• Total Revenue Growth: 16% increase to $4.7 billion.
• Organic Revenue Growth: 5% for the quarter.
• Adjusted Operating Income Growth: 12% increase.
• Adjusted Operating Margin: 38.4%, down 130 basis points from Q1 '24.
• Adjusted EPS: $5.67.
• Free Cash Flow: $84 million generated.
• Capital Returned to Shareholders: $397 million through dividends and share repurchases.
• Quarterly Dividend Increase: 10% increase to $0.74 per share.
• Commercial Risk Organic Revenue Growth: 5%.
• Reinsurance Organic Revenue Growth: 4%.
• Health Solutions Organic Revenue Growth: 5%.
• Wealth Organic Revenue Growth: 8%.
• Interest Expense: $206 million, up $62 million year-over-year.
• Tax Rate: 20.9% for Q1.
• Leverage Ratio: 3.5 times.
• NFP Acquisition Impact: Contributed to margin and earnings impact.

• Warning! GuruFocus has detected 3 Warning Signs with AON.

Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Aon PLC (NYSE:AON) reported a 16% total revenue growth, driven by 5% organic revenue growth and the acquisition of NFP.
• The company achieved a 38.4% adjusted operating income margin, contributing to a 12% growth in adjusted operating income.
• Aon PLC (NYSE:AON) increased its quarterly dividend by 10%, marking the 15th consecutive year of dividend growth.
• The acquisition of NFP has been successful, with high producer retention and a strong pipeline for middle market growth.
• Aon PLC (NYSE:AON) reaffirmed its 2025 full-year guidance, expecting mid-single-digit or greater organic revenue growth, margin expansion, and double-digit free cash flow growth.

Negative Points

• The company faced a 130 basis point decline in adjusted operating margin due to the impact of the NFP acquisition.
• Interest expense increased by $62 million year-over-year, reflecting higher debt levels from the NFP acquisition.
• Free cash flow generation in Q1 was lower due to higher incentive interest and restructuring payments.
• The macroeconomic environment remains unpredictable, with potential pressures on client discretionary spending due to tariffs and trade complexities.
• Aon PLC (NYSE:AON) experienced a 15% decline in fiduciary investment income due to lower interest rates.

Q & A Highlights

Q: Can you provide more details on the M&A pipeline for NFP and your thoughts on potential acquisitions in 2025? A: Gregory Case, CEO, stated that Aon is always looking for opportunities to strengthen the firm and reinforce return on invested capital. The acquisition of NFP has been successful, and Aon plans to continue executing programmatic acquisitions. Edmund Reese, CFO, added that the primary objective for 2025 is to achieve the leverage ratio target, and any M&A will be evaluated based on strategic fit and financial return criteria.

Q: Could you elaborate on the factors influencing the 5% organic revenue growth in Commercial Risk Solutions? A: Gregory Case explained that the growth was driven by new business and strong retention, with limited market impact. The 3x3 plan and Aon Business Services have been instrumental in increasing win rates and retention. Edmund Reese added that the growth is primarily driven by new business, with retention improving year-over-year, and that the company expects continued strength in the second half of the year.

Q: What impact did the multiyear extension in Reinsurance have on the quarter, and what are the expectations for the rest of the year? A: Gregory Case noted that the multiyear extension was a significant value creation for the client, affecting timing in Q1 but not the overall year opportunity. Edmund Reese emphasized that the impact will not carry over into Q2, and the company expects strong performance in the second half, with July 1 renewals and international facultative placements contributing to growth.

Q: How is the performance of the NFP acquisition tracking against expectations? A: Gregory Case stated that the acquisition has exceeded high expectations, with strong connectivity and retention on the producer side. The integration has been accretive to revenue, operating performance, and free cash flow, and Aon is optimistic about continued success in the middle market.

Q: What are the expectations for free cash flow growth in 2025, and is there any seasonality to consider? A: Edmund Reese confirmed that Aon expects double-digit free cash flow growth off the 2024 baseline, driven by NFP contributions and core operating performance. He noted that Q1 typically has the lowest free cash flow due to integration costs, restructuring payments, and higher incentives, but expects stronger performance in the latter part of the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.