Q3 2023 Aon PLC Earnings Call

Speaker 1: Good morning and thank you for holding. Welcome to Aeon PLC's third quarter, 2023 conference call. At this time, all parties will be in a listen only mode until the question and answer portion of today's call. 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.

Good morning, and thank you for holding welcome to Anne Plc's third quarter 2023 conference call. At this time, all parties will be in a listen only mode until the question and answer portion of today's call.

I'd also like to remind all parties that this call is being recorded.

Anyone has an objection you may disconnect. Your line at this time.

Speaker 1: 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 1995.

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 1995, such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results.

Speaker 1: such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historic results of those anticipated.

Are those anticipated.

Speaker 2: Information concerning risk factors that could cause such differences are described in the press release Covering our third quarter 2023 results as well as having been posted on our website It is now my pleasure to turn the call over to great TCO of ANPLC Welcome to our third quarter conference

Information concerning risk factors that could cause such differences are described in the press release, covering our third quarter 2023 results as well as having been posted on our website. It is now my pleasure to turn the call over to Great T. C. O M. P. S C.

Good morning, everyone welcome to our third quarter conference call.

And by Christa Davies, our CFO and Eric Anderson, our president as.

Speaker 2: As in previous quarters, for your reference, we posted a detailed financial presentation on our website.

As in previous quarters for your reference we posted a detailed financial presentation on our website.

Speaker 2: As we begin the call of day, we like to take a moment to reflect on the ongoing conflict in Israel and Gaza.

As we begin the call today, we'd like to take a moment to reflect on the ongoing conflict in Israel in Gaza.

Speaker 2: We condemn violence anywhere it occurs in the world and remain highly concerned about all in harm's way. The safety and well-being of our colleagues and their families is always our top priority. Our team is in constant contact with our leaders in Israel to ensure our colleagues, their families, and our clients have our full support.

We can Jim Bartlett anywhere it occurs in the world and remain highly concerned about all in harm's way.

Safety and wellbeing of our colleagues and their families is always our top priority.

Team is in constant contact with our leaders in Israel to ensure our colleagues and their families and our clients have our full support.

Speaker 2: I really want to thank you to our Aeon colleagues around the world for all they do every day to support each other and to support our clients.

In the quarter, we wanted to start with a huge thank you to our aon colleagues around the world for all they do every day to support each other and to support our clients.

Turning to the financial performance.

Speaker 2: strong results in the quarter that contribute to year-to-date progress against our key financial metrics.

With strong results in the quarter that contributed to year to date progress against our key financial metrics.

Speaker 2: Organic gravity growth in 6% in the quarter was highlighted by double digit growth in re-interimed solutions and health solutions.

Organic revenue growth of 6% in the quarter was highlighted by double digit growth in reinsurance solutions and health solutions.

Speaker 2: Year to date, 7% organic revenue growth and ongoing operational improvement have contributed to 80 basis points of adjusted operating margin expansion and 10% adjusted operating income growth, a strong performance.

Year to date, 7% organic revenue growth and ongoing operational improvement contributed 80 basis points of adjusted operating margin expansion and 10% adjusted operating income growth a strong performance in.

Speaker 2: In our solution lines, Reinsurance Solutions delivered another very strong quarter of 11% organic revenue growth to strong growth across tree, fax, and our strategy technology group.

And our solution lines reinsurance solutions delivered another very strong quarter, and 11% organic revenue growth with strong growth across tree back and our strategies technology group and.

Speaker 2: In addition to delivering a strong quarter, our team has already helped me clients prepare for the 2024 Redo.

In addition to delivering a strong quarter our team is already helping clients prepare for the 2020 for renewals.

Speaker 2: Health solutions also delivered another very strong quarter with 10% organic revenue growth as our team continue to drive strong new and renewal business.

Solutions also delivered another very strong quarter with 10% organic revenue growth as our team continued to drive strong new and renewal business.

Speaker 2: We see ongoing focus from clients to address underlying trends impacting their workforce and health care costs. Such as medical and wage inflation, population health, focus on well-being and overall talent and data.

