Earnings call transcript Q4 2022

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Operator

Good morning and thank you for holding. Welcome to Aon plc's Fourth Quarter and Full Year 2022 Conference Call. [Operator Instructions] I would like to also remind 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 historic 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 is It over call now my pleasure to Aon to plc. turn of

Greg Case

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

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

We Aon today around the begin world. by thanking colleagues

and performance in Aon United power to strong XXXX, address XXXX we as of support and through strategy start of their to in plan clients, and and their colleagues our continues today to Our needs dedication demands tomorrow. the fourth momentum they tremendous of as the our strong reflect both quarter our by

century a $XXX the to XXXX and to was we to focus engage global risk, clients and grow. the from challenges on weather risk economic losses opportunities our continues at continue gap. increasing clients sized see climate report over only commercial billion, covered it and global X% $XXX opportunities and the catastrophes natural In latest billion year protection was in from Catastrophe which XXst XX% average insurance, Insight by both

and importance of the back and stakes colleagues which Wealth never year encompassing income changing to trends In broad the readiness and C-suite in reassess and volatility of demand focus half health, higher. organizations and continuation a across the business, capital retirement And growing financial human been culture, Health the engagement wellness, fixed our for our Solutions, equity workforce, Wealth the have help and inclusion, includes created in around well-being. our Solutions Solutions market

the full enable many across client address bring and force evolving colleagues solutions offerings to on relying firm, including demand. of This In United. would complexity this and our risk them fronts, core Aon environment so our innovative increasing scale to increasingly are at of

analytics the deliver Turning Wealth growth growth teams advice in to performance. organic market performance. in delivered In early X/X on strategic and revenue to in were benefited This and our growth reinsurance, help highlighted our data-driven In X% to reflects renewal a we able in financial our fourth renewal growth Health X% clients by very Solutions. X%, in of market navigate process greatly the leadership Solutions X% dynamics. difficult and reinsurance, clients challenging strong quarter,

in focus Wealth In which rewards, in growth tools human In and employee years. core Solutions, enhancements Solutions, delivered we platforms revenue increased strongest to team our Both and quarterly on strength our organic capital. H&P the of engagement X in health, offerings, saw Health benefited client over from and our well-being.

worked As transfer, client to the tirelessly to from volatility, to continue risk rate pension respond our to pension respond help particularly in regulatory demand U.K. execute on teams resulting clients and interest changes. market management strategic and and

X.X%. opportunity has very contribute continue growth. attractive organic are we This significant the long into the pressure organic double-digit And X% U.S., business by annual M&A over delivered strong while growth risk bottom in Latin the otherwise results X%, positioned growth on in QX, reduced to and growth Canada America impact commercial U.K. an may revenue strong long-term in the the this X% top and continue Asia year. grew IPO for to the and quarterly but to finally, quarter impact And the In M&A and in reflect Pacific. We and by this line services. short-term well and environment of growth Europe, highly external term,

XX% key our points top adjusted earnings driver Aon revenue $X XX billion year, margins line of $X.X results basis value is both and a free margins grew a XX.X%, flow direct X% of of organic XX.X%. operating in per full strategy share to result billion of growth X% year. the firm. our with $XX.XX, exceeded ever and for full our the cash headwind. buyback, flow overcoming to strong expanded our highest Adjusted cash Noting is FX the the or confidence of demonstrating bottom and For we a $X.XX completed of share long-term United Free

term. us well positions to exceptionally over performance in long team's and deliver XXXX Our the

flow average and compound and back, cash X,XXX view growth. the history. about momentum of expansion X% rates opportunity than EPS per More respectively. Over at go-forward any higher while and XX%, margin basis organic adjusted XXXX, Looking growth revenue now or time a annual since year, we've basis XX XX% our important, in increased reported free points points of we

ahead, Looking revenue growth cash free flow expect improvement term. the to organic greater full or firm, continue for XXXX year the we over and mid-single-digit double-digit and long growth margin the for

of United offer put scale deliver and some of to are would we at challenges on continues an in services colleagues, exceptionally that decade highlighted including steps year, significant impact progress and for business blueprint, how Aon decade, are areas in a increasingly they P&L, for The and us Aon position the past United Aon and on clients, deliver the the clients. our have taken innovation strong These opportunities single on brand not continuation over single we've few observations There on mutually a clients face. reinforcing. our over Reflecting new. are the to interconnected and greatest ideas of a

like bring together business. across for demonstrated concepts On new development, solution increasingly delivering innovation of not within platform enables in analytics lines our us solution only from as scale, we've climate both built we've solutions to connected at but the new and areas property and expertise and intellectual innovation enables our

designed improve deliver health an and in help and experts well-being, hundreds our It's by employees' as scientists health services. to turn and For health assess data Aon capital ad lower helps example, business developed and from productivity Solutions actuaries, cost. platform, well Health which has analytics of team credential clients supported as human their

safety, this including we engagement form absence physical proprietary employee assess of robust can driven data Within this and health offerings insurance claims, a together view offering, external well-being. can health teams and recommend individualized and data insight, targeted around which solutions, by employee trends With workplace information, analytics, solutions data better our on insurance program. and

