Is Aon plc (AON) the Best Performing Insurance Stock to Buy Right Now?

Aon plc (AON), a leading global professional services firm, has been making waves in the insurance sector with its strong financial performance and strategic focus on Risk Capital and Human Capital, powered by Aon Business Services. As investors seek the best performing insurance stocks to buy, Aon's recent results and growth prospects make it an attractive option. This article will explore Aon's recent performance, strategic focus, and growth potential, supported by data and expert opinions.



Aon's Strong Financial Performance

Aon's fourth quarter and full-year 2024 results demonstrate the company's strong financial performance. Key metrics include:

1. Total revenue: $4,147 million, up 23% from the prior year, reflecting acquired revenues from NFP and 6% organic revenue growth.
2. Operating margin: 26.3%, up from 23.1% in the prior year, driven by strong margins across both Risk Capital and Human Capital segments.
3. Adjusted operating margin: 33.3%, up from 33.8% in the prior year, indicating Aon's ability to maintain profitability despite increased expenses.
4. Diluted EPS: $3.28, up 33% from the prior year, reflecting Aon's strong earnings growth.
5. Adjusted EPS: $4.42, up 14% from the prior year, showing Aon's ability to generate earnings growth even after adjusting for one-time items.
6. Cash provided by operations: $1,200 million, down 5% from the prior year, primarily due to higher cash taxes and payments related to restructuring, legal settlement expenses, transaction, and integration costs.
7. Free cash flow: $1,145 million, down 6% from the prior year, reflecting the same factors that impacted cash provided by operations.



Strategic Focus on Risk Capital and Human Capital

Aon's strategic focus on Risk Capital and Human Capital, powered by Aon Business Services, has contributed significantly to its growth and profitability. This focus has resulted in:

1. Organic revenue growth: Aon achieved 6% organic revenue growth for both the fourth quarter and the full year of 2024, driven by mid-single-digit or greater organic revenue growth across all its solution lines.
2. Strong margins: Aon's adjusted operating margin for the full year 2024 was 31.5%, up from 31.6% in 2023, indicating improved operational efficiency and profitability.
3. Double-digit adjusted EPS growth: Aon's adjusted EPS grew by 10% for the full year 2024, driven by its strategic focus on Risk Capital and Human Capital.
4. Free cash flow growth: Aon generated $2.8 billion in free cash flow for the full year 2024, up from $3.183 billion in 2023, reflecting the company's effective management of its cash flows and its strategic focus on generating value for shareholders.



Acquisitions and Sustainable Growth

Acquisitions, such as NFP, have played a significant role in Aon's recent success. In the fourth quarter of 2024, Aon reported a 23% increase in total revenue compared to the prior year period, with acquired revenues from NFP contributing to this growth. The sustainability of this growth strategy depends on Aon's ability to successfully integrate acquired companies and leverage their synergies. Aon's guidance for 2025 suggests that the company expects to continue its long-term track record of delivering mid-single-digit or greater organic revenue growth, adjusted margin expansion, strong adjusted EPS growth, and double-digit free cash flow growth. This implies that Aon believes its acquisition strategy, along with organic growth initiatives, will contribute to sustainable growth in the future.



Conclusion

Aon plc (AON) has demonstrated strong financial performance and a strategic focus on Risk Capital and Human Capital, powered by Aon Business Services. With its recent results and growth prospects, Aon is an attractive option for investors seeking the best performing insurance stocks to buy. While acquisitions like NFP have contributed to Aon's recent success, the company's ability to integrate acquired businesses and maintain sustainable growth will be crucial for its long-term performance. As Aon continues to execute its strategic initiatives and deliver on its guidance, investors can expect the company to remain a strong performer in the insurance sector.