.XX full our was an in of in FX the approximately the and fourth impact earnings the will If unfavorable approximately per operating currency we income of million in per remain today's rates, decrease would quarter approximately of in $XX impact $X.XX share expect XXXX. an unfavorable first stable at or translation

of million expense in noncash pension noncash based million assumptions. full approximately of we compares pension the expect current $XX for XXXX on addition, $XX recognized This income In XXXX. to year

Turning to cash flow capital and allocation. free

termination Business expect of to and and We related continue million enabled free free strong or expansion in payment, income by operating to cash capital growth, based structural In the decreased working free $X flow on flow over observe improvements I'd XX% cash cash approximately drive flow termination by excluding billion were offset uses which from Aon to XXXX. Services. term growth XX% in the capital, improvements that margin $X.X reflecting $XXX long fee XXXX, cash and billion, costs. $X payment revenue growth, other working billion $X billion fee grew

flow growth strong. beyond free and for XXXX cash remains outlook Our in

are allocation highest as billion XXXX. share to capital share billion quarter we today, the Given opportunity the market highlighted the undervalued share of we outlook, significantly $X in our capital by of repurchase to continue repurchase in approximately remain this return expect we for $X.X repurchase believe on and in

our return shares last Over of we've total in of net and expect basis. we levels invest we as to the technology a working. more on smart In repurchased one normalized decade, outstanding XXXX, third CapEx over to

$XXX of We million. investment expect $XXX an million to

we before, CapEx investments return manage our said all basis. like on on of a we've As disciplined capital

inorganically to and also invest and address to content We needs. capabilities organically expect in client unmet

solutions areas evolving highest scalable to clients' M&A pipeline on is our will priority growing bring that Our and our challenges. focused

portfolio capital on our capital a basis. an all a than continue return basis allocation increase manage of the over We on assess ended points X,XXX with to return decisions XX.X%, We decade. XXXX of more last capital on and

capacity. debt our and in sheet maturity risk a strength well-laddered the liquidity sheet through debt manage and of profile. balance our to confident now remain We balance Turning

addition, QX. we senior million $XXX In in issued notes of

capacity maintaining in growth while in our issue and improvements before, combined said our investment-grade we liability we with pension incremental increases As current the year-end lease to EBITDA, credit have balances, ratings. debt

and last still Current the funded to XXXX, progress volatility result liability have clients, future decade are net risk million of significant market over the to pension and of is Our unfunded by balance nearly sheets. volatility. -- clients improved on giving taken volatility $XXX to reflecting changes. their a balance derisk of regulatory status a our reduce the status reduction we've steps and continued many in in This many reduce conditions pension obligations chance or for who related funding funding this

flow analytics often risk manage their a insight to free shareholder will With strong strength over achieved dividends and Aon effectively. delighted balance returned as the I'll our to the driven pension return our growth, creation We sheet operator, performance, us by with Aon combined we'd In provides top Our and with clients access share billion retirement over Business long cash on risk, capital, another new line be help in our repurchase the expected can for value XXXX. long-term this Services. was this to take creating team's substantial call we capital to of help invested head to approach their questions. shareholders unlock we year of transfer, to and XXXX nearly We your risk bottom into success in term. believe United summary, XXXX. momentum our year The continued $X that, and efficiently turn long-term disciplined reduce the partial through clients back opportunity a space and Strategy

Operator

will [Operator first our you. Fargo. Instructions] from Wells like Please Thank ahead. from Greenspan Elyse Looks go question come

Elyse Greenspan

to investing first and -- comments Hi, inorganically thanks, the question good organically Christa's on over mentioned back of guys year. My you coming goes morning. some

increase could past to you. And XXX was I expansion in you the just sense expenses 'XX. to Thank point that a in mentioned you trend decade. trying have basis get the So thought on of you expect over the a average if relative margin how

Christa Davies

Thanks so much, Elyse.

portfolio And to is leverage higher-margin shift expect and Business year, XXXX. previously, Services. goal each Aon from driven stated margins and accelerating growth; to mix our we margins XXXX to including by higher-growth, every we As grow in be revenue businesses;

XXXX. You've seen over expansion less. more from expenses. basis the and in And year, margin We a a XXX lumpiness of of driving years a deliver of did expansion see will and some the our XXX we which some years terms mentioned, above-average margin timing of this in points track record, with you as points basis discretionary there quarter-to-quarter, always past did decade, investment little be little year of

margins XXXX, expand reduction we XXXX? to to as growth. investments in going some long-term expect look in Absolutely. we are And So of also colleagues, in we ongoing T&E and investments

investments, the we expansion, So of the course year. margin expect to of full net drive over