XX and manufacturing As were employee correlated The an that wanted employees physical and to example, we success. Together, and impressive. customized program improve costs. X specific long-term for client designed health well-being health well-being a individual comprehensive and includes reduce targeted factors a results programs vendors well-being on based strategy

in engagement. XX% important workforce lower ongoing cost people. metrics of like saw to allows platform rapid solutions and Aon volatility. the colleague And is see solution our challenges Further, In at our high impact per help biggest selected this health target Equally group And help opportunity and across an day very person. backdrop across clients we every manage for clients' as distribution to this support driver rapid we the risk firm of address wealth improvement scale and which at productivity. the colleagues our our continue we innovative and compared to change having health, demonstrates of our drive their examples important, a nonparticipants, our while this to clients of meaningful the as delivering kind scale

position strength. in a summarize, To began of XXXX we

progress us support our and than shareholders firm to deliver connected to the is is ever better reflected continue to to for long key financial colleagues. will now Aon and enabling better before, Our in deliver clients, solutions and clients term and for our results objectives. our over more United colleagues achieve

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

Christa Davies

Greg morning, so good Thanks and much, everyone.

to our the performance year. strong quarter Greg metrics As delivered finish we key highlighted, another of across

quarter, earnings the and growth we into translated XX margin of points revenue basis share. adjusted growth per In adjusted X% strong in organic expansion

revenue high. to organic basis as For increased all-time over the an look operating and on $X We forward to free X%. in into building Adjusted margins this points cash full head XXXX. XX growth flow, generated we was year we XX.X% billion momentum XXXX,

X% organic on As growth revenue in for year. was the full I fourth as noted, the and quarter reflect results, X% Greg

for also includes term. the most both to continue X% of the a organic revenue X% growth and of the mid-single driven year greater and in We from impact in would reported versus QX periods. an revenue long unfavorable full year dollar by growth that over both full expect note FX I currencies. in Primarily digital U.S. XXXX changes stronger

million million not growth, both in QX X% I'd periods. in also $XX full year investment for highlight $XX was income or which that and organic fiduciary our is included in the revenue

overcoming organic to of Moving resumption operating delivered to growth XX.X% operating performance. adjusted long-term with colleagues and by and Aon revenue Business from expense technology improvement in Services, basis growth, and operational an in points efficiencies QX ongoing strong margins increase some including investments growth of XX We T&E. drive of driven

operating of years, delivered year, margin XX.X% past full of a note year. margin XX For of expansion XX the reflects And XX year-over-year. the basis basis points we points over margin I'll adjusted expansion

an to cost as record investments ROIC XXXX margin on of our in the expect in deliver we we growth basis. expansion continue over forward, Looking term and long-term long managing discipline track and

about is previously margins full we've by areas: line first X course year, of revenue driven we think over growth. communicated, As the the top the

platform. and client area productivity by in our this areas data-driven to invest shift third And Business supported from portfolio mix the improvement is from leverage disproportionately to Aon operating our organizations. insights higher solutions Services businesses and protect that increased advice help clients grow second is margin deliver The as increasing we of demand, their ongoing

contributor I'd inflationary in advantage, highlight key and that to a represents Aon be expansion Business competitive to a market. margin continues Services a high especially

gains, service continues business Am at to platform and services efficiency and quality increased innovation improved drive scale. Our

Aon the Business through to automation process of and continue make improvement, Particularly use efficiencies we progress XXXX, services. During and driving enhanced on artificial in Services intelligence.

legal require policies. clients a captives of was each identify digital manual to our We've inefficient. solution quickly process of moved and to and checking now entities with has hundreds more instance, much the who deliver differences and these Previously, can policies business quickly. For that accurately clients multiple

better Similarly, clients. the us use to of enabling AI is deliver to increasingly solutions

a we growth key human essential example, best engine This firms. using on pay solution them insights globally for search geography-based within a including differentials. clients technology of existing the finding and delivered is area with our client's for provides many technology for optimizing capital an talent the For that AI-powered workforce, new talent

outcomes before, client time our these said and drive for better we've client and free help improvements valuable service activities only clients. more improve also not delivery, As they our up for colleagues accuracy

margin and expansion of EPS X% for the growth Organic translated growth in double-digit XX% of QX and adjusted full into year.

unfavorable an our full the at for year per for of approximately translation XXXX. $X.XX share QX in in year rate, first unfavorable share share currencies the we of would earnings today's in an expect remained the XXXX $X.XX XXXX. noted per quarter was materials, per If impact and impact stable $X.XX of FX As are approximately share per and $X.XX full

capital free to We record XX% free $X allocation. over XXXX. of in CAGR flow Turning flow track cash XXXX, our generated billion cash flow since long-term in contributing and free to at growing cash

and continue term, growth driven by flow strong double-digit cash year and free free improvements. flow over full to the capital for expect and outlook operating in for income Our working deliver to XXXX beyond growth long and we remains cash the

we I'd note in growth. level in as technology more long-term ABS to to made and drive enabled CapEx platforms normalized ongoing returned investments a XXXX