We see ongoing focus from clients to address underlying trends impacting their workforce in health care costs such.

Such as medical and wage inflation population health focus on well be and overall talent engagement.

Speaker 2: Within Wealth Solutions, organic growth of 4% reflected strength in retirement as our team continues to help clients with pension risk transfer and regulatory change.

Within wealth solutions organic growth of 4%, reflecting strength in retirement as our team continues to help clients with pension risk transfer and regulatory change.

Speaker 2: Finally, commercial risk organic revenue growth of 4% reflected strongly duels in net new business, the strength internationally in the end of the Pacific. However, overall organic revenue growth was negatively impacted by the external MNNN IPO markets as we communicated pretty good.

Finally, commercial risk organic revenue growth of 4%, reflecting strong renewals and net new business with strength internationally in EMEA and the Pacific. However, overall organic revenue growth was negatively impacted by the external M&A and IPO markets as we communicated previously.

Speaker 2: Today, we're also excited to announce action to go further faster on a united and we will describe our plan and our restructuring program will accelerate key elements of our strategy.

Today, we're also excited to announce action to go further faster on Aon, United and we will describe our plan and our restructuring program will accelerate key elements of our strategy.

Operator: Good morning and thank you for holding. Welcome to Aon PLC's third quarter 2023 conference call. At this time, all parties will be in a listen only mode until the question and answer portion of today's call. 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 1995.

Speaker 2: As always, our actions are given by client meet. For our clients, the difficult reality of the current world is evident everywhere as they face increasing challenges, understanding, measuring, and dealing with risk.

As always our actions are driven by client need for our clients the difficult reality of the current world is evident everywhere as they face increasing challenges understanding measuring and dealing with risk.

Speaker 2: Our forthcoming global risk management survey details this trend with input from over 3,000 public and private clients of all sizes across geographies and industries.

Our forthcoming global risk management survey details this trend with input from over 3000 public and private clients of all sizes across geographies and industries.

Speaker 2: Trade, technology, weather, and workforce stability are central forces in today's risk landscape. And while each of these forces are individually impacting risk exposures, their increasing connectivity is compounding complexity and presenting new challenges to business leaders.

<unk> technology, whether in workforce stability are simple horses and today's risk landscape.

Operator: Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results of those anticipated. Information concerning risk factors that could cause such differences are described in the press release covering our third quarter 2023 results as well as having been posted on our website.

While each of these forces are individually impacting risk exposures were increasing connectivity is compounding complexity and presenting new challenges the business leaders.

Speaker 2: Responding to our clients increasing and evolving demand they'll protect and build their business.

Responding to our clients' increasing and evolving demand they will protect and build their business. We are advancing a series of actions to further accelerate our aon United strategy. These actions taken over the next three years will deliver outcomes that directly address client needs and demand specifically, we will improve the quality and availability of analytic tool.

Speaker 2: We are advancing a series of actions to further accelerate our AI and United strategy. These actions, taken over the next three years, will deliver outcomes that directly address client need and demand. Specifically, we will improve the quality and availability of analytic tools available to clients.

Gregory Case: It is now my pleasure to turn the call over to Great T. C. O, of Aon PLC. Welcome to our third quarter conference call.

So available to clients.

Gregory Case: I'm joined by Chris the Davies or TFO and Eric Anderson, our president. As in previous quarters, for your reference, we posted a detailed financial presentation on our website.

Speaker 2: substantially improve their service experience and expand the quality and scope of solutions we bring to them.

Actually improve their service experience and expand the quality and scope of solutions, we bring to them.

Speaker 2: This work will put our clients in a much stronger position to make better decision to support their company.

This work will put our clients in a much stronger position to make better decisions to support their companies.

Gregory Case: As we begin to call the day, we'd like to take a moment to reflect on the ongoing conflict in Israel and Gaza. We condemn violence anywhere it occurs in the world and remain highly concerned about all in harm's way. The safety and wellbeing of our colleagues and their families is always our top priority. Our team is in constant contact with our leaders in Israel to ensure our colleagues, their families and our clients have our full support.

We will accomplish this by delivering on three commitments over the next three years internally we call. This the three by three plan.

