Aon (AON) Q3 2026 Earnings Call Transcript

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DATE

Wed, Oct. 28, 2026

CALL PARTICIPANTS

• President and CEO - Gregory Case
• CFO - Christa Davies
• CEO for Risk Capital and Human Capital Solutions - Andrew Marcell

TAKEAWAYS

• Total Revenue -- $4.1 billion, representing a 3% increase driven by 6% organic growth across all solution lines.
• Organic Revenue Growth -- 6% for the total firm, reflecting broad-based momentum despite a 3% unfavorable impact from divestitures.
• Adjusted Operating Income -- $1.1 billion, a 5% increase compared to the prior-year period.
• Adjusted Operating Margin -- 27.0%, expanding 70 basis points due to operating leverage from the Aon Business Services platform and restructuring savings.
• Adjusted Diluted EPS -- $3.36, up 10% year over year, including a $0.02 favorable impact from foreign currency translation.
• Commercial Risk Solutions Revenue -- $2.1 billion with 7% organic growth, driven by strength in North America and EMEA and accelerated M&A activity.
• Reinsurance Solutions Revenue -- $572 million with 7% organic growth, reflecting strong treaty new business and retention that offset lower market rates.
• Health Solutions Revenue -- $992 million with 6% organic growth, supported by core health and benefits demand and data analytics-driven sales in the talent business.
• Wealth Solutions Revenue -- $429 million with 4% organic growth, driven by regulatory and valuation advisory work in the United Kingdom and EMEA.
• New Business Contribution -- 11 points of organic revenue growth, marking the 10th consecutive quarter that new business contributed between 9 points and 11 points.
• Fiduciary Investment Income -- $69 million, an 8% decrease compared to the prior-year period due to lower interest rates.
• Restructuring Savings -- $20 million in the quarter, providing approximately 50 basis points of margin benefit as part of the Accelerating Aon United program.
• Free Cash Flow -- $1.1 billion for the quarter and $1.9 billion year to date, reflecting strong adjusted operating income growth partially offset by transaction costs.
• Revenue-Generating Headcount -- up 4% year to date, with management targeting an expansion of 4% to 8% for the full year.
• USI Acquisition Synergies -- $395 million in total expected EBITDA run rate synergies, consisting of $280 million in cost savings and $115 million in revenue synergies.
• USI Synergy Timeline -- 90% of cost synergies are expected to be achieved by 2028 through global capability centers and technology optimization.
• USI Transaction Costs -- $160 million in total estimated expenses, with recognition primarily occurring in the third and fourth quarters of 2026.
• Interest Expense Guidance -- approximately $410 million in the fourth quarter, driven by debt issued for the USI acquisition.
• Capital Allocation and Debt -- prioritizes a deleveraging path toward a 2.8 times to 3.0 times leverage ratio objective in approximately 24 months.
• Share Repurchase Activity -- zero shares repurchased during the quarter, leaving $7.7 billion in remaining authorization.
• Construction Segment Growth -- supported by a pipeline of data center projects, with North American organic growth reaching 7% in the quarter.
• M&A Services Performance -- achieved double-digit organic growth, providing an incremental lift to the Commercial Risk segment.

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RISKS

• CFO Davies noted that "Adjusted margins expanded despite the impact of lower rates on investment income from fiduciary balances," indicating a headwind to overall performance.
• Marcell noted that while insurance prices are decreasing in some segments, the overall risk environment remains elevated due to climate and social inflation factors.

SUMMARY

Aon plc (NYSE:AON) reported organic revenue growth of 6% for the third quarter, supported by momentum across its risk capital and human capital segments. Management highlighted the pending acquisition of USI as a strategic driver for its middle-market platform, which is expected to close in the fourth quarter of 2026. The company continues to execute its 3x3 plan, focusing on integrating artificial intelligence into its Aon Business Services platform to drive productivity and margin expansion. Capital allocation remains focused on deleveraging post-acquisition and maintaining a sustainable dividend.

• President and CEO Case stated, "Our acquisition of USI, which we expect to close in the fourth quarter of 2026, represents an important step in the development of our global middle market strategy."
• Management reported that the integration of USI will create a $6.5 billion U.S. middle-market platform by combining existing NFP and Aon capabilities.
• Andrew Marcell stated, "In fact, in the third quarter, 6.6 thousand clients used our risk analytics and utilization was up year-on-year 30%."
• The company expects revenue-generating talent cohorts from 2024 and 2025 to increase their contribution to organic growth as their productivity continues to ramp.
• Andrew Marcell noted that the pipeline for digital infrastructure is "improving all the time," specifically citing power life cycle programs and surety for power contracts.

INDUSTRY GLOSSARY

• ABS: Aon Business Services, the firm's integrated global operating platform that provides technology, data, and analytics capabilities.
• E&S: Excess and Surplus, a specialty market for risks that are not typically covered by standard insurance carriers.
• Fiduciary Investment Income: Revenue generated from interest earned on funds held by a broker on behalf of clients or insurers.
• MGA/MGU: Managing General Agent and Managing General Underwriter, organizations with underwriting authority to bind insurance coverage on behalf of carriers.
• P&C: Property and Casualty, insurance covering physical damage to property and liability for accidents or injuries.

Full Conference Call Transcript

Operator: Good morning, and thank you for holding. Welcome to Aon plc's Third Quarter 26 Conference Call. At this time, all participants will be in a listen-only mode until the question-and-answer portion of today's call. To join the question queue, please press 1 on your touch tone. A confirmation tone will indicate your line is in the question queue. 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 2000.

Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. Information concerning these risk factors is available, please refer to our earnings release for this quarter and to our most recent quarterly or annual SEC filings, all of which are available on our website. Now, it is my pleasure to turn the call over to Gregory Case, President and CEO of Aon plc. Please go ahead.