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

continue we repurchases outlook opportunity approximately repurchase million we're capital year. We highlighted Given for to highest in for today, billion free in expect believe in and of our and quarter $X.X share beyond, significantly flow the share share remain $XXX full of ROIC repurchases market the for strong growth XXXX allocation. the the undervalued to cash by our

continue to that content consulting We expertise needs and also in unmet client leader and modeling help our our in expect needs. and scale catastrophe in to content to We've of expands a inorganically to clients' meet in our ERM, modeling we can which such organically as invested assessment reinsurance. invest address Mexico-based capabilities capabilities acquisition QX and risk

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

an to and capital over ROIC portfolio increase continue the basis. basis We years. will manage X,XXX all actively XXXX decisions nearly XX.X%, last ended with of XX points on We the allocation of an an assess ROIC

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

X% as EBITDA and average I'd a improved XX investment-grade growth weighted rate, term as approximately current We of expect credit to liability incremental add of debt rates all With the while increase. long our pension a I'd maturity over rate interest ratings. note term interest to respect with approximately debt interest our note weighted our is maintaining years. fixed rates, average

efforts, resulting continuation $XXX obligation. I'd pension incredibly of derisking annuity continues that in transfers for we our transfers an transaction our completed the a settlement in pension we quarter, demand the strong benefit As approximately to from reduction done be highlight of our risk fourth attractive in This pension in pension an environment leader and and do U.S. to the substantial a are continue and clients see the in clients. to risk numbers space. We've very U.K. million

XXXX. provide In year the The we summary, We United XXXX dividends. to year as strength billion Aon of and returned Strategy share our performance, over and success into was Aon $X.X repurchase by and achieved we continues bottom head Business to shareholders another top strong this momentum of driven line Services. through

the economic guidance our of XXXX. we're seeing of signs confident we firm our remain for and While in strength uncertainty, financial

is and Aon results gives any deliver business confidence our United our strategy in ability resilient our economic Overall, to scenario. in us

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

Operator

this question from comes time, the conducting line be Wells At Our [Operator session. you. Greenspan Elyse Instructions] a with we'll Fargo. first question-and-answer of Thank

Elyse Greenspan

margins. on first your is My question

So excluding look seems the it quarter, like declined margin in income. benefit investment if fiduciary of we your the

see a outlook the So NII margin, for I'm of XXXX? drivers excluding you benefit get sense and to just trying the in your

Christa Davies

would much basis really income. correct. full XX note, course year. the points impact That Yes. I think saw over We the fiduciary of for of we Elyse. Thanks so about the investment question, expansion is and And from margins margin XX of points basis

really XX basis fiduciary the expansion margin full about from the of So think year, over in of points points we margin term. XX long income. basis expansion came which And investment

revenue and margin the XX for last points over year Our has productivity Aon the basis to or points benefit higher it's getting we're XX shift And growth by portfolio a Business Services. really years. been areas mix growth, years X,XXX the XX from basis driven margin

And our organic with year or mid-single-digit free we're expansion the which at for revenue growth full confident full extremely XXXX and is XXXX. so the cash track year for double-digit that least flow record guidance financial growth, margin for greater

Elyse Greenspan

I what quarter? get the the a guess, you'll to 'XX, the from that letting did continue we line some in assuming of So investments fall income, in similar making all probably tailwind to fiduciary investment to you bottom balance fourth and

Christa Davies

fair. that's think I

each the overcoming invested business are We continuing investments we're in saw we you and year, to in expansion drive every in because QX making margin substantially IT.

really and And invest So our clients. IT to expense is up. for to We're investing solutions and drive what continue invest continue to and but areas of which the we'll think in M&A in colleagues in growth technology over course in about continue of us. invest drive to to full we'll platforms really our innovative a is to we'll a lot we matters long-term year this

Elyse Greenspan

in Can a you am heard second reinsurance sure past the of I the sense can at just But that reinsurance but the X? you the concentration the property an a perform of you that environment where seeing renewals. sense not in outlook then give highlighted for business? of you lot lot think out we've in how X about coming January is question, saw increases a pricing we give reinsurance we're if of it your should strong my January And as business robust a price us catastrophe lines. us

Eric Andersen

to moves, would we would with the Andersen, performer to to [ph] help kick property you us losses, business. think be more it's XX But the certainly, a there's good the This continue the opportunity a the us to out the the risk, take of as of part year. happen would others when be very They're happening morning. be CAT part off. it. very time The reinsurance don't to for the were the whole team. continue of clients we specialty so that is and of dominant spending to figure that data Eric is primary the next months, been And a say, continues for a go say on lot I this I casualty, reason. see insurers. primary through that restructurings with CAT through season. Certainly, think a great going programs why endgame, I Property over what's but their of spent to lot [ph] But big attention better the renewals throughout through our rate say the I insight robust business think I the to positioning. a not has for the interest analytics, of be business as I one It's more volatility you strong to Certainly, continues pushed future X/X

will space of use have very risk the reinsurance, other disciplined in outcome year. like They'll the them they'll to the selective risk methods that in on going They're do for they buying be be And that assume throughout probably to either appetite. facultative property particular. the

so would manage different is to And ultimately, progresses. than X/X season, going which alluding little they're the continue portfolio what past And their years I say a think I to. the as to you're year

Greg Case

market I theme a the exceptional. I'd helped our and that, we're to the what through navigated at how they have as taking renewals unique and and might place the in add analytics anyone tell the tremendously unique we truly able well marketplace. we else and was you, clients do it the deliver least, market before just to capability had and And dynamic X/X to was

risk value more means demonstrate highlighted, Eric As to added. more opportunity