Speaker 2: The three commitments include first, leveraging our risk capital and human capital structure and capability to unlock new integrated solutions across our core business, but also address new requirements in client demand.

The three commitments include first.

Leveraging our risk capital and human capital structure and capability.

New integrated solutions across our core business, but also address new requirements in client demand.

Speaker 2: Second, embedding the AL and client leadership model across our enterprise client and barrage your middle-market segments to further strengthen and expand our client relations.

Second embedding the Aon client leadership model across our enterprise clients and large and middle market segments to further strengthen and expand our client relationships.

Gregory Case: As we reflect on the quarter, we want to start with a huge thank you to our Aon colleagues around the world for all they do every day to support each other and to support our clients. To read the financial performance, it's a strong result from the quarter that contributes to year-to-date progress against our key financial metrics. Organic revenue growth is 6% in the quarter with highlighted by double digit growth and re-intern solutions and health solutions.

Speaker 2: And third, accelerating the Now Business Services plan to set a new standard for service delivery and next generation analytic tools.

And third accelerating our business services plan to set a new standard for service delivery and next generation analytic tools.

Speaker 2: The benefits of this plan accrue to our colleagues, our clients, and our shareholders. Colleagues win, with greater...

The benefits of this plan and accrue to our colleagues our clients and our shareholders.

Colleagues win with greater capability to serve clients today, our team is exceptional and their client leadership focus on impact and this work provides them with next generation tools and capability to serve clients and to meet increasing client demand.

Speaker 2: Today, our team is exceptional in their client leadership focus and impact and this work provides them with next generation tools and capability to serve clients and to meet increasing client demand. Clients win with better.

Gregory Case: Year-to-date, 7% organic revenue growth and ongoing operation improvement have contributed to agent basis points of adjusted operating margin expansion and 10% adjusted operating income growth, a strong performance. In our solution lines, re-intern solutions deliver another very strong quarter of 11% organic revenue growth, the strong growth across tree, back and our strategy and technology group. In addition to delivering a strong quarter, our team has already helped clients prepare for the 2024 renewals.

Clients win with better solutions and better service.

Speaker 2: This work resets client service to a higher standard and provides analytic tools and solutions required to meet demand.

Work resets client service to a higher standard provides analytic tools and solutions required to meet demand.

And investors win.

Speaker 2: to our greater client relevance, continuing margin improvement, and sustained double-digit free cash flow growth.

We're a greater client relevance continuing margin improvement and sustained double digit free cash flow growth.

Speaker 2: And while we could have achieved these benefits over time, we have instead decided, back now, an accelerator-proven strategy. Let me describe how our team.

Gregory Case: Health solutions also delivered another very strong quarter with 10% organic revenue growth as our team continue to drive strong new and renewal business. We see ongoing focus from clients to address underlying trends impacting their workforce and health care costs, such as medical and wage inflation, population health, focus on well-being and overall talent engagement. Within wealth solutions, organic growth of 4% reflected strength and retirement as our team continues to help clients with pension risk transfer and regulatory change. Finally, commercial risk organic revenue growth of 4% reflected strong renewals and net new business, with strength internationally in the end of the Pacific.

And while we could have achieved these benefits overtime, we've instead decided back now and accelerate a proven strategy.

Let me describe our team came to this conclusion.

Speaker 2: The last 10 plus years have demonstrated that a more connected firm is a more capable firm and the connecting Aon isn't done in concept. It's accomplished through meaningful structural change, which must be embraced and led by colleagues. It is cultural and only viable as a defining part of our DNA. And even though we remain on the journey with plenty of distance to travel and opportunity ahead to improve, we have made progress.

Last 10, plus years have demonstrated that a more conducted firm is a more capable firm and they're connecting and isn't done in concept with accomplished through meaningful structural change, which must be embraced and led by colleagues. It is cultural and only viable as the defining part of our DNA.

And even though we remain on the journey with plenty of distance to travel and opportunity ahead to improve we have made progress and the results have been meaningful.

