Aon's Q3 2025 Earnings Call: Contradictions Emerge on Growth Drivers, 2024 Hire Cohort, Free Cash Flow, Reinsurance Dynamics, and Client Retention

Date of Call: October 31, 2025

Financials Results

• Revenue: $4.0B, up 7% YOY
• EPS: $3.05 adjusted EPS, up 12% YOY
• Operating Margin: 26.3%, up 170 basis points year-over-year

Guidance:

• Reaffirmed full-year 2025 guidance: organic revenue growth mid-single-digit or greater.
• Margin expansion of 80 to 90 basis points for 2025, including ~$260M cumulative annual savings from Aon United.
• Q4 '25 adjusted EPS growth estimated 7%–9%; full-year effective tax rate expected 19.5%–20.5%.
• Free cash flow expected to grow double-digits in 2025.
• Leverage target ~2.8x–3.0x by Q4 2025; disciplined capital allocation (debt paydown, targeted M&A, shareholder returns).

Business Commentary:

* Revenue Growth and Strategy Execution: - Aon plc reported 7% organic revenue growth in Q3, with a 26.3% adjusted operating margin and 12% adjusted EPS growth. - The growth was driven by the execution of their Aon United strategy, deepening client relationships, and the ongoing momentum from their 3x3 Plan.

• Data Center Expansion:
• The company's insurance solutions for data centers are expected to generate over $10 billion in new premium volume in 2026 alone.

• This expansion is due to rapid construction of data centers driven by AI and cloud infrastructure, presenting a significant opportunity for Aon to provide comprehensive risk management solutions.

• 中文的主题：收入增长和战略执行：

• Aon plc 在第三季度报告了 7% 的有机收入增长，调整后的营业利润达 26.3%，调整后的EPS增长 12%。

• 这次增长得益于其执行的Aon统一战略，加深与客户的关系，以及3x3计划的持续动力。

• 数据中心扩张：

• 公司的数据中心保险解决方案预计在2026年独自就能产生超过 $100亿美元 的新保费。
• 这一扩张是由人工智能和云基础设施采用引起的数据中心建设的快速增长，为Aon 提供一次独特的风险管理解决方案的机会。

Sentiment Analysis:

Overall Tone: Positive

• Management reaffirmed 2025 guidance and highlighted a strong quarter: 7% organic revenue growth, 26.3% adjusted operating margin (up 170 bps), 12% adjusted EPS growth and free cash flow up 13%. They emphasized progress on Aon United, ongoing margin expansion and achieving leverage targets, signaling confidence in execution and outlook.

Q&A:

• Question from Robert Cox (Goldman Sachs Group, Inc., Research Division): The revenue-generating hires were up 6%... does stacking benefits from the 2024 hiring and 2025 cohorts get us to roughly 80 basis points in 2026?
  Response: 2024 hires are performing in line with expectations and contributing ~30–35 bps to full-year organic growth today; cumulative benefits will increase as cohorts ramp and management will provide specific 2026 contribution in the Q4 update.

• Question from Robert Cox (Goldman Sachs Group, Inc., Research Division): On Commercial Risk U.S. core P&C double-digit growth—what drove that outperformance and was it flattered by multiyear policies?
  Response: Growth was driven by durable client wins, retention and analytics/ABS-driven execution (not multiyear-policy one-offs or M&A); priority hires and day-to-day client impact powered the expansion.

• Question from Andrew Andersen (Jefferies LLC, Research Division): For Health Solutions' 6% organic growth, can you break down net new business, retention and market impact?
  Response: Health growth was primarily driven by new business and expansion with existing clients (notably talent analytics), with a positive but smaller contribution from net market impact due to rising healthcare costs.

• Question from Andrew Andersen (Jefferies LLC, Research Division): How do you see the reinsurance pricing environment as we shift toward 2026 and any color on demand?
  Response: Property unit pricing is under pressure and net market impact was flat this quarter, but demand remains high and alternative solutions (facultative, STG analytics, ILS) sustain activity; management will provide more 2026 color in Q4.

• Question from Jian Huang (Morgan Stanley, Research Division): Thoughts on capital deployment—buybacks slowed; how do you allocate between NFP acquisitions, buybacks and dividends going forward?
  Response: Balanced approach: prioritize debt reduction to hit leverage targets, continue dividends and targeted share repurchases ($1B repurchase target), and pursue disciplined middle-market M&A through NFP when strategic and financially accretive.

• Question from Jian Huang (Morgan Stanley, Research Division): On data centers, how should we think about competition and Aon's market share as the opportunity expands?
  Response: It's early; the opportunity is massive and global so there is room for multiple competitors, but Aon believes its integrated risk/human-capital capabilities and engineering-driven approach uniquely position it to capture meaningful share over time.

• Question from Michael Zaremski (BMO Capital Markets Equity Research): On the ~$10B industry premium opportunity for data centers in 2026, is this fee- or commission-based and will Aon capture a disproportionate share or will it go to E&S?
  Response: Too early to segment precisely; Aon expects to access all channels (admitted, E&S, alternative capital) and capture opportunities where it delivers client value—compensation will follow value delivered across global markets.

• Question from Michael Zaremski (BMO Capital Markets Equity Research): How much cash spend remains on the accelerating Aon United program and is it spread evenly over the next quarters?
  Response: Cash spend to date is just over $600M and is on track with expectations; restructuring savings are progressing ($110M last year, ~$150M this year) and spend/savings will be assessed into 2026.

• Question from Jamminder Bhullar (JPMorgan Chase & Co, Research Division): Commercial Risk organic growth accelerated from 5% to 7% YTD—what drove the ramp and which factors are sustainable?
  Response: Acceleration stems from execution of the 3x3 plan—integrating risk capital, human capital and ABS analyzers—plus priority hires and NFP's middle-market access; these are durable drivers management expects to continue.