Operator

Kligerman from question next the with of Credit line Suisse. Andrew comes Our

Andrew Kligerman

kind give commercial fees both risk on whether described modest fees discuss slides, little revenues and impact maybe the in organic level reinsurance. year-over-year commissions from impact your of or versus each In on were color driven the of you Can more in positive commissions a you issue that as segments? market and whether the were those X impact down of and your market

Greg Case

in Eric, and well start I'll chime here. can maybe Andrew, as you

really always lot in the First, is employee has market happening impact. per on This back but sort you values just is function a a all se. really this of side on to actually talk Obviously, than that over by also is this insured about and impact value as you're driven but And the come changes more broadly property of Andrew, about highlighting of the think And we prices those much idea values. what's we aspects price beyond insured front. time.

highlighted, we're back, a they very greater this quarter. from we're And is saw the that highlighted really we step on could question, We year. value very, throughout you think over for we've really opportunity because doing it risk, that. is As about see value impact provide environment that for get clients and it deliver real value. and about And meaningful in is Elyse's clear and that benefit. benefit it. modest from benefiting we'll in time. an the and We with And we're We Eric as to it greater us

So pricing. more specific bit you're that's you into dive the Eric, to overall. a maybe But what seeing want

Eric Andersen

use clients. noting Listen, purchase. They getting you think on continue I primary market and market use a challenging market retention. that to use dynamic. see Sure. is the for property clients our of captives, that they certainly tools property It lot attention is the be that different They of worth perspective, though lot limits manage a to on

rate a not line market a property what client actually carrier it's say versus a from about a So would assume. direct what

So limit tools have modeling to value additional them and there's and exposure. saying, trying financial spend that we to and for awful using that add was time, Greg of as of lot an try a techniques they lot

say, into I etcetera, We're an casualty, around a The stable. globe, X.X, the equilibrium. years are those and products, cycle products, I products more would a think more other X coming market cyber, are good to financial

benefits and being And one what Greg thing to broker ties driven in whether value would or value transparent of by our it's what fees we we we that we provide, a I your to where are fully a are clients fairly the about commission say on paid care a the for we paid providing said get last of clients and really question we engage fee. commission is the whether it's we for What that value. is being really don't are back

transparent cycle really it. with the in those think a great whether way so of our down, clients have because is relationships I engage doesn't and matter conversations or we it We to up And us. in fully

Andrew Kligerman

Okay.

So so reinsurance. can maybe the function revenue growth in what Both a to X%-plus in just I Aon were them of commercial of was inflationary that opposed it as X%-plus delivering on more interpret it [ph]? played as firm of environment. very of the that these should little and Aon pricing kind I exposures issues more Is right impacts market think [ph] a through. and about very risk,

Eric Andersen

an driven. I'll our our example. you -- think placements, reinsurance driven facultative technology treaty historically It's not and If about it around consulting use just smallest It's it's as group. banking, quarter

but issues in issues exposures. market-driven really more terms not tools to value So of their manage those clients help of usage

Andrew Kligerman

then should on year sustainable quick just say, Or drifting bit a little rate? towards, up a kind at tax one And XX% the thinking of about it quarter? last Okay. that X%. be in Is rate we the tax a

Christa Davies

of our XX%. capital be a in guidance positive cash us structure any global I company X say a result historical that's management don't domiciled what we was can with years of And global which X structure. the So or is underlying rate Ireland of the as impact the forward on historically, a negative items for quarter, look back tax. discrete But give being would exclusive in we global last and

we we're where are. And so really confident about

Andrew Kligerman

Confident.

So towards should more thinking the [ph]? be XX% I

Christa Davies

years last XX%. Again, tax X I tell look historical for forward you rate we our we historically, going can underlying on guidance but was back the that rate as don't give

Operator

comes with the Our next of JPMorgan. Jimmy Bhullar line from question

Jimmy Bhullar

So some market. on the on a comments question reinsurance your had -- first, your just of

expect for Are a challenging a especially the similar shifts in any Or your environment capacity as renewals entering clients, do reinsurance. expecting you trend in mentioned sort You property for market? you midyear well? of

Eric Andersen

certainly seen enter opportunity not capacity there now, there's lot discussion whispers of about is a whether right the to have lot a for marketplace, capital of So and enter. additional although we new Jimmy,

into say property X by So Japan then as by go which dominated the and are is June I April dominated Florida. would we renewals which

I think continue. dynamics market will today, to we sit you have think that here as would those

Jimmy Bhullar

just it's little It seeing obviously, seems pricing Okay. on too? bit, a some like similar reported. the good And carriers similarly, softening then Are given results has while. in been lines, market, something commercial a pretty of the have you for the that

Eric Andersen

Yes, say the you it are and I would depends depends it it on the on depends segment, where industry.

with I But carriers primary casualty to that a were think to definitely we whether like of liability, cyber, covered. reinsurers. individual to of retained traditionally property, professional thing, as on effects think, say continues the and it's market. basis, there's general now there a million the be seeing on financial that they're macro are that risk in stabilizing they lines, higher D&O, deal depending business the that passing the of little type and the lines, firmest type on we're exposures But markets the each of certainly, out I being client then

