By David Bull

Jan 31 - (The Insurer) - After Aon reported a beat for the fourth quarter, CEO Greg Case told analysts the firm is well-positioned to continued to deliver mid-single-digit or greater organic growth, continued margin expansion in line with its past performance, strong adjusted EPS growth and “disciplined” capital allocation.

The executive highlighted 6 percent organic growth for the quarter and full-year 2024 with mid-single-digit or greater organic growth or better across each of its solutions lines.

The firm’s 34.4 percent adjusted Ebitda margin for the quarter beat Wall Street’s 33.8 percent estimate, as did adjusted earnings per share of $4.42, compared to analyst consensus of $4.25.

On the call, Case said the financial performance is a “strong start” to the firm’s 3x3 Plan as he highlighted “tremendous progress” across its three pillars of Risk Capital and Human Capital, Aon Client Leadership, and Aon Business Services.

The Aon CEO pointed to challenges faced by clients and their “intensifying” requirements amid “mega-trends” that include trade, technology, weather and workforce.

“We are committed to levering our distinctive Risk Capital and Human Capital structure to unlock new solutions that address the evolving client demand discussed earlier. In 2024, we created and delivered innovative solutions that integrate reinsurance and commercial risk data and analytics.

“Solutions using this connected capability are enabling clients to access capital more efficiently and make better decisions,” he commented.

Case pointed to work in the fourth quarter that included securing $715mn of alternative reinsurance capacity for an unnamed major underwriter and a record 30 percent increase in capacity for Aon Client Treaty, when the follow-on London market placement facility renewed in December.

“Looking ahead, as we onboard recent hires, we're continuing to invest to support top line growth, particularly client-facing talent in prioritised growth areas and an innovative new technology-driven solutions enabled through Aon Business Services,” he continued.

“In addition, the efficiencies we gain through Aon Business Services continue to support margin expansion. As a result, we expect to deliver another year of mid-single-digit or greater organic growth, continued margin expansion, strong adjusted EPS growth and double-digit free cash flow growth for 2025,” the executive said.

On the call, Aon CFO Edmund Reese highlighted drivers of organic growth across Aon’s business segments.

Q4 organic growth of 6 percent in commercial risk was “broad-based”, reflecting strength in the firm’s North American core P&C business, as well as continued “strong contribution” from international and an uptick in construction as Aon sees the impact from specialty hires.

“We also benefited from double-digit growth in M&A services as increased transactions activity continued to be a modest tailwind,” he continued.

The 6 percent performance was matched in reinsurance as Reese pointed to the contributions from the firm’s strategy and technology group, “strong treaty placements with existing clients and increased insurance-linked securities”.

“Specifically, interest in catastrophe bonds continues to grow as investors seek unique asset classes with uncorrelated returns, and Aon is the leading industry provider in cat bond placements,” said the Aon CFO.

NFP performing as expected

On the call, Case also commented on NFP, which was acquired in a deal that closed in late April last year to bolster Aon’s middle market presence.

“Eight months in, the business is performing very well, just as expected. Integration is right on track, producer retention is strong, and the acquisition is driving top-line growth as we build on NFP’s strong client relationships by bringing additional content capabilities and tools to the team.

“Clients have responded well to the potential for NFP under the Aon umbrella, giving us even more confidence in our ability to achieve our sales and cost synergy goals in 2025 and 2026,” he said.

In its investor presentation Aon said that NFP is on track to deliver organic and inorganic growth, $175mn of net revenue and $60mn of cost synergies in 2025, as well as adjusted operating margin expansion for the combined firm, execution against an “attractive” M&A pipeline, and free cash flow impact of $300mn in 2025 and $600mn in 2026.

Aon president Eric Andersen identified examples of where NFP had been able to benefit by “connecting the capabilities that Aon has”.

One is the utilisation of the Aon network, where an NFP clients – a major sports league – had used Aon’s global broking centre in London to access the Aon Client Treaty to get more capacity for a challenging renewal.

“The second one would be industry and product specialisation where, as another example, NFP had a professional services client who they were working with in the health arena. And they were able to partner with our team that had a focus in that industry in the risk area. Together, we’re able to now provide risk capability services for that client,” said the executive.

“And then the third is across Risk Capital, where they have an MGA that needed reinsurance support. We were able to use Aon capabilities to help the MGA that is part of NFP get capacity and better reinsurance terms,” he added.

Aon shares were trading up around 0.5 percent to $373.92 at 10:48 ET in New York.