Speaker 2: and the results have been meaningful. For clients in terms of innovation and support, for colleagues in the form of excitement and engagement, currently at an all-time high, and for shareholders, measured by sustainable value creation, including a 30.8% full-year 2022 operating budget.

For clients in terms of innovation and support for colleagues and the point of excitement and engagement currently in an all time high.

Gregory Case: However, overall organic revenue growth was negatively impacted by the external M&A, NIPO markets, as we communicated previously.

And for shareholders, making about sustainable value creation, including a 38% full year 2022 operating margin compound free cash flow growth of 13% a year from 2010 to 2022.

Gregory Case: Today, we're also excited to announce actions to go further, faster, on Aon United, and we will describe our plan and our restructuring program will accelerate key elements of our strategy. As always, our actions are given by client need. For our clients, the difficult reality of the current world is evident everywhere, as they face increasing challenges, understanding, measuring, and dealing with risk. Our forthcoming Global Risk Management Survey detailed this trend with input from over three thousand public and private clients of all sizes across geographies and industries.

Speaker 2: Compound free cash flow growth of 13% a year from 2010 to 2022, and return on invested capital at year-end 2022 of 30.6%.

And return on invested capital at year end 2022 of 36%.

Speaker 2: However, two observations give us conviction that going further faster is a requirement. The first is increasing client demand. And the second is our execution competence. Based on our proven track record, the three by three action planning you've defined, and the development work already underway. Accelerator plan.

However, two observations give us conviction that.

Further faster is a requirement the first is increasing client demand and the second is our execution competence based on our proven track record. The three by three action plan to be a decline in the diligent work already underway.

Accelerating our plans requires greater upfront investment and.

Gregory Case: Trade, technology, weather, and workforce ability are simple forces in today's risk landscape. While each of these forces are individually impacting risk exposures, their increasing connectivity is compounding complexity and designing new challenges to business leaders. Responding to our clients increasing and evolving demand will protect and build our business. We are advancing a series of actions to further accelerate our Aon United strategy. These actions taken over the next three years will deliver outcomes that directly address client need and demand.

Speaker 2: And as announced in our press release, we will execute this through a 900 million dollar restructuring program focused on 2 areas. 1st is on accelerating our AON business services.

And as announced in our press release, we will execute this through a $900 million restructuring program focused on two areas first is on accelerating our aon business services plan.

Speaker 2: by focusing on standardizing operations, integrating operating platforms, and driving product innovation.

By focusing on standardizing operations, integrating operating platforms and driving product innovation and.

Speaker 2: And the second is on workforce planning to align skills and capabilities required to deliver on the digital first opportunity embedded in AI business services, as well as workforce changes to strengthen our client serving capability and risk capital and human capital.

And the second is on workforce planning to align skills and capabilities required to deliver on the digital first opportunity embedded in Aon business services.

As well as workforce changes to strengthen our client serving capability and risk capital and human capital.

Gregory Case: Specifically, we will improve the quality and availability and analytic tools available to clients. To substantially improve their service experience and expand the quality and scope of solutions we bring to them. This work will put our clients in a much stronger position to make better decisions to support their companies. We will accomplish this by delivering on three commitments for the next three years. Internally, we call this a three by three plan. The three commitments include first, leveraging our risk capital and unique capital structure and capability to unlock new integrated solutions across our core business that also address we requirements and client demand.

Speaker 2: This investment will also drive $350 million of cumulative annual run rate savings by year-end 2026, which Krista will describe in more detail.

This investment will also drive $350 million of accumulative annual run rate savings by year end, 2026, which Christopher will describe in more detail.

Speaker 2: Overall, our team is very excited about the opportunity to accelerate our plans to strengthen client leadership. And fortunate that we have the opportunity and option to take this step at the direct result of the work of our college.

Overall, our team is very excited about the opportunity to accelerate our plans to strengthen client leadership and fortunate that we have the opportunity and option to take this step as a direct result of the work of our colleagues.

Gregory Case: Second, embedding the Aon client leadership model across our enterprise client and barge in middle market segments to further strengthen and expand our client relationships. Third, accelerating the Aon business services plan to set a new standard for service delivery and next generation analytic tools. The benefits of this plan accrue to our colleagues, our clients and our shareholders. Colleagues win with greater capability to serve clients. Today, our team is exceptional in their client leadership focus and impact and this work divides them with next generation tools and capability to serve clients and to meet increasing client demand.