As more And clients also and are years that into capital given more areas those has choices what being say remediating are they're X I doing. would their the portfolios. in insurers come into

clients areas which to kind much potential of of more as specific the to more write of targeted choose that they give does they that in compete a want insurer to choice partners. they're so the and And sort business

Greg Case

well product-by-product of about and as a back think Jimmy, highlighted context you if basis. very Eric on implications in insurers, the the for kind this, step of

going comments there really us going for described talked, risk how about a client my out Christa it's the to very The approach talk is world about in is and it's As clients well, up. to and demand connected, amplified I up. in fundamental and leadership this opportunity

pricing sort individual protect is of actually their prescribed us of increase. and opportunity continuing business to the environment grow the them engage for which are help to to how irrespective and So well, clients

Jimmy Bhullar

how And now? On do -- in right you see it how of lastly Okay. taxes, or there have something out what's tax any anything global would terms for on your -- based impact just Christa. like minimum a And financials? you on do views that

Christa Davies

any and run an a structure on where years really we comment XX% feel we had of and about X the tax for don't we We Jimmy, legislation. rate future underlying we've last are. global good

Operator

Sachs. of question next Cox from Goldman the Our comes Rob line with

Rob Cox

And longer-term first, maybe a question. just

past, the XX% about you you've on have don't in the some by of some disclose get most could think color know give I businesses level? talked if curious which area. us if plus that and of margins can margins segment. into getting commercial ever opportunity risk I your you the up But to there

Greg Case

take commercial risk growth margins really health, our mid-single-digit or more and just for cash it step about, the the as function how are about connected. as together. and hearing aspects greater business, of commentary, is second, more you're contributed. Rob, in back for And and are firm our solutions we've reinsurance talent a has business, flow talked The really are our we we're providing growth business organic providing, wealth some come improving of a driving overtime really double-digit free most and a solutions innovative all

continuing about And so margin confident to we're improvement. drive

engine double described, think That's digit. how it. about we're to digit greater cash flow revenue our organic we really growth or That coming confident you we want growth can achieve that is clients' and on together behalf. we As free and our mid-single what's and

Rob Cox

considers if risk it. if transfers wondering changes the outlook seeing, to switching continued And in Okay, strong was maybe pension or the we're segment. in from Europe. driven of tailwind quarter. more areas? your the regulatory wealth the particularly I got growth was Obviously, these some a that by And just

Greg Case

clients pension and the done of general Look, I the as job. I on start a on it's Eric, our or and interest just transfer color the love would rate happening, overall phenomenal and out there There's for a the a whether described. overall lot economy to this here. arena, lot teams add additional complexity some going what's state overall described risk before you've side of as we -- the in

drop So marketplaces. very done the saw in add of what saw kind across Eric, our basis the quarter. exceptional has to certainly clients just on would a a job global team challenging And navigate really drop the else you you a very, an year, that? in helping you

Eric Andersen

the such think of I Listen, business the regulatory pensions global the is the side. in changes retirement a minimum big part with

an saw a out growth we investment with we're of I because really well overall, you business think think, were mentioned U.S. with but AUM the down headwinds in risk think So comments it. the lot team in there, Also, piece. about being well. to of positioned. the decent space great growth U.K. do a some we're But really and your industry of I I the pension have especially transfer And Christa, that also leader There opening as in market. the

Christa Davies

I'll benefit the to freeze of And settle doing a the we pension the give on the We're reduced risk Look, following close risk years, portion our steps XX economic Aon much side. finish over what in less last substantially accrual, matchup plants, to in we've clients. pension contributions. new just it's and reduced advice with liabilities. the entrants, and through resulted And the we're liabilities purchased much same annuities cash

trend have only contributing over we're and see we're in And a our plans funded so in on come a managing are that in remaining you our time, cash, cash with well cash. downward can continued really $XX substantially million XXXX contributions hedged. And down and cash basis

with so cash off the million really contributions. in obligation continue benefit of the in we're decreased derisking, in QX, as the progress coming we And own sheet plans make balance you $XXX our and pension saw on the excited about to

Operator

of question Weston next UBS. [Operator from line with Bloomer the comes Our Instructions]

Weston Bloomer

margins be to margin of on was was guess, core income would My away income. about would that see first benefit I margin. your expand a real lower fiduciary outlook on the could away where we And you I margin Sorry question in I that. in expand that. still estate then hoping from the could component I from able you fiduciary kind is potentially XXXX? of improvement? mute. assume would on the business be

Christa Davies

thanks question. Weston, for so much So the

mentioned, it the and expansion, driven or benefit growth, As revenue invest higher the about holistically we basis it's portfolio grown by year And higher-margin growth for as ABS. inorganically at margin points the revenue mix over in of years I a think a we've and think as XX organically businesses And level. about last years. year shift basis XX we from we margins, Aon XX X,XXX productivity over points course disproportionately the

frankly, and So we and in or underlying clients. investments year drive we're separately at making investment business to income from long-term our growth each look it don't every the for the innovation