Gregory Clarence Case: Good morning, and thank you for attending our third quarter earnings call. I am joined today by Christa Davies, CFO; and Andrew Marcell, CEO for Risk Capital and Human Capital Solutions. The presentation, which Christa will reference during her remarks, is available on our website. Our outstanding third quarter results reflect continued momentum across the firm and reinforce high confidence in our Aon United strategy. We delivered 6% overall organic growth with 7% in risk capital, and 5% in human capital. Demonstrating broad based strength across our solution lines.

We progress through the final year of our 3x3 plan, our execution and ongoing investments in talent and technology are delivering differentiated value for clients, expanding our opportunity set, and creating long-term value for our shareholders. Today, we want to emphasize 3 important drivers of our performance this past quarter, and as we look to the future. First, the force is shaping client demand. Second, our Aon United operating structure with integrated risk capital and human capital capabilities And third, our recently announced pending acquisition of USI, which together with NFP and Aon establishes the premier US middle market platform for clients. Let's start with the landscape for business decision makers. And what we are hearing from clients.

Today's macroeconomic environment continues to be defined by volatility and complexity. Geopolitical uncertainty remains elevated. Economic conditions are uneven, and cyber threats continue to evolve. All while rapid technology innovation is creating new opportunities, reshaping business models, and workforce strategies. These forces do not exist in isolation. They are deeply interconnected. Making it more complicated than ever for businesses to understand their risks build resilience, and grow. In uncertain and challenging times, clients turn to Aon. As a trusted partner to help them diagnose risk and people issues, design bespoke programs, access capital solutions.

And with rapid technology change, the catalyst to deliver sustained client impact and greater value over the long term will be at the intersection of human expertise, proprietary data, and technology. Concepts will not accrue solely to AI models or to individuals. But rather to organizations with the technology and talent to build trusted, lasting client relationships. This is exactly where Aon is positioned. And it links directly to my second topic, how Aon continues to strengthen our capabilities to help clients make better decisions for their businesses and employees. Our Aon United strategy remains the foundation upon which we capture these opportunities.

By bringing together our Risk Capital and Human Capital capabilities, supported by Aon Business Services, we connect data analytics, expertise, and access to capital across our firm. This integrated approach is a key differentiator. Allowing us to address client needs more comprehensively. And deliver better advice and superior solutions. Our strategy is further accelerated by AI, as our analyzers and diagnostics lead to better insights, that help us win more business, retain more clients, and create new revenue opportunities. We are also capturing productivity gains. We leverage our shared services platform, and domain expertise to deliver faster,, more relevant, and more actionable insights for clients.

Importantly, this work continues to reinforce our Aon United advantage which translates into stronger client results. A few examples highlight how this advantage is powering our momentum. During the quarter, we were appointed as the lead broker for the reinsurance program of a new natural catastrophe program introduced by the Thai government. To reduce the protection gap for natural disasters, particularly flood, the significant perils in Thailand. The program is executed by a consortium of local insurers, through the Thailand General Insurance Association and provides broad risk coverage including flood, earthquake, and windstorm. To 30 million households in Thailand. the vast majority of which currently have no insurance.

This work and impact demonstrates the relevance and strength of risk capital, connecting insurance and reinsurance along with the national government, to reduce the production gap in a region where natural perils have profound impact for millions of people. Another example highlights our ability to broaden capital access and attract new capital pools. Our partnership with a leading alternative asset manager shows how Aon combines proprietary data analytics, and structuring expertise to deliver innovative capital solutions. Traditional insurance capital remains critically important but the scale of emerging client needs increasingly requires us to connect risk with capital beyond the traditional insurance market.

We have spoken previously about the $250 trillion of capital globally, and this is a clear, tangible example of our work to selectively bring these sources of capital to bear on behalf of clients. Our ability to quantify risk exposure and provide investors with the insight required to deploy capital with confidence will create additional capacity for clients and expand the universe of insurable risks. Which brings me to the third driver of our performance, especially as we look to the future. USI and The US middle market opportunity.

Post close, we could not be more excited about the opportunity to bring together USI team members and our colleagues at NFP and Aon to set a new standard of capability expertise, client service for the middle market. This important growing segment includes more than 200 thousand companies and 48 million employees. Representing an addressable market of more than 40 billion across commercial risk, health, and wealth. These businesses face the same interconnected forces as our large business clients. And they need full access to analytics. Insights, capital solutions required to protect and build their companies.

Against this backdrop, our acquisition of USI, which we expect to close in the fourth quarter of 2026, represents an important step in the development of our global middle market strategy that builds directly on the successful foundation we established with NFP. USI also gives us direct access to the fast growing E&S market. Expanding our ability to match capital with client need, and provide greater capital access across all markets. And with the addition of approximately 11 billion of P&C premium flow, we continue to enhance our middle market data footprint further improving our Aon United advantage.

Together, Aon, NFP, and USI will create the premier 6.5 billion US middle market platform combining deep local relationships and distribution with the full capabilities of USI, NFP, and Aon. Fundamentally, this strategy is all about being better and giving our colleagues greater content capability, and market access to serve clients with increasing levels of distinction. In addition, we also outlined key initiatives that will capture $395 million of expected synergies including connecting producers and client leaders to broader content and capability. Optimizing premium placement for clients, expanding market access, and simplifying technology and operations.

Since the acquisition announcement, planning is well underway for the implementation of these initiatives, with integration planning teams in place and clear work streams to bring USI, NFP, and Aon together at closing as 1 connected middle market platform. We look forward to welcoming Mike Sicard and the incredible team at USI to Aon as we build out this terrific growth opportunity. Overall, we have emphasized a few points. Taken together, our Q3 results and the progress we continue to make across our firm reinforce our confidence in the trajectory of our business and our ability to deliver on our strategic and financial commitments. And prior stand alone guidance.