Speaker 2: We continue to expect the drive, mid-sicle digital greater organic revenue growth over the course of 2023 and the long-term. Before they're expected savings, we'll contribute to ongoing annual and large-end expansion. While the program will impact wheat cash flow in the near-term, over the long-term, we expect to continue to deliver double-digit wheat cash flow growth driven by operating income and working capital improve.

We continue to expect to drive mid single digit or greater organic revenue growth over the course of 2023 and the long term. We further expect these savings will contribute to ongoing annual margin expansion, while the program will impact free cash flow in the near term over the long term, we expect to continue to deliver double digit free cash flow growth driven by operating income and working capital.

The improvements.

Speaker 2: In summary, our strong year-to-date operational performance, including 7% organic revenue growth, 80 basis points of adjusted operating margin expansion, and 10% adjusted operating income growth, demonstrates strong momentum against our AION United strategy and creates the opportunity for us to double down on our strategic commitments around risk capital, human capital, our client leadership model, and AION business services.

In summary.

Our strong year to date operational performance, including 7% organic revenue growth 80 basis points of adjusted operating margin expansion and 10% adjusted operating income growth demonstrates strong momentum against our Aon United strategy.

Creates the opportunity for us to double down on our strategic commitments around risk capital human capital our client leadership model in Aon business services. These steps will enable us to continue to address evolving client demand improved colleague outcomes and continue our track record of long term shareholder value creation now.

Speaker 2: These steps will enable us to continue to address evolving client demand, improve colleague outcomes, and continue our track record of long-term shareholder value creation.

Gregory Case: Clients win with better solutions and better service. This work resets client service to a higher standard and provides analytic tools and solutions required to meet demand. And investors win through our greater client relevance, continuing margin improvement and sustained double digit free cashware growth. And while we could have achieved these benefits over time, we have instead decided back now and accelerated proven strategy. Let me describe our team came to this conclusion. The last 10 plus years are demonstrated that a more connected firm is a more capable firm and the connecting Aon isn't done in concept.

Speaker 2: Now I'd like to turn the call over to Krista for her thoughts on our financial results and long-term outlook. Krista?

Now I'd like to turn the call over to Christa for her thoughts on our financial results and long term outlook Christa.

Speaker 3: Thanks so much, Greg, and good morning, everyone. As Greg highlighted, we delivered strong operating results in the third quarter and year to date. For the first nine months of the year, we translated 7% organic revenue growth into 80 basis points of adjusted margin expansion and 10% adjusted operating income growth. These results position us very well to continue driving results in 2023 and over the long term. We look forward to building on this momentum as we head into the last quarter of the year.

Thanks, so much Greg and good morning, everyone.

As Greg highlighted we delivered strong operating results in the third quarter and year to date for the first nine months a year, we translated 7% organic revenue growth into 80 basis points of adjusted margin expansion and 10% adjusted operating income growth.

This positions us very well to continue to drive results in 2023 and over the long time.

We look forward to building on this momentum as we head into the last quarter.

Speaker 3: As I reflect on our performance year-to-date, as Greg noted, organic revenue growth was 6% in Q3 and 7% year-to-date. We continue to expect mid-single-digit or greater organic revenue growth for the full year 2023 and over the long term.

Gregory Case: It's accomplished through meaningful structural change, which must be embraced and led by colleagues. It is cultural and only viable as a defining part of our DNA. And even though we remain on the journey with plenty of distance to travel and opportunity ahead to improve. We have made progress. And the result of the need for clients in terms of innovation and support for colleagues in the form of excitement and engagement currently in an all time high.

As I reflect on our performance year to date as Greg noted organic revenue growth was 6% in Q3 and 7% year to date, we continue to expect mid single digit or greater organic revenue growth for the full year 2023 and over the long term.

Speaker 3: I would also note the reported revenue growth of 10% in Q3 includes a favorable impact from changes in FX of 2%, primarily driven by a weaker US dollar versus most currencies compared to the prior year period.