Weston Bloomer

some Great. guidance of of My second economic seeing kind then you're that those weakness? were prepared on Can does highlighted where your I economic you signs what seeing question, know assume? remarks. signs in And just you expand of backdrop uncertainty your you

Greg Case

appreciate I the Listen, question. Excellent.

opportunity. And these our seeing it. everywhere of more do understand just or with offensive. get an actually are risk, they candidly, them you really or to to understand it's this the around effectively. in can describe deal context We to risks complexity however to opportunity want clients clients the to and actually help their how though, ways then want businesses They want that on the interconnectivity, not to It's is uncertainty it, emphasize, want world. in We engage grow risk

it globe, opening we're wealth the So I around over changing for in the like rate the health things around described impact and us, fundamental a really but the geopolitical connectivity and issues about changes, talent. really seeing is comments of environment around this inflation, more interest challenges,

all is in it about think together to and you addition are from sort How and The come the all create context that. everywhere now commercial the that coming analytics you things of evolution to really aspects and people, in without for us described. wellness managing reinsurance using of these challenges all seeing just of that risk engagement analytics of opportunity we're things

Weston Bloomer

believe going Singapore ran And then that I a that XXXX. of holiday through one, tax had on Was in last you a September extended forward? tax. my Great. follow-up

Christa Davies

and Look, our finalize and we Development local we'll operations XX-K. global an in and important an part Economic an Singapore, including expect essential arrangement We negotiations our will provide that investment center strategy Board disclosure going our our updated part of did mean forward. in our the today in Singapore our on with XX-year operations of our are business

Operator

the Motemaden with from line question Evercore next of Our ISI. comes David

David Motemaden

commercial about to a that I'm to lower was I the drag progress a going drag the as be in volume growth. organic lower I as guess about had it first be XXXX? we risk. is think we think X-point wondering a you the question guess, is on or through Greg, similar I size Or that going quarter's there quarter? transaction we higher? should from how mentioned

Greg Case

the described, thanks for And everywhere David, our has growth, commercial the that, and firm with in which just risk even done really we Yes. job. headwind underlying the done of the context a job that tremendous world, exception in described. M&A IPO drove question. we across Really, the But around the and external were we've as colleagues created U.S. working including magnificent a a environment I the of

is amazing and done this Aon And an context are overall. highlighted, global But happens one we what 'XX. really out. we're described maybe strong grow the it and about exceptionally it. in to the excited and proceed see about it's performance very first QX, an going overall confident firm do and just it what drags we'll We as in how know, of you And positioned services we've terms this with into of incredibly As what the plays front. the well before, that's overall, M&A how to we on piece we is that's and in business can quarter

David Motemaden

Got it.

then every an I calling give usually think at And year. of count Okay. guys update on the the end you

at end end think at of XX,XXX that did I that Where stand it the was the grow XXXX? XXXX. all? So of Does at

Greg Case

pleased as more it at say, we help the much because become them effective, how how about isn't greater individuals a we sure the been more to ability -- we've firm. capable not for that, disclose us on we it's look the And I'm deliver I people standpoint, Listen, from would to specific incredibly it aspects 'XX. all think it 'XX in would you'll in When continue you United and again in bringing about around and great and the and Aon But 'XX, I invest overall colleagues our colleagues to the that progress. progress. with see And on saw tremendously say we you it.

David Motemaden

I a just guess it. Got that, Greg. follow-up on And

like productivity help guys think You base. mentioned, enhancement can Is -- us sounded existing you that employee track it that any metrics guess, about that? there are just your of you I

Greg Case

David, lots there are metrics. of

We growth, I think to step worth to I back drive plus. a that maybe couple on question. worth of and you for it's organic think cash to fundamentally, minutes years to was we Christa not and particular, understanding disclose the strategy protect you in risk, do margin to saw the this across need help been David, better fundamental improvement, make accrued our we're saw, just commercial role about back we've them here, talent, your think health, And and to this all saw highlighted workforce all We We their decisions frankly, them. then We of when it think to listen, XX both business. United Look, and I flow them. it, client grow doing, aspects We is of it's and aspects don't ability this minute if point, have etcetera. risk, drive Aon drive need taking say, changing. what that. plays free about in improvement, a at

at joined we capability. driving terms of that up clear, wasn't in we saw where had wasn't David, we and scale. But the around like also it and And loud innovation are. We world, it saw everyone great

created maintain for but it? were great. real We better We our we there how at critical fundamental and to them. The longer required price deliver it fundamental to do that to you which about you great strategy. XX P&L, how was, it this of How also created years the do and leadership fundamental as opportunity over is we do single online. Aon Business United challenge learning, accomplish about us, the has deal challenge talks Everybody and in team, some more do excitement And when and How we that okay, a the real, that? And single pockets question, that of are Aon that's serving training, We design this. we ago a really admission leadership frankly, do sounds evolved bringing also drive retain Aon and them scale this and really firm. organization brand, pieces development. do work this, across clients, around saw, think single truth, and together. we've win been we innovation with performance is And this colleagues your a etcetera faster of is It United. clients, time. however, more it Service also is back

lines is as is we the cutting opportunity progress a in frankly, have in lines clients to for forward. better we United comments put are solution the And highlighted becomes Christa capability to, more solution us decade about done but confident And really so to heard go that's bring in make Christa what clients, value. fundamentally the as we've by current you it serve and the well to with what And what from seeing both environment, and I are Eric's that the difficult just why bring them. our we excited more Aon not over to you're not just which frankly why across ability is position last to