As the environment continues to evolve and the underlying drivers of client demand remain strong, organizations need better insights in their interconnected risk and people challenges. They need broader and more innovative access to capital, and they need trusted partners who can combine data, analytics capabilities, and frontline expertise across markets and geographies. Aon United positions us to meet these needs. Our alignment across risk capital and human capital enabled by ABS is creating greater value for clients. And accelerating momentum across the firm. Our investments in technology and AI are amplifying our expertise and strengthening how we serve clients. And the announced acquisition of USI advances important growth pillars. Across the middle market, and E&S.

As we progress through the final year of the 3x3 plan, remain focused on disciplined execution and our overall growth agenda. To our more than 60 thousand colleagues around the world, Thank you. Thank you for your continued commitment to our clients, each other, and our Aon United strategy. Your dedication drives our momentum, and gives us confidence to continue to deliver for our clients colleagues, and shareholders. Now let me turn the call over to Christa. Christa?

Nadin Virani: Thank you, Gregory, and good morning, everyone. Our third quarter results once again demonstrate the strength and durability of our business built to deliver through the cycle. We achieved our highest organic revenue growth of the year so far, continued strong adjusted margin expansion, and for double digit adjusted EPS growth. Clear evidence of broad based momentum across our solution lines and disciplined execution of our long term strategy. Our client-centric organizational structure, Aon United, combined with continued investments in talent, data, analytics, and AI, position us well to create more value innovate for our clients, deliver strong growth despite what might be described as a challenging pricing environment.

That consistency is most evident in new business. which have contributed 9 to 11 points of growth now for 10 consecutive quarters. As we have announced, we plan to extend the Aon United Advantage to the premier middle market platform that we have established with the pending acquisition of USI and building on the success of NFP. This acquisition leverages the operating model, driving our strong performance, and enhances our ability to serve the growing middle market segment. With broader capabilities, deeper client relationships, and greater distribution reach. With that framing, let's turn to the financials. Starting with our third quarter results on Slide 5, organic revenue growth was 6%.

Total revenue increased 3% to $4.1 billion Adjusted operating income increased 5% to $1.1 billion. Adjusted operating margin expanded by 70 basis points to 27%, and adjusted EPS grew 10% to $3.36. Finally, we generated $1.1 billion in free cash flow. Let's get into the details of these results, starting with organic revenue growth on slide Organic revenue growth was 6% in the quarter. Growth was broad based with all 4 solution lines delivering mid single digits or greater organic remedy growth. Reflecting the strength of our diversified business mix. In commercial risk, organic revenue growth accelerated to 7%, driven by meaningful contributions across North America and EMEA and reflects continued strength in our core P&C business.

M&A activity accelerated during the quarter, demonstrating double digit growth, and provided an incremental lift to our results. Strong client demand for specialized underwriting solutions also continue to support growth across our MGA and MGU platforms. Finally, growth in construction was fueled by our record pipeline of data center projects. Reinsurance delivered 7% organic revenue growth on top of 8% in Q3 last year. The strength of the Reinsurance business despite soft market conditions reflects the differentiated value we deliver through risk capital and our ability to innovate and broaden access to capital. Strength in the quarter was driven by treaty growth reflecting continued strong new business activity and client retention. Which together more than offset lower rates.

Looking ahead to Q4, we continue to expect strong organic growth driven by strong demand for our Strategy and Technology Group solutions. And momentum in international facultative placements. Health solutions grew 6% in the quarter, driven by continued strength in our core health and benefits business internationally. As we help employers navigate rising health care costs and benefits complexity. Both also benefited from data analytics driven sales in our talent business as we continue to leverage analytics and advisory to address evolving workforce needs. Finally, Wealth generated 4% organic revenue growth, reflecting sustained demand for regulatory and valuation related work. Across The UK and EMEA. Growth also came from our core retirement business as well as NFB's asset based revenues.

Turning to the components of our Q3 organic revenue growth on slide 7. In Q3, new business contributed 11 points to organic revenue growth, supported by a balanced mix of new client wins, and the expansion of our wallet share with existing clients. Our investments in revenue generating talent continues to be a meaningful driver of growth. The 2024 and 2025 cohorts contributed approximately 115 basis points to organic revenue growth in the quarter. And we expect their impact to continue to increase as productivity ramps. Revenue generating headcount is up 4% year to date, we remain on track to expand the population of priority growth hires by 4% to 8% this year.

Retention remains strong in the mid nineties, supported by increased engagement from our enterprise client group. As well as enhanced delivery of analytics and advisory powered by ABS. Net market impact, which captures both rates and exposure, was slightly positive and within our expected 0 to 2 point range despite a softer pricing environment in P&C and reinsurance. Importantly, these results reflect the durability and differentiation of our business model across market cycles. Organic, growth continuing to be driven by business investments and client demands. As a final point on revenue, third quarter fiduciary investment income was $69 million, down 8% from prior year as higher average balances were more than off by lower interest rates.

On slide 8, Q3 adjusted operating income increased 5%. to $1.1 billion and adjusted operating margin expanded by 70 basis points to 27%. Adjusted margins expanded despite the impact of lower rates on investment income from fiduciary balances, This was offset by the benefit from the AAE restructuring program and most importantly, continued operating leverage. Enabled by our scalable AVS platform. ABS continues to generate scale benefits through disciplined expense management and AI enabled productivity gains. Thereby lowering unit costs and creating operating leverage that funds growth investments enables margin expansion. Restructuring savings were $20 million in the quarter, contributing approximately 50 basis points to adjusted operating margin.

And we remain on track to deliver £100 million of savings in 2026 advancing towards our goal of $450 million program savings with 2026 representing the final year of our restructuring investment. Moving to interest, other income, and tax on slide 9, Interest income of $24 million in the third quarter driven by interest earned on the proceeds from debt raised to fund the pending USI acquisition. Interest expense of $206 million was flat versus prior year and $27 million higher than Q2. Primarily due to a partial quarter of interest expense on debt raised to fund the pending USI acquisition. We expect Q4 interest expense to be approximately $410 million driven by higher USI related debt.