Elyse Greenspan

you capital well 'XX But And on thinking growth, going about in about the billion, can robust think you and forward know if help quarter. just a the bought as think capital capital flow Okay. EBITDA And don't $X you could the then as about have right cash potential number guys think in the guidance as firepower about level beyond? you fourth provide incremental -- I the have pretty side, buybacks. is guys of back for return that expectations on way you you guys leverage your to free us --

Christa Davies

do Absolutely. growth And look, future. expect double-digit the cash for free we foreseeable flow

So we capital flow capacity, cash we're really have substantial and in a generation strong a position.

incremental flow, debt you're first and the is term, digit right, over so capacity. expectations starting for cash the long Elyse, double is free which And point

growth XXXX a across demand return-on-capital leverage highest very giving repurchased think us is So high on do our billion XXXX billion in you a $X share have continue but should sense pipeline, how allocate you QX, But we investment-grade and remaining stock the areas that capital. as Elyse, a of in in And share currently debt, is. approach saw with to $X.X substantial buybacks current disciplined clients. buyback, expect we say of keeping capital expect the then to in would and high EBITDA that we investing in to M&A opportunity we in grows, from ratios M&A undervalued to to our we with you Aon, addition during return add follow what ratings. And line

our invest it's technology whether to in colleagues, expect organically innovation in the to also scale globe. across We

$X pleased the return an we're in also we're points X,XXX over XX.X% And billion about capital of capital XXXX, And shareholders last the with XX so of excited over in to really return the of increase basis really on years. XXXX.

Elyse Greenspan

Thanks for the color.

Operator

Our Mike go next from Please ahead. question comes Zaremski Wolfe from Research.

Unidentified Analyst

This is Mike. Charlie on for

estate. measures undergo Aon to Does curve Aon any more via has the collaborative workplaces announced So to saving less been real cost-cutting ahead similar peers some for expense who initiatives? have of expect building

Greg Case

always which is -- around, our that. think, I entire supporting it is, to colleagues approach design, really our delivering, accomplish, trying start, do around with We'd as our client to we're entire

really approach we number the you've sort And that. colleagues actually will, on So optimize worked reinforce as for as and around of of first that well and a side done, foremost, well. client our we've described, things innovative to and that perspective. It's exceptionally

worked be So The exceptionally that. see outcome the for invested basis, us outgrowth expense on on optimization, for opportunities actually do be. that. And clients a invest and opportunities create return to side as you'll Where that's and we'll what a well to will will investments, on us. do better described, do we'll that. there's just make colleagues, capital there's We'll Christa it to continue to create where

as exceptionally to So really continue that's it, about evolve. and environments well we for thought how it's especially us, the worked

Greg Case

environment Can terms us P&C deck you're And 'XX? for were there? in then the your have whether in side modestly what Okay. Great. pricing exposures pricing on you seeing And an slide positive. momentum to you the that of about you noted on in P&C outlook talk

Greg Case

Go ahead, Eric.

Eric Andersen

this one of these calls, the say -- think Listen, I Sure, really pricing is I've Greg. on I factor. couple environment just said and a Thanks. would

the growth look listen, risk this, is first, our And at about, to identification, and like. how when exposure with have also our clients, do we management. work they role risk in really You

lot and themselves So balance that own do market. they're their also protect doesn't using financed, when get they right? on what So the sheets go that do resources? into they to there's at they own they limits, a a they can look can ultimately, they tools how retentions, conditions, then, to they their And at their risk number deductibles, and these at look They at areas. transfer, terms look a they look of where at ability. have actually point coinsurance, look all they want at they do But

bring -- them of analytics them insight, our help and and we and best our try those In all data make fact to to choices.

And market so discussions when clients what different rates, you it's around than buy. see actually

So it's the up, not they their who portfolio. carrier, a what the versus line direct market's say going may going the market's for do down, from own

Unidentified Analyst

you.. Okay, Thank

Operator

Next, Piper from Paul go ahead. we'll Newsome go to Please Sandler.