Eric Andersen

with love have Hewitt Aon the of were We it this just Risk would work when these have under for us. you dig were us would do firm a do to specialized use the what world to we a When process sorts were from And can to we we us this how that others, for to a our say within what would but the what Greg, this, who I important the our bring the a risk focus give to example better right? operating And surface, lines the to strategy, and back client. for is of kind from their locally. both regard spots. the clients. Aon we of just saying, clients thinking global looking I and been and There for do a for on for is in I can't firm maybe Benfield, have as brands distracted do, we Aon about of it disjointed is as that used all multiple risk and bit on sub barriers industry internal advisory of to just been services, would globally pretty all services because around client life color I by Greg, engaged little just recently stress resources solution well

incentive P&L discussions. revenue internal issues, had We resource allocation, sharing, like

allows get leaders But Aon under are the by all United brand. way X in line the a global with client who that focused that the us today, to around globally. And powered the With which X you the Aon solution P&L is it model X actually world. deliver on Services have Aon uniform Business delivering point. we region think operating capability for leaders, solely I structure,

Christa Davies

be Eric, stage say sets the would I I And to agree said. both just United Business Services would with add everything X Aon things. you I for successful, Aon And that

across part is then applications Business at we We Aon find innovation Services to in first scale clients X connectivity area our to The without for is an of the clients globe. and deliver solutions and essential scale continue seamless to as globally. can't enabling ability it results do developed that

free creation It's enable flow ultimately, translates by And cash story. free for our colleagues of and and way, Second, line Aon highest cash flow margin flow a as deliver the better every United to in our bottom of translates billion that is which we for shareholders. growth, not as performance. top continue field in to value which believe and into we stronger cash clients results use designed into capital put long-term our free best XX% evidenced drive will

Business operation and really innovation to at our scaled free This by got we've into the we clients. revenue for countries, makes the done and detailed day, scale deliver accuracy. Aon outcome XXX and over Aon United by globally a possible by flow go-forward without XXXX not all powered cash excited how about It it's with operating this operational model is scale Translating country in great services. is tracking us momentum

Greg Case

It a that way the to connects What excitement our we're driving And key ahead for how of it initial creates but we're with approach There's more question. also how it you was solutions the specific happens fundamental is And to creates really described. more sort important the and on not to that a journey. trying lot drives that is of love David, colleagues integrated Eric the opportunity how very So it around. with performance. you us. convey the piece asked is complete than It they engagement. asked that because answer

the that If is something kind truly you've in a done makes the can month. client, of week you wow

it's So we partners it's all obviously, because clients a fundamental as here it stress with our to our success opportunity investors of huge well. and our and so with as

So hopefully, that's helpful.

David Motemaden

No, thanks it. appreciate I really so the thorough much for answer.

Operator

with Ward comes from question line Michael Citi. next Our of the

Unidentified Analyst

quarters is strong the market This human being for Charlie job guess, [ph] on in tech? your uncertainty capital, has for been Wondering now. of some and Amid in talent that really opening there. Mike. many macro growth tech what And remarks, comps from in I first, you dislocation the organic mentioned challenging. business pipeline is looks benefiting

Eric Andersen

over Certainly, us assessment has a clients. agendas see XX data our the why don't information very very one. around competitive months. it. first been business And last The the sales, talent we robust the of critical engagement comp to for still -- the still I the capital So take also it's human

about as are feel confident it really XX XX next months and So done about last we business over what the and the over good to literally XX months it's well. that

Greg Case

on the And tech go Please ahead, ahead. talent go -- side Christa.

Christa Davies

All right.

right your on gave around your talent anywhere one brands was And find On to world. the at of the existing the to able AI able got match also space, in the your most remarks to be the where is figure the fabulous out tech able be organization that tech around to and the to price, I And the tech workforce. talent, we've within then Radford. be optimize actually using to example tech talent opening optimal

and make And way. a get fabulous to technology the access it get sure the so clients tech right time optimize best we AI do talent in utilize this to dislocations to see that our being the to -- that

Unidentified Analyst

the Wondering Got has more grown pricing evolved several over that lot you now. mentioned Aon's market kind time a how years? it. cyber equilibrium of And as in marketplace over role has an last being then the

Eric Andersen

so change do real it clients risk. of terms we're -- and our insurers would the management. actually would risk leading and cyber to understanding strong I would both to you are obviously, have the think is of gone then to Friedbeg quality say think security brand, time. over the actors to to exposures work in-depth client what risk continuing cyber Stroz say a very say and the and as data back have the aspect. market understand today them underwriting, certainly of When where continue think allowed I with basics. the of I in way prevent cyber when you we'll The threat to its about better the attack, going, evolve with about strategy the I Listen, cyber the market it's the provider price transfer the real

be but of billion approaching gives a in way and allowed work and of terms bring frankly, from and insurance it's market to that the premium quite them our Aon they're doing become an and them a the space. I it's both to And around side, protection individual size, $XX a us clients probably in in able distinguish differentiate to consider leader views cyber about market to a that market reinsurance

Operator

of Han with line comes Derek question the from next KBW. Our

Derek Han

strong little the fourth operating cash unusual I So anything a Was my question is that? just given driving buybacks. slowed in first quarter. looks bit like on buybacks the little It there a was surprised flows.