Adjusted other expense was $2 million higher than last year driven by remeasurements of balance sheet currency exposure. We estimate Q4 other expense to range between $12 million and $15 million Our Q3 adjusted effective tax rate was 20.2%. And we continue to expect the full year adjusted effective tax rate between 19.5% to 20.5%. Finally, adjusted EPS grew 10% year over year to $3.36. Turning now to free cash flow and capital allocation on Slide 10. We generated $1.1 billion of free cash flow in the third quarter, up 2% year over year with growth partially offset by working capital movements USI related transaction costs.

Q4 is historically a seasonally higher quarter of free cash flow growth, excluding the impact of USI related cash expenses we continue to expect double digit free cash flow growth on a stand alone basis for 2020 As a reminder, the pending USI acquisition is expected to result in approximately $160 million of transaction costs. Largely recognized in the third and fourth quarter of 26. Turning to capital allocation on the right hand side of the page, the principles of our balanced capital allocation model remain the same. Deleveraging our balance sheet, funding a stable and growing dividend, followed by balancing investments for growth with a return of excess capital to our shareholders.

I will conclude my prepared remarks with a few thoughts on our full year 2026 financial objectives. The underlying drivers of our growth are evident in another quarter of differentiated results. We are generating sustainable organic revenue growth through consistent new business generation and high retention. Translating that growth into strong earnings through operating leverage and converting those earnings into free cash flow. On a stand alone basis, excluding cash, and other transaction expenses from the impact of the USI acquisition, we remain confident in our ability to deliver our previously communicated full-year 2026 guidance. Across organic revenue, margin expansion, EPS, and free cash flow growth.

Continue to make progress towards the close of the USI acquisition in the fourth quarter and we will provide more details on the combined financials after closing. As Greg mentioned, integration planning is well underway. With the establishment of the integration management office, with myself, the executive sponsor, and alongside leaders from Aon, NFP and USI. We are focused on planning for the next generation client experience, building on a unified culture, maintaining clear accountability, and driving value creation objectives. Before we move to Q&A, let me underscore the Aon United brought to life through risk capital, human capital, Aon client leadership, and ABS.

This strategy is delivering strong results today, and positions us well for sustainable growth in the future. Creating differentiated value for our clients, colleagues, and shareholders. So with that, let's open the line for questions.

Operator: Thank you. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 if you would like to remove your question from the queue. We ask that you each keep to 1 question and invite you to rejoin the queue for any additional questions. Thank you. Our first question comes from the line of Andrew Kligerman with TD Cowen. Please proceed with your question.

Andrew Kligerman: Thanks, and good morning. As I think about Aon's exceptional organic growth for another consecutive quarter, broker facilities come to mind. I hear about Aon doing a $10 billion data center facility, a $2.5 billion energy facility, something with Blackstone and reinsurance. It just continues on. So my question is, what is the runway for data. Not just data center, but facilities in general You see that having a long runway at Aon and industry wide for brokers? And then the second part of it is with Aon's history of innovation, more broadly, I know you touched on a few specifics.

In your opening remarks, Gregory, but more broadly, there other innovations that are having the kind of impact at Aon like broker facilities?

Gregory Clarence Case: Well, first of Andrew, thanks for the question. Appreciate it. And, listen, a lot to unpack there in terms of sort of the overall line. First, let me-- the whole area around the data centers and the evolution bringing capital in the industry, all these innovations are here. And it is Andrew because of client need. We spent a huge amount of time understanding client need and how it is evolved and essentially structured the firm so we could respond to that. You are seeing that.

But I do want to emphasize, though, before we get into the detail, and I want to also say it is just been. it is awesome to have Andy and Anne on the call with Christa and I. You are getting a chance to get even more frontline color. So I am gonna go to both of them in a second to get their response. But I would start with foundationally, Andrew. This is another strong quarter of growth. As you highlighted, across and really, you think about the consensus from 20 Q3 2025 top of a strong a strong period. So this is growth on growth.

And it really is our team's excited about it not because of the performance, really. it is really about we are describing client momentum. And it really is client momentum that continues to build. And it is and it is beyond a single area. These innovation pieces are just are just steps. They are components. They are not the overall answer. They are important, but they are real The fundamentals of our of our of our progress and the momentum has really been much more broad based. It reflects really this response to client need I described And at a foundational level, it comes back to the work of the 3x3.

Again, we listen to clients in years you know, now for 3 years, broke down our firm and rebuilt it, around alignment. We changed the organizational structure, risk capital and human capital. And AI business services, connected it in an aligned way, and then, frankly, have amplified it with AI. And this has really brought us to a place where we can respond. I mean, think about being able to sit across the table from you know, a financial sponsor about bringing capital and you have got risk capital. You have got commercial risk and reinsurance at the table or a data center. At the table. At cyber, you know, risk capital at the table.

So all these things sort of contribute to these pieces. Our view fundamentally, Andrew, is demand is going up. More volatility, more complexity, and our ability to and meet client need is the opportunity. that is why we did Aon Business Services why we did risk out in human capital. that is why we invested behind in 3x3. I was thinking, Andy, you know, price and thoughts and views as you think about sort of the specifics on a couple of these areas. We will cover them some more in detail. And then the frontline field response has also been exciting see because our colleagues are excited about this level of innovation. Andy, maybe over to you.

Andrew Marcell: Yeah. Thanks, Gregory. I mean, our performance in commercial risk and reinsurance being pretty broad based. Particularly our core P&C business. Has exceptional results. And in part, that is driven by the further development and utilization of our analyzers globally in our risk diagnostics. In fact, in the third quarter, 6.6 thousand clients used our risk analytics and utilization was up year-on-year 30%. So we are excited about that. that is driving new business and retention in positive ways.

And when we think about, you know, facilities and, you know, data centers as an example, we have created the capacity to meet the client needs whether it is operational programs, whether it is whether it is we did with our power life cycle program, and even leaning into surety for US based power contracts to meet the client's requirements there. We are responding to client needs. In that regard and the pipeline and development in the digital infrastructure is improving all the time. So we are excited about that. M&A services was another double digit growth for us in the quarter. You know, the pipeline remains strong.