Paul Newsome

for brokers most time. been the morning. talking relationship because hoping been been of sort been little give thoughts where growth of for folks really us have bit that organic there's call. Thanks you pandemic, and has of between -- I over Good But broken I The margin growth, maybe the was allows what to has the there your down, some on. X% or on in industry the thumb expansion. organic to and could margin expansion that, see rule relationship a more X% wanted

Greg Case

a line, top of things. the Well, couple

new just terms we're beyond, in XXXX achieved opportunity on serving that's new trying see opportunity and see and or overall, addressable clients, of time and increasing the observe against markets seen we've we and in Christa in that but serve there, very and perspectives existing to able said doing. our out First, effectively digit what we mid-single are in described. all would their net And when profile that you also of as accomplish more I what -- we've believe, strengthen that we've that more kind go ways around demands, also changing XXXX. accomplish. described organic, continued greater, to demand margin which to to we well obviously we're over us about demand, We and you've improve profile, what think, again,

do We've If you of different fully would add margin years, kind expansion But last Eric, and think achieved it, you variety about that. there's growth that? XX anything over to environments. a the to expect of

Eric Andersen

strategy would say continue we to I we've where number take around a clients. to our value advantage Greg, and of trying how drive bring there's areas that to built to growth

how areas we units, capital risk sits business do our solutions today, human got You've connecting capability existing insight we're bring we where we free And a actually globally, capability to you been directors' how what capabilities we the new connect and side. or find it then of we're what growth, different that corporate with make inside historically business do have our within do to how business. it we where where match up reinsurance clients, the bring sure might bringing is you and officers' on that across

new those -- bring ways how we're no longer where new you problems. just clients' whether together obviously then the on, so capabilities an how that existing it's to you've And got cyber, you solve growth So it's insurance new in policy. net bring focused

to provide to You need the able to investing risks. be opportunities skills the risk identification, future while better they're those an to try also to to manage new our insight today climate mitigation, help provide to risk you new how climate, manage clients that facing and to clients. in Certainly, issues drive with value opportunity real give bring

new that today to everybody's better that have door, front considered past, been issues ways as said are are use how drive happening be our there existing are in So -- outcomes capabilities horizon clients. would we've also for in but that the we on risks

certainly and So an for opportunity we future. today see the growth in

Paul Newsome

What's on current if to more really the environment? outside companies. it's new it's just in My question, It of be equity be a getting everything if for M&A that to more that there stable your in to But an know ask of about roll-up And continue environment lot like industry. a we the in, like seems roll-up seems the supply companies, new to lots endless is take hard hear arising, second and private about just are or brokerage. of the interested view. I'd comments is Great. competitive probably valuations environment

Christa Davies

start So at the our delegated aligned highest and Paul, need, we whether management, analytics. areas do is on associated margin, which that's benefits, are the investment we we one needs, really around that's we the with M&A highest client of and whether biggest return capital pipelines of things highest client -- from health look growth, that's whether build opportunities, then data

And so before areas in, actually a a we're lot that of building actually with we're go well the process. relationship companies they focused through

others. So we're competing not actually with

in so in we're expect like thrilled that to which Aon. really with building in lot we're And bringing a capability relationships areas of companies cyber, we in And of do be areas property, that XXXX. like intellectual more analytic-intensive businesses, a into to lot data

Paul Newsome

Okay, Appreciate thank very you much. it.

Operator

line to Kinar we'll of go ahead. Next, the Yaron Please from Jefferies. go

Yaron Kinar

diluted count morning. thanks I of really you look that beginning taking of think yet just at out, for I XXX another be or you million first my some under the 'XX, one If will Can why ended maybe million, million, share first actual you share have count common question Good shares the And color provide as here. to a period Actually, equivalents. dilutive -- of question. year outstanding, quarter that called I the going X with up? almost. And at it's XXX the

Christa Davies

which So the few million. have QX XXXX we QX outstanding estimated of to And shares, is we XXX.X diluted million have in XXXX actual diluted shares. you a shares then get XXX.X

Yaron Kinar

Okay.

So that's apples oranges. to

me does into flow stock-based remind just compensation, the Okay. EPS? that could maybe you adjusted And

Christa Davies

of Yes, course.

increased share to count compensation. related issue you stock-based the you So when shares,

amounts the last down going think you same. the of years, about shares issue each stock been has dollar couple if the actual so remained year of been the issued And while substantially, it's for we

price But decreases. disciplined dilutive giving granting been we're we've impact very increases, amount So out. as the the obviously, stock the about

as an issued example, XXXX, in we million shares. So X.X

Yaron Kinar

Thank you.