I would also note that reported revenue growth of 10% in Q3 includes a favorable impact from changes in FX of 2%, primarily driven by a weaker U S dollar versus most currencies compared to the prior year period.

Gregory Case: And for shareholders, measured by sustainable value creation, including a 30.8% full year 2022 operating. Marker, compound pre-tasual growth of 13% a year from 2010 to 2022, and return on to the capital year in 2022 of 30.6%. However, two observations give us conviction that going further faster is a requirement. The first is increasing client demand, and the second is our execution competence based on our proven track record, the 3x3 action planning you've defined, and the development work already underway.

Speaker 3: Reported revenue growth of 7% year-to-date includes an unfavorable impact from changes in FX 1%, primarily driven by a stronger US dollar versus most currencies compared to the prior year period.

Reported revenue growth of 7% year to date includes an unfavorable impact from changes in FX, 1%, primarily driven by a stronger U S dollar versus most car T as compared to the prior year period.

Speaker 3: I'd also highlight the do-it-sure investment income, which is not included in organic revenue growth, with 80 million in Q3 and 196 million yesterdays, or 3% of total revenue in Q3, and 2% of total revenue yesterday.

I'd also highlight fiduciary investment income, which is not included in organic revenue growth with $18 billion in Q3, and 196 million Yesterdays close to 8% of total revenue in Q3, and 2% of total revenue yesterdays.

Speaker 3: Moving to operating performance. We delivered strong operational improvement through the first nine months of the year with adjusted operating margins of 30.8%, an increase of 80 basis points driven by revenue growth, efficiency for members and services, overcoming expense growth, including investment in colleagues and technology to drive long term growth.

Moving to operating performance, we delivered strong operational improvement through the first nine months EBITDA with adjusted operating margins of 38% an increase of 80 basis points driven by revenue growth efficiencies from Amazon services, overcoming expense growth, including investment in colleagues and technology to drive long term growth.

Gregory Case: Accelerating our plan requires greater upfront investment, and as announced in our press release, we'll execute this through a $900 million restructuring program, focused on two areas. First is on Accelerating our Aon Business Services plan, by focusing on standardizing operations, integrating operating platforms, and driving product innovation. And the second is on workforce planning to line skills and capability required to deliver on the digital first opportunity embedded in Aon Business Services, as well as workforce changes to strengthen our client-serving capability and risk capital and human capital.

Speaker 3: We translated double-digit adjusted operating income growth into adjusted EPS growth of 15% in Q3 and 8% year-to-date.

We tried to put a double digit adjusted operating income growth into adjusted EPS growth of 15% in Q3 and 8% yesterday.

Speaker 3: As noted in our earnings materials, FX had an unfavourable impact of approximately 1 cent per share in Q3 and an unfavourable impact of 20 cents per share year-to-date.

I started out earnings materials, FX had an unfavorable impact of approximately one cents per share in Q3, and an unfavorable impact of 20 cents posh at yesterdays if.

Speaker 3: If currently remains stable at today's rates, we would expect a favorable impact of three cents for share in the fourth quarter, totaling an unfavorable impact of 17 cents per share for before video 2023.

Gregory Case: This investment will also drive $350 million of cumulative annual run rate savings by year in 2026, which Kusta will describe in a more detailed. Overall, our team is very excited about the opportunity to accelerate our plans to strengthen client leadership and fortunate, so we have the opportunity and option to take this step at the direct result of the work of our colleagues. We continue to expect to drive mid-cycle digital greater organic revenue growth over the course of 2023 and the long-term.

If content to remain stable at today's rates, we would expect a favorable impact of three cents per share in the fourth quarter titling and unfavorable impact of 17 side, especially after before the 'twenty two 'twenty three.

Speaker 3: I'd also note the change in other non-operating expense had a $0.15 per share or 7% unfavorable impact in Q3 and a $0.59 per share or 6% unfavorable impact year-to-date.

I'd also note the change in other nonoperating expense had a 15 cents per share or 7% unfavorable impact in Q3, and a 59 cents per share or 6% unfavorable impact year to date.