And so, you know, that was broad based too, both geography the reps, the warranties, intact, and across corporates and PE. But, Ann, what are you seeing in the-- what are you seeing in the tropics there?

Ann Corona: Yeah. Thanks. Andy. And as you mentioned, the commercial risk organic growth has been broad based on top of a very strong comp from the prior year period. For the full year, we delivered 7% organic growth on top of 7% last year. And North America, the 7% organic growth over 10% last year. The fact is we are doing more, we are winning more, and we are keeping our clients for longer. Around the world. Our clients are sharing how our talent and technology are driving better outcomes for them. Just last month, we held our North American client council. This is a gathering of 50 of the largest global companies that are headquartered in The US.

And the client shared direct feedback. Exceptionally positive direct feedback. That our analyzers and diagnostic tools are enabling them to make different and more effective risk transfer decisions. In fact, 1 client explained how they moved their cyber program to Aon because of our team and capabilities and then had the confidence to restructure their program. Our AI enabled tools are differentiated because they are built by Aon Business Services along with our colleagues in the business. And then we can continue to iterate them based on that direct client feedback. Bottom line is it is working.

Andrew Kligerman: Got it. My follow-up question is around potential for divestitures. I understand. I just to confirm, Gregory, you said USI was going to close in the fourth quarter. It sounds like everything's on track. But I think about NFP Wealth. And you raised $2.7 billion from that divestiture. I wonder if there are places inside of Aon where-- And, obviously, you are not gonna point to anything specific on this question on the call. But are there areas where Aon could divest or would want to divest? Like, what do you think about on that front?

Gregory Clarence Case: Well, Andrew, appreciate the question. And as you step back and think about how we orient ourselves again, we are looking across our company around the deployment of capital. We treat this as sacred for us. And the approach we take is a pooled approach. You know, we are looking for return on invested capital, and we are looking across our firm at all aspects of the firm. And we will always be doing this. So we have made many, many acquisitions, many divestitures. To optimize return on capital overall. So anticipate we are doing that. You are exactly right on USI. Everything's proceeding exactly as planned. Fully anticipate closing in Q4 as we described.

And fully anticipate sort of deploying capital in the most optimal way over time as we pay down the debt that is out there and sort of move forward. And we will continue to look for these opportunities. But, Christa, anything else you would add on that on the capital allocation side?

Nadin Virani: Yeah. I would, you know, I would say that just as you mentioned, we are always looking at opportunities to optimize the portfolio. But when it comes back to capital allocation, our objectives and our methodology stays the same. We are focused on deleveraging our balance sheet, funding a stable and growing dividend, investing in growth opportunities, and then returning excess capital. To shareholders. So that is how we thought about it in the past, and we will continue to do so. We have to exercise discipline in order for us to be able to get to the leverage ratios that we have talked about.

And we did that just with NFP, and we expect to do so again in this transaction. Thank you.

Operator: Ladies and gentlemen, just as a reminder, please keep to 1 question each. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question.

Elyse Greenspan: Hi, thanks. Good morning. My question is on the USI transaction. I just was hoping, you know, now that it is been a little bit since you announced the deal, could you just provide us, you know, hopefully, more color on just the drivers of the revenue synergies? I know we previously touched on just the USI and, like, the wholesale component there and how that could be you know, could help drive the revenue synergies that you outlined. Can you just update on us since you announced the deal, the work that you have done? The confidence, you know, that you potentially have in the revenue synergies.

And the wholesale piece as well as anything else that you wanna highlight that is gonna drive the revenue synergies you are expecting with the transaction?

Gregory Clarence Case: Absolutely, Lisa. Really appreciate it. Listen. I have to start with the foundation, though. You know, we are here around with USA and the middle market opportunity, at least because the foundation has been set. the 3x3, by Risk Capital, Human Capital, ABS and now acceleration with AI, that success and momentum has been tremendous, and you see it in the results. Today. But, you know, in addition to that, we saw the opportunity in the middle market that literally deliver a premier US middle market platform. And this is building on, really building on the USI capability, NFP capability, Aon capability, And it is frankly about greater value for clients.

Through our frontline leaders, through our producers, through our client leaders, And we saw it, we could see it, we proved it with NFPA, it was so clear. And now with USI and that combination, we are. And we probably it is 59 days ago, for those who are keeping track, We had high expectations then when we announced You know, candidly, at least, they are stronger now. We brought the team together. We have got the planning in place, fully in place for action on day 1 once we close. And, really, I want to get Christa to talk about the synergy capture overall, but specifically around revenue. But listen.

This opportunity for us builds on this foundational platform with another area of incremental substantial growth in the middle market and in E&S and with the data footprint we have got now sort of in the middle market. So the expectation we have, it should. it is high, and you should have high expectations on us as well. But let's talk about synergy capture, Christa, and then we will get some reactions from Ann and Andy as we see it out in the field.

Nadin Virani: Right. Yeah. So let's take a step back, and let me just explain We have identified $395 million in EBITDA run rate synergies, and these come from 33 specific work streams that we have identified, 23 revenue work streams, and 10 cost work streams. I start with the cost, that represents $280 million, or 71% of the total synergies, and we are really high confident in being able to achieve these. Because 90% of these are expected to be completed by 2028. And these are through our global capability centers, technology savings, and other efficiency actions that we plan to take as well. This is a proven playbook for us.

This is part of what we have been doing with the 3x3 strategy and the ABS platform that we have developed over the years. And NFP. The NFP integration provides the muscle memory and the recency effect for our confidence being able to achieve these. Now if I move to the revenue synergies, those actually represent $115 million or 29% of the total. That comes from placement optimization of wholesale flow E&S segment opportunity, direct placement opportunity of USI premium volume, all with the client in mind. Producing the best service. Another area is a high retention and producer productivity, This is enabled by additional tools and capabilities that we have been developing.