Christa Davies

highest deploy on opportunity. at that based Derek. we we Buyback see across return today's to that would just capital list firm on of the prices, say top cash even continue No, is the the we

we $X.X buyback XXXX. we bought why opportunity billion -- year so that's going remain to on return expect back capital And we And forward. in highest calendar the

Derek Han

question that about this? cooling We've little kind -- your the how Are And market? that in on my kind bit. for M&A. of of is appetite you the seeing chatter Got And a second helpful. M&A impact M&A market it. That's then does heard

Greg Case

And some Yes. standpoint, market been opportunity our more as the see there's creates opportunity. tremendous around strategy, we From marketplace overall. it

out our lots described, we cash-on-cash pool. made there. opportunity a return around Christa literally As capital, with of see and decisions cash It's on return are those the

opportunity We value. with see great business strong as add organically we in we've pipeline And as ever described, before invest been really the doing our success. of is also to and Christa to got that it's see as lots

of For very content, scale we opportunities really we set of And drives powerful. And that can of us, a that see about outcomes it's a effectively. are lot there. sort

anything to Christa, you'd that? add else

Christa Davies

Yes. look, analytics in in we've found and some And add, and I invested this year. capital modeling and I Tyche, space mean, fantastic those terrific in in ERM companies space capability just the would the modeling Mexico.

which continue we so about. in invest client And of areas growth excited to we're high and really need

Operator

from morning Capital comes BMO this line Our the final Mike Markets. Zaremski of with question

Mike Zaremski

Great.

on you get Can of marketplace. in of -- for wallet remind Any has roll-ups with Just us into know street just believe there's M&A I there. equity private kind market U.S. of some you I main marketplace. there mentioned retail stresses. market the were some stresses some the small M&A we ambitions into cover landscape. that follow-up the some a know moved the to Aon commercial

to ambitions Main retail, if get of Just any kind mid-commercial? into that's curious Street small

Greg Case

Listen, small It market. can And opportunities. that kind middle like capability, you're bringing segments step I has you that, small that of context about in if to is BXB, businesses, you companies which with them. sure phenomenal. of the sized the franchises, commercial as the love segments but think commercial market absolutely understand and much back, we the Scale, really the in of kind we just about market operate about been marketplace is XC that I thinking right. in large large think in capability many things market, cover want the a not make The We in like if scale. you're the bringing distributed that wallet we phenomenal

seen were So the it great going got to we We've continue to in capability it. success space. grow and we've love great We it. with

that we So But question. that's think overall commercial. your sure answer make how to I small does about want

Mike Zaremski

the Yes. in just of that confirm operates guess, what no for bigger they're here wallet. kind you of Fortune the little sandbox versus marshaling kind initiative smaller competing size more wanted -- there the I that is a cover were agency The XXXX, to businesses in. that of or kind strategic I

Greg Case

and how all Yes, with segment board. that active the has [ph] across question But of the because in it The as love of addition content Novo across not those how And capability. cover in been great the absolutely while us agreements. was scale size been really and we we've that to segments, necessarily is we're I very opposed -- opportunity pieces, lets it successful more capability Aon see great world. segments to the those in a

anything Eric, add that? you'd else to

Eric Andersen

say in Affinity would specialized our I businesses, small. we Greg. Yes, of serve groups

in the can the value, but really I small We we active lot commercial. we whether do clients. with XXX space mean, there segments. our to that -- the around Fortune say or XXX actually awful very the we're we clients an able product thing, clients. are engage all offices also where we're where So and to only with it's bring the would world, middle market or I in XXX across office type capability our provide travel the value small distinct a of distinct where in museums, have space

and Our a in of so get you using but able capabilities. that adviser, it's Aon capabilities strategy we're where delivered we across our all a use effective of to them be is to the expertise to bring value efficient and real them in have product package way the providing our and where way product using solutions deliver them that for as cost expertise your

Mike Zaremski

And based model And some Okay. exactly be are expecting should That's the and across interest last into now income. 'XX globe? step was tough a my investment know where us it on rates quarterly make interesting that a there's -- nuances not we up, fiduciary I follow-up step-up for the but and helpful. on it's material to

Christa Davies

Yes.

in So QX and interest stepped what XXXX XXXX. QX what I of that saw we you tell rate in would up is was

interest QX and if you'll to they rates QX. see are so similar in today, impact And QX a stay where

where fiduciary income. would are. fiduciary rate for they that between every rates is rates there's And million and then it so modeling interest $XX in increase interest in expect basis approximately increase in increases forward, investment point And And our XXX delay income. investment interest we going stay impacting no

Operator

question-and-answer our Mr. concludes the turn this comments. to gentlemen, back any I'll and Case session. floor final for Ladies

Greg Case

next call. thanks, just joining appreciate the I it for to today. and look everybody, to us want We say forward

Operator

This you. Thank today's concludes conference.

time. disconnect may lines at your participation. your for You Thank this you

Aon (AON) 3 Feb 232022 Q4 Earnings call transcript