• Question from Tracy Benguigui (Wolfe Research, LLC): The client win replacing nearly $30B in coverage for a data center developer—does that represent any one-offs for the quarter?
  Response: No—management stated this win is part of ongoing, durable business activity and not a one-off; it exemplifies current, sustainable demand.

• Question from Tracy Benguigui (Wolfe Research, LLC): Regarding data center placement—is the announced $2.5B facility the only vehicle and how else can you play in the business?
  Response: The $2.5B facility is one tool among multiple placement channels (primary, E&S, reinsurance, alternative capital); Aon will deploy an engineering-driven, multi-channel approach globally to scale capacity.

• Question from Tracy Benguigui (Wolfe Research, LLC): The revenue-generating talent up 6%—is that gross or net after exits?
  Response: The 6% figure is a net increase in revenue-generating hires (producers, brokers, account executives, health & benefits consultants).

• Question from Andrew Kligerman (TD Cowen, Research Division): Can you sustain the 4%–8% net talent growth into 2026 and where is middle-market growth originating (NFP vs prior Aon talent)?
  Response: Management expects the ABS-driven model to provide ongoing capacity for talent investment (supporting continued net talent growth) and middle-market growth is largely enabled by NFP integration coupled with Aon's analytics and capabilities.

• Question from Andrew Kligerman (TD Cowen, Research Division): Now that leverage objectives are near, are you prepared to pursue larger M&A deals in the middle market?
  Response: Aon has flexibility but will pursue larger M&A only if it meets strict strategic and financial return criteria; capital deployment will remain focused on long-term shareholder value creation.

Contradiction Point 1

Growth Drivers in U.S. P&C Business

It involves the key drivers of growth in the U.S. P&C business, which is critical for understanding the company's strategic direction and performance.

Why is U.S. P&C business growth significantly outpacing that of some peers? - Robert Cox (Goldman Sachs Group, Inc., Research Division)

2025Q3: Growth is driven by our advanced analytic capabilities, strong portfolio, and integration with ABS tools. - **Gregory Case(CEO)**

What is the contribution of capital markets and new hires to growth? Is the capital markets impact greater this year compared to H1? - Jamminder Singh Bhullar (JPMorgan)

2025Q2: We continue to drive top line growth, again, across all lines of businesses with good core retention and strong new business sales. - **Gregory Case(CEO)**

Contradiction Point 2

Contribution of 2024 Hire Cohort to Growth

It involves the expected contribution of the 2024 hire cohort to growth, which is crucial for understanding the company's investment in talent and its impact on financial performance.

Will the 2024 hiring cohort's benefits reach approximately 80 basis points by 2026? - Robert Cox (Goldman Sachs Group, Inc., Research Division)

2025Q3: The 6% increase in revenue-generating hires is right in line with our expectations, contributing 30 to 35 basis points to full-year organic revenue growth. - **Edmund Reese(CFO)**

Could you elaborate on the growth contributions from capital markets activities and new hires? Is the capital markets impact greater this year compared to the first half? - Jamminder Singh Bhullar (JPMorgan)

2025Q2: The '24 hire cohort is expected to contribute 30-35 basis points to full-year organic revenue growth. - **Edmund Reese(CFO)**

Contradiction Point 3

Free Cash Flow and Capital Allocation

It involves the company's free cash flow generation and capital allocation strategy, which are critical for assessing financial health and strategic direction.

Why has the buyback slowed despite strong free cash flow? What is the strategy for allocating capital between acquisitions and buybacks? - Jian Huang (Morgan Stanley, Research Division)

2025Q3: Focus on reducing debt and paying dividends, coupled with middle market acquisitions, are priorities. - **Edmund Reese(CFO)**

What drove free cash flow growth in Q2, and what is the current status of the $300 million NFP free cash flow contribution? - Elyse Beth Greenspan (Wells Fargo Securities)

2025Q2: We continue to expect NFP to contribute approximately $300 million in free cash flow for the full year. - **Edmund Reese(CFO)**

Contradiction Point 4

Reinsurance Growth and Market Dynamics

It involves differing perspectives on the growth and market dynamics of reinsurance solutions, which are critical for understanding the company's strategic positioning and financial outlook.

How do you see reinsurance pricing and demand evolving in 2026? - Andrew Andersen (Jefferies LLC, Research Division)

2025Q3: Pressure on property rates is evident, but demand remains high, driven by increased risk. - **Gregory Case(CEO)**

Will reinsurance solutions maintain their growth trajectory in upcoming quarters? - Robert Cox (Goldman Sachs)

2024Q4: We expect growth in reinsurance, driven by a global portfolio approach. Markets are dynamic, but we remain optimistic about future growth. - **Eric Andersen(President)**

Contradiction Point 5

Client Retention and Hiring Impact

It highlights differing views on the impact of hiring and client retention, which are key factors in the company's growth trajectory and operational effectiveness.

Will the cumulative benefits from the 2024 hiring cohort reach approximately 80 basis points by 2026? - Robert Cox (Goldman Sachs Group, Inc., Research Division)

2025Q3: The 6% increase in revenue-generating hires is right in line with our expectations, contributing 30 to 35 basis points to full-year organic revenue growth. - **Edmund Reese(CFO)**

Can you elaborate on the mid-single-digit organic revenue growth outlook, especially retention and M&A services? - David Motemaden (Evercore ISI)

2024Q4: Growth is driven by new business from existing and new clients. The release of ABS tools supports retention. The M&A services are modest, but we see pickup. Retention is strengthening, particularly in North America. - **Edmund Reese(CFO)**