Operator

to we'll line go Bhullar go ahead. Please Jimmy of the Next, JPMorgan. from

Jimmy Bhullar

Hi, good morning.

actually concerns were lot could from you seems if ones just I a be expenses, the of the I and All And But line So one like are of growth, down. organic And if deal. comp then years impacted lot. it -- fallout the your seem think on benefits couple or just about it questions Willis look just about the about that? to from your doesn't a there other a ago. that's talk is at relatedly, only the up based

So little talent, you're up? sure retain deal having just of because bit the to if to or pay because more a whether of not inflation breaking

Greg Case

appreciate in the of I question, Jimmy, both them, fact.

is our our performance. one. answer question specific the over first believe we to with -- point digits, double with I in Jimmy, at 'XX and grow strong, improve about opportunity start going you we're over flow where 'XX, financial by think, unique because Aon of on And Let's for the think to in be time grow margins position we'd momentum our very time. you And and, fact, this in sort when just your start momentum, -- cash future, and current our ability the free maintain start very consider and way, revenue, with 'XX, as the really, final and we'll

And at higher, but high describing, is evolving. getting organic; at attrition, You free more saw also way, double levels. by below important, the X% XX%; digit; as was Voluntary and then flow, colleague need, Eric engagement, margin as client XX%. it's cash pre-COVID

the say, momentum if going into And as the our think globe And perform And we're about the and on especially lot. actions Delivering months. that XXXX leadership. the over is Jimmy, reasons and exceptional, performed to on we've on build got very, really why the is question, talk it's continued and Aon called very But and you you what so around it the decade Services, and and this doing model look, United the network most needs. financial this, in all the last operating have and really ask the about we performance of six client Business I'll these colleagues that. is important, that? innovation, drove before and exact And is Aon refinement driving talked we work momentum, a Aon United continue this what's 'XX,'XX we've built behind a and blueprint around him to people performance to United, the really systematic same now we're that on about is 'XX. amplification Eric, on Aon in Really, going get Maybe, actions ask the you and it fronts: are

before. are it, It's And it. difference and path. finally, we've believe career while more together, in would that's all But and you Aon's means say more becomes known more in that got we they have them. in have, in wow, and is really this point traditional It's ultimately, really integrated all and need on that if now an say, a brand in a positioned the are the requiring fit career compelling. it's better and would more is areas, well, And areas strategy then a exciting. colleague the We opportunity they're all Our this compelling the talent you about, the forward, XX terms think United, mix, this more that around client And win about we years, strong go of compelling creation and capability. approach. think more And these more demand as for it And we've matter we're final to momentum more the look, and for about amplification had. in requires path Aon of a clients fortunate. who clients, then context ever for and greater this wealth of make than opportunity post-COVID why to getting future, development thinking last world, for approach, really the a I'd

going? anything the we've want questions you'd just on stay there. first around I just to first two add one. So got that Eric, piece to But we're where else I know

Eric Andersen

really Yeah, well. Greg, it covered I think you

we of the client clients really it help for risk as few work with risk today the minutes is I their ago. about model. think the the the talked of question But an we future, us to and plan operating demand our around show on a opportunity value

human as risk we a bring our at that's to capabilities together. a capital point. the just together way So our in and insurance teams provide that want out And and not done risk, talent at it firm risk, it insight they can a looks one resilience holistically, the that work use to pull of but just in the an of really you being risk client all not of the that see as

in provides marketplace, able back allows the types. those to that that also what able channel having But you that You with need, our looking is using future, a talk service the to handle different in and absolutely segments the that clients' efficiency the ability in of you operating to resilience competitive our by understanding to able different of Services invest connecting like Aon clients issues leverage see to it. be of these and us provide couple examples talent risk, need the a in bringing a where Business scale, backbone to that like way about. drives firm, needs leverage globally I like to do see think, really firm say industry then that critical an It climate, that backgrounds, with to and is you those that model, of capability. draw their the can talked to be are new but the us a be the the reinsurance we're level Anybody as it from we to analytics, meet able for advantage issues to data cyber, into

we ability So place meet does model forward. that that give the us needs really going we've put in feel really to good an those

Christa Davies

question, said you think on up. your are comp going benefits and I expenses then And

talents about We as to are areas in invest and business across the for in full new able well unmet our growth XXXX excited continue We're client in colleagues. needs. year. of to expansion in the current context creation into continue we're great that driving in investing margin being to as talent in and do absolutely to colleagues, investing our wealth our development, serve in hiring And

Jimmy Bhullar

inflation? you do comment Obviously, you. of the about well? how And business? of wage negative extent helps that Okay. But could the think inflation premiums evidence go First, the if up, inflation just you you as and your pickup in on positive affecting seeing are the to

Christa Davies

inflation see that in We do QX. saw our We business. Yes. wage in

to to to Services XXXX. we our say terrific, which by that we efficiencies what Aon invest driven We think colleagues, But is continue continue expect at we while that scale. we is, with into offset in would Business expect

sort allows to there offset and continued to drive continue us And so of efficiency expansion. margin that

you're just while inflation, interest on One of might the add, I macro rates. things other is

dot our if in continue is a impact there's ways: line there's So entire expense interest, not, but basis an the rate us comes is liability debt. very key interest which a investment points debt fixed portfolio $XX interest, third, rise, think interest and has line negative, for every short-term for XXX that fixed interest rates so X top then pension to positive on is Aon; and you fiduciary bottom rates, income were second the million is to in increases, increase no down, may of and

inflation So for term, for inflation, on is longer of do to Interest a we positive positive our fronts. X a Short there's expect, impact rates business. sure. wage sort be term,

is So positive we do very think macro the our environment business. for

Jimmy Bhullar

Thank you.