And then the third area is risk capital and the human capital cross sell. Which builds on a 3x3 strategy that we have had in place many years now. So these work streams, then many of them are tried and true strategies that we have been working on and have good experiencing over the years. What we will be doing because we have such high confidence is that we will provide quarterly updates on an annual net EBITDA synergies and the total program synergies as well. And we have the integration management office in place now. So again, a lot of the planning is taking place, and we are excited to get started.

Now I am going to hand you to Ann for some additional thoughts.

Ann Corona: Thanks, Christa. The business is highly confident that we will deliver to the synergies that Christa described, and we see potential for more. We have proven our ability to deliver on targeted synergies with the NFT combination, and we are excited to build on the success of the NFP Foundation and to learn from the USI team members. And we are truly thrilled to deliver better outcomes for our clients and our colleagues. it is about creating the premier middle market platform and bringing new content capabilities to companies in the growing middle market. Ann, do you wanna comment on the.

Andrew Marcell: On some of the broken pieces? Sure. Actually, we are at CIAB. They came in with carriers, and the revenue opportunities that we identified are actually magnified by the fee. From the feedback that we got from the carriers. Gave a real clear line of sight in what we are gonna do and how it is benefiting the USI clients. First and foremost, and how we can avail ourselves of a global breaking network, which we are excited about. So our degree of confidence, whether it is around, you know, Tata special TRNGA platform or sort of broking infrastructure, is, you know, much stronger than it was. when we went into it. So we are highly confident.

Elyse Greenspan: Is that helpful, Elyse? That is. And then my second question, I wanted to pivot to reinsurance. You guys have seen strong growth there. We have seen a little bit of a dispersion across the industry and just the organic growth trends. Even. You know, I know there was perhaps some onetime ish revenue in the quarter, but even excluding that, there is still positive in excess of the mid single digit target.

So can you just give us a sense of what is driving the reinsurance organic and how we should think about that trending into 2027 when it seems like, right, we will probably see you know, another round of double digit price declines on the property cat side at 1.

Gregory Clarence Case: Absolutely, Elyse. I appreciate the question. Listen, have an incredible team, with a long record of performance, really, over time. I admire about the team. These guys, you know, this absolutely relentless pursuit of client impact but they also are constantly looking around on innovation and new ideas and new solutions to bring to market. And so I wanna get Andy to talk a little bit about sort of this history. But this idea around the and all the ways we can support and help clients, really has sort of played a significant role. Also, just wanna highlight the commercial risk result and the reinsurance result, both. Really are a testament to risk capital.

You were literally putting content in the room that was different than it was before. Analytics that are different and people that are different reinforcing and supporting each other, fully aligned. That means a different set of solutions for clients. Better set of solutions. That shows up. The reinsurance capability shows up in reinsurance, and you are seeing it also shows up in commercial risk when you see it sort of in some of the some of the bigger, more complex items that our that our clients are facing. You know? Think data centers, etcetera.

So it really is, you know, a unique combination that is come out of this alignment that we have worked so hard to create with risk capital. And you are, again, seeing it in reinsurance with a great group of leaders. And this is 7% on top of, I think, 8% prior year period, Andy. So this is pretty, you know, unique. Good momentum. As we talked about before. But your thoughts on sort of what is happening under the hood here?

Andrew Marcell: Yeah. Thanks, Gregory. I think the reinsurance story is it is a risk capital story. And it is a diversification story at least, as we first spoke about at Investor Day. And, yeah, from a risk capital standpoint, you know, highlights 2 things. 1 would be our global fact platform in partnership with commercial risk driving double digit growth internationally, which has been a success and long lasting, and we see great future in that. Then I think about digital infrastructure, partnering with the carriers, alternative capital, you know, to bring solutions to clients on a commercial risk side.

So that is been tremendously exciting But it is the diversification in reinsurance, at Aon Re has always been leading into innovation. I am sure we have great success and great schemes with our treaty business. We have a lot of new wins, particularly in the NGA space. But it is a story about diversification. We have been leading with capital advisory and Aon Securities. Capital formations in Lloyd with the ReShare deals or the sidecar that we have been involved in that is accelerating Our cat bond business remains the leading cat bond business globally. We are having tremendous success there.

But we also knew that we had to diversify away from straight up transaction business and we sort of leaned into the formation of the Strategy and technology group. We are leading there with sort of advice to P&C insurance, and strategy and analytics and actuarial services. But also broadening out with our proprietary know, path wise tool leading into the life space, which is a growing part of our business. And that is a that is really differentiating us, you know, from our competitors in the life advisory space, but we do the back field, what we do with actuarial advisory. So that is exciting for us.

So overall, it is a diversification thing that is driving, and it sets us up well through the cycle together markets stuff. But I think we had set this up for single-digit growth or greater, you know, through the cycle. Thank you.

Operator: Our next question comes from the line of Rob Cox. With Goldman Sachs. Please proceed with your question.

Rob: Hey, good morning. Yes, so when I think about the outcomes of Aon's strategy, and all the innovative work in recent periods, a couple of those outcomes are this 100 basis points plus of organic contribution from talent and the really consistent 70 basis points plus of margin expansion, which goes back to the 25 Investor Day, I believe. As we look through to 2027 and beyond, should we be thinking about those underlying drivers as sustainable underneath any impacts from USI and all the integration involved?

Gregory Clarence Case: Yeah. Rob, thanks for the question. I will start with an overview. We will go to Christa on specific mechanics here, and we might even get into a field view around sort of the credibility of all those comes back to clients and client reaction. that is the fuel. The answer is not only sustainable. We believe we have got greater momentum against those objectives than ever before. And it is not magic. Right? It literally is client demand, client needs going up, Our ability to respond, has been shaped literally to their what they are demanding, and we are seeing opportunity. And, you know, when we were attracting talent, and building talent inside of Aon.