Operator

question, Blair. of ahead. go Please line Klauber last to we'll William our go for the Adam And from

Adam Klauber

Good part. to able in morning, the been you've thanks. Historically, increase margin

lower-margin focused but think divest on I you low-growth, mix high-growth, said business you you higher-margin historically a from perspective, businesses. also businesses

So part, is or there of on the the a growth XXXX, that we amount still fair second at divest? margin could XXXX, as lower you parts of business look

Christa Davies

higher we I continue to the and portfolio say we actively what growth, businesses. invest is would revenue manage in to higher-margin continue mean

low We on will to capital revenue continue lower growth, lower-margin, divest return businesses.

them fewer think of there's in the I portfolio. left

and do in but Business existing ways. to innovation scale Exchange increase the with So to much more a efficient to Services therefore, efficiency that margins saw huge the QX, and Retiree business and Aon also you ways businesses Health the in opportunity them in more us prove with scale invest of help globally Care there's the

much to us but continue a forward. we'll probably an margin lever bigger manager Business yes, be Services portfolio, Aon driving expansion active in So for going is

Greg Case

on every is over we XX% has to capital, which terms very Kind clearly, led through situation what Christa which as a do. process really very capital, also, out in this return conversation. you could year, if as of sort a a that. outcome time dynamic to phenomenal invested margin, real, been But is this of believe, call Every And real with it's move also invested able described in change evolves of on return led upside to we it's time. XX% over

ways to businesses well. for X So And ago, improve, that performing the we were in category or have to and us we're years it looking that. served do to continue X

So Chris served And about well. this static that but it about has the not the just over is time. and the really really team that up has the us dynamic how set evolves and process

almost because capital on like XX last basis years, return points think on the the on what there's probably X,XXX over like invested more even I done side, like we've surpassing margin.

Christa Davies

Okay. one follow-up. And just then

do some being the understand, engaged, what Are having been macro turn? On we Health business, has has you been you business and be that impacted always more market, sort into of Are to more getting the across environment not seeing the time managers the workforces did HR do to XXXX? they Solutions what very managers COVID discretionary projects. more I that more offensive, beginning go as for by in busy during year. business this quite that HR well From very, impacted

Greg Case

future, of to what employees, -- as world, resilience, day-to-day leaders it's now clients to Adam, whether not but the has all workforce just you sort this just or talent. revenue of done you around to opportunity exceptional. are demand sort with the activity the results it and tremendous, do work and also things the in literally revenue is for we here really highlight, our has And support And and you people as the -- continues about think increase. and the now the been dramatic and in

So talent space a overall a from the health we standpoint. love and

into what going think every the do day on and specific just leaders, beyond employees humans, on, ties side, be as of also as line. effective they it While retirement a helping benefit I what's really more in terms

- on health all the of the other we like in the see opportunity in tremendous seeing that. described that and just connects And US. areas everywhere retirement before, world, employees, Eric around we're it as side not demand So aspects with touch

Eric Andersen

one maybe Greg, just comment. quick

to talent, we across you how understand, colleagues is a borders on to harmonize programs look our There's of designed those. well-being basis, certainly out free -- to when but about the doing it's talent to what side, desire think the also global like, move benefit now that right clients. playing all our are as a not able to this really meet global is benefit that the I be corporations strategy And whole their talk up opportunities. the but side, absolutely just with person, professional own

they're of their looking building is also company, for or it drive I value to trying fits that where resource And use what into talent person also individual opportunities as is part best And so of at. human piece to a the able the career well. talent, but a for the think

Adam Klauber

Thank you much. All very right.

Operator

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

Greg Case

Take our on Thanks next I, very much. time. very this I joining forward say, just of want Eric to care. thanks quarter to and Christa, and discussion look behalf much for

Operator

rest of the That you your Conference XXXX a plc's Year and have Fourth and Call. Quarter joining, great concludes Aon day.+ Full for Thank -

Aon (AON) 4 Feb 222021 Q4 Earnings call transcript