But remember, it is not just. it is talent with technology. it is content, the capability around it. So it is not. None of this is bigger. This is all about better. Better in the middle market, better in large corp, better in enterprise clients, because we have got a set of solutions that we have come together and developed over time. We also can not just innovate, but innovate at scale more quickly. And more effectively. So all these things are literally the reason the goal, the objective we had set out on Aon United over a decade ago, but really why we you know, over 3 years ago, dove in and said, we have got to do better.

We changed structure, risk capital, and human capital. That is alignment. That is reaction to the market. ABS absolutely towering in terms of its connectivity. But as Anne said, it was not in isolation. It was with the field. These things came together to give us capability that has enabled our current performance And our view is the model we described at investor day is the model that literally you are seeing play out. But, Nadin, thoughts?

Nadin Virani: Yeah. Let me build on that. So our full year objective in terms of priority revenue-generating hires is 4% to 8% for the full year. We have achieved 4% year to date, so we are already at the low end of the full year expectation. And it is not just about the headcount, it is about the right headcount, which is why we have a range. And so we are really pleased with the performance that we are seeing coming through in our results today. As I mentioned in my remarks, those will continue to grow as the individual season and mature in terms of their contribution.

As we continue to bring on more cohorts, that is just going to build on top of each other. it is not really just about, you know, 1 quarter or 1 year. it is a program that we have put in place that will drive sustainable growth into the future. So we will continue to prioritize these investments because they help fuel growth in our business. I am gonna pass to Anne for a bit more color.

Ann Corona: Thanks, Christa. And as you stated, our ability to attract and retain talent best talent, has always been high. In fact, NFP producer retention is higher than the pre acquisition numbers. And the enthusiasm with which external candidates are reaching out is profound. The candidates are keen to join our winning team and to serve clients with our AI enabled capabilities. it is the analyzers, the diagnostic tools. Certificate center, In addition to brokers and producers, we are attracting the best client leaders, and they are serving the most complex clients. Global clients.

Our enterprise client leaders are joining from within the industry, but, also, we are attracting client leaders from outside the industry, from technology, manufacturing, financial institutions, and they are joining because they want to solve client needs and deliver the integrated risk capital and human capital capabilities. And we are the destination of choice for candidates, and for clients.

Operator: Thank you. Next question. Our next question comes from the line of Meyer Shields with KBW. Please proceed with your question.

Meyer: Thanks so much. I was hoping to sort of look at the USI acquisition in the context of NSP. Specifically, I was hoping you could give us a time line for accelerating legacy NFP production and what the timeline. Whether the timeline would be the same for USI when they have access to Aon's tools.

Gregory Clarence Case: Love it, Meyer. Listen. We have long thought about this middle market opportunity. With ABS, we had the data to go in and really address it in a way that we felt could be powerful for clients, but also accretive for Aon. And all the above that comes with it. NFT proved it. We saw it. We could see. We knew. We could see it happen. By the way, it was the frontline of NMP that made it happen. It was the producers, the client leaders as they picked up. And by the way, we learned a huge amount from NFP.

Know, hopefully, they picked up a few things from Aon together, and together, we are just stronger as we work together. So we proved it. We learned a lot, though, in 2 plus years. We learned a lot. So not only do we see the opportunity now with USI at the table, with NFP, with Aon together, and I wanna emphasize this, together a single platform that is gonna make a difference. Under leadership of Mike Sukkar, who is watched this for 20 years, been in this game, Our view is that opportunity is even greater than we when we came in with NFP, even greater We have seen it. We have proved it.

Now we have got all the capability around the table to make it happen. You know, listen. We have high expectations on what this might be and what we will play out to be. We are highly confident on the synergies as Nadin described. But, really, the place we are most excited is the impact, you know, with our colleagues sitting across the table from clients around how they can help them succeed. So, you know, I think, again, the performance of NFP were not recorded externally is as strong as it is maybe the highest quarter it is been over the last since they have joined.

And we see that opportunity playing out in an even faster fashion over time together with the platform with USI.

Nadin Virani: that is exactly right. You know, we are really pleased with the NFP performance. A really, really strong quarter for Q3, and we have confidence that, that performance is going to continue to grow.

Meyer: Okay, Meyer?

Operator: Thank you. Our next question comes from the line of Bob Huang with Morgan Stanley. Please proceed with your question.

Bob Huang: Good morning. I want to unpack a little bit about the Sidecar initiatives you have. I know you mentioned about this a little bit earlier, but if we were to think about your proposed partnership with Blackstone on Cortina. With advancement in AI risk modeling, a higher yield environment that we are in today, and then just the amount of capital that is available to deploy, do you foresee sort of like a proliferation of the sidecars going forward?

Not just really gradually, but to the point where it could have private equity capital displace carrier capacity at a significant fashion going forward And if that is the case, if you were to, you know, put your confronting hat on, what is Aon's opportunity here going forward?

Gregory Clarence Case: Well, I wanna just start with a big emphasis here. This is really. This is not about the capital. it is about the clients. What we are responding to and what Andy's gonna describe a little bit is around the innovation on analytics and content. If you have got analytics and content and capital to consume way to come in and make a return and be protected, you are going to attract capital. Our goal is to. You know, think about our $4.5 trillion industry right now. With absolutely cherished market partners to serve clients. We are gonna reinforce and support that capital pool.

That capital pool at 4.5 trillion to 5 trillion that needs to grow over time, needs to be bigger over time. Imagine if it was twice the size and it was closer to 10 trillion than 5 trillion. We are talking about net creation, not a zero sum game. Net creation. So now you are talking about the ability to actually address data center issues. Address cyber, address the evolving AI risk, address, if you think about, the Thai catastrophe arrangement I described, this is a country now we are actually supporting just like we did with Jamaica. So for us, this is really, Rob, about a much bigger industry that evolves over time.

And the analytics is the way to unlock that. If they have got competence, then you can deploy new capital to do that. And by the way, this has been a history of our industry, and Andy should talk a little bit about how it is evolved over time. And so this is just another step By the way, not an easy 1. The content and analytics required to move money, to move capital, to move someone else's balance sheet, to bet on our industry, a big deal. I mean, this is not easy to do.

When you can pull off you know, we are creating more capacity, more ability to serve client need, this should not be a zero sum game. It should be opportunity to really make a difference with clients in unique ways. But, Andy, thoughts?

Andrew Marcell: Yeah. Thanks, Gregory. I mean, our role as a an intermediary is to bring you know, choice to clients, durable, meaningful, quality choice to clients durable capital. And we have done that historically at Aon Re. I think back 25 years, the beginning of the cat bond market. You know, that is now. We are leading that in the category, but that now is beyond The US and Japan and more common in Europe. 2098 Citars. And so we are we are helping clients with their needs, but perhaps as it relates to cat bond.

But if you think of you know, the Citars, there is been created since 2020 and 163 in the last 10 years, but very few new capital balance sheet formations the reinsurance market. So this is the way the capital is entering the business. We are partnered with that capital to resolve the client needs in this respect. Pointed out, the risk is elevated around the world. Prices may be down at this particular juncture, but risk is elevated whether it is from climate, whether it is from social inflation, whether it is from technology, socioeconomic disruption, the riots in France.

So over time, we anticipate the needs of our clients and the and the need for risk transfer is gonna increase and the cost of that risk transfer over time will increase. So we want to, you know, expand the total addressable market. So we need capital to come in And so we are excited about our position in that. We feel that we are leading it whether it is the reshare deal deployed, whether it is the sidecar's capital advisory team partnered with our Aon Securities team is creating with the account teams, really putting us in the driving seat and solving fine issues.

Gregory Clarence Case: And you saw, Bob, the opportunity to do this was with the market. You know, even the example you highlighted so that it is with market partners as well. So appreciate the question. Hopefully, that is that is good color and background for you.

Operator: Thank you. Our next question comes from the line of David Motemaden with Evercore ISI. Please proceed with your question.

David Motemaden: Hey, thanks. Good morning. I was hoping you guys could talk a little bit about the construction growth in North America. It sounded like that maybe moderated a little bit. I think last quarter, you guys were talking double digit growth there. And this quarter, I did not hear that. But at the same time, you spoke about a strong pipeline. So I was hoping maybe you could just unpack that a little bit and your outlook, for contributions to growth from, you know, AI infrastructure just given all the focus on that?

Gregory Clarence Case: David, appreciate the question. And listen, I would just highlight it is never about a single quarter. As you know, you have heard us talk about before, it is trend over time. I would also highlight construction continues to be incredibly important investment area for us, opportunity area for us. We have got a tremendous team sort of on this broad based topic. And not just the construction, but the operation over time, all that comes with this. So we just see tremendous opportunity.

And I would say the pipeline looks strong, but I also wanna emphasize, as I did at the beginning, story you have seen in this quarter, you have seen in previous quarters is not just construction or data centers and all. It really is the broad base we are talking about. These are amplifiers of that. But maybe to get into specifics on the quarter, because David asked. but then more broadly, Andy, how are you seeing this evolve over time?

Dylan: Yeah. Let me start with just commenting on commercial risk overall. And just, you know, how happy we are with the high quality growth. And what we mean by that is it is always starting with new business generation. And we actually had 12 points of new business come through for the quarter. So, again, that is the area that is leading. it is high quality. Retention remains in the mid nineties, and market impact overall continues to be slightly positive despite pricing pressures. So, strength was broad based, ongoing strength in core P&C, m and a services, and construction Across regions, organic growth was mid single digits or greater for this quarter.

I am gonna pass over to Andy with a little bit. More color.

Andrew Marcell: Thanks, Christa. You know, we grew over construction in The US and globally over a really strong you know, quarter in third quarter in 2025. And so that is, like, a tremendous achievement. When we look at our, you know, construction business globally, you know, we have a, you know, big share of the. Of global infrastructure projects, so that momentum is continuing. Pipeline in The US and I put digital infrastructure remains strong and it is expanding all the time.

And so we are we are highly confident about the future of that business, and how we are how we are sort of partnering across Risk Capital with the insurers and the reinsurers, actually, in some cases, in even bring it in alternative capital to meet those needs, and they are changing all the time. But we look at the pipeline and how it is expanding. We are very confident about the needs in digital infrastructure. Are global, so we have had tons of success in Australia, Europe, we have had success. There are permitting slowdowns, and there is energy cost in effect. You know, the timing of particular project. And that is that is happening all the time.

But overall, the pipeline is expanding. The investment from the hyperscalers and others is not slowing down. So we see a tremendous opportunity across risk capital and also working with our colleagues in human capital how they can bring some of the solutions, you know, to bear on that. So we are. We, you know, we remain really optimistic about, you know, what we are doing in that space.

Operator: Thank you. Our next question will be our final question this morning from Yaron Kinar with Mizuho Securities. Please proceed with your question.

Yaron Kinar: Good morning. Thanks for allowing me on. My first question relates to margins. So when we adjust for the 50 basis points of restructuring cost saves and fiduciary income headwind of I think, about 20 basis points by my calculation. The residual margin expansion was in the 30 to 40 basis point range. I am curious why with 6% organic growth, that residual expansion would not be higher Is it that you are capitalizing on strong growth to increase platform investments? Or are there other offsetting headwinds?

Nadin Virani: Yeah. Let me take this 1. So that is exactly right. Right? If we. If you think about the margin expansion that was actually created, it is well over a 100 basis points. But we chose to invest into the business, is how we ended up with the 70 basis points on a net basis. it is all about creating durable growth for the long term. So those are the decisions that we make every quarter and for the year.

Operator: Thank you. That concludes our question and answer session. I will turn the floor back to Mr. Case for final comments.

Gregory Clarence Case: Thanks very much. Just want to thank everyone for joining the call this quarter and look Thank you.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Gregory Clarence Case: Looking forward to our discussion next quarter.

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