Speaker 3: This reflects an unfaible impact from an increase in non-cash net periodic pension expense, as well as balance sheet effects re-measurement in the current period, and a gale on sale of businesses in the prior period.

This reflects the unfavorable impact from an increase in noncash net periodic pension expense as well as balance sheet FX remeasurement in the current period and a gain on sale of businesses in the prior year period.

Gregory Case: Before they're expecting savings, we'll contribute to ongoing annual margin expansion. While the program will impact wheat cash flow in the near term, over the long term, we expect to continue to deliver double-digit wheat cash flow growth driven by operating income and working capital improvements. In summary, our strong, near-to-date operational performance, including seven percent organic revenue growth, 80 basis points of adjusted operating margin expansion, and 10 percent adjusted operating income growth, demonstrate strong momentum against our Aon United strategy, and creates the opportunity to gross the double bound on our strategic commitments around risk capital, human capital, our client leadership model and Aon Business Services. These steps will enable us to continue to address evolving client demand, improve colleague outcomes, and continue our track record of long-term shareholder value creation.

Speaker 3: Planning to pre-cash flow. Cash flow from operations decreased $3 million year over year, reflecting double digit operating income growth, offset in part by higher cash tax payments, as we've mentioned previously. And the negative impact of working capital in the third quarter caused by temporary invoice in delays associated with the implementation of a new system.

Turning to free cash flow cash flow from operations decreased $3 million year over year, reflecting double digit operating income growth offset in part by higher cash tax payments as we've mentioned previously.

The negative impact to working capital in the third quarter caused by temporary invoicing delays associated with the implementation of a new system.

Speaker 3: 3 cash low decreased 4% to approximately 2 billion, primarily driven by a $77 million increase in capital.

Free cash flow decreased 4% to approximately 2 billion, primarily driven by a $77 million increase in capex.

Speaker 3: CapEx was elevated in the first nine months of the year compared to the prior year period, as we executed a number of technology projects to drive long-term growth. I'd note CapEx could be lumpy quarter to quarter, and we expect CapEx to moderate in the fourth quarter for total CapEx investment of $220 to $250 million in 2023.

Capex was elevated in the first nine months compared to the prior year period, as we executed a number of technology projects to drive long term growth.

Im not capex can be lumpy quarter to quarter, and we expect capex to moderate in the fourth quarter. The total capex investment of $220 million to $250 million in 2023.

Christa Davies: Now, I'd like to turn the call over to Christian for a thoughts on our financial results and long-term outlook. Thanks so much, Greg, and good morning, everyone. As Greg highlighted, we delivered strong operating results in the third quarter and year-to-date. Through the first nine months of the year, we translated seven percent organic revenue growth into 80 basis points of adjusted margin expansion, and 10 percent adjusted operating income growth. These results positioned us very well to continue driving results in 2023 and over the long-term.

Speaker 3: As we've said before, we manage capex like all of our investments on a disciplined ROIC basis. And we expect it to grow as a business growing forward.

As I said before we manage capex like all of our investments on a disciplined ROIC basis.

Specced at to grow the business going forward.

Speaker 3: Now let me share more details about our accelerating Aeon United program.

Now, let me share more details about our accelerating Aon United program.

Speaker 3: As Greg highlighted, we are doubling down on three strategic commitments, including accelerating A-owned-of-the-servators, which in turn enables us to unlock advances in risk capital and human capital, and our A-owned client leadership strategy.

As Greg highlighted we are doubling down on three strategic commitments, including accelerating Aon business services, which in turn enables us to unlock and boxes in risk capital and human capital and I own client leadership strategy.

Christa Davies: We looked forward to building on this momentum as we head into the last order of the year. As I reflect on our performance year-to-date, as Greg noted, organic revenue growth was six percent in Q3 and seven percent year-to-date. We continue to expect mid-civil digital greater organic revenue growth for the four-year 2023 and over the long-term. I would also note that reported revenue growth of 10 percent in Q3 includes a favorable impact on changes in the effects of 2 percent, primarily driven by a weaker US dollar, both as most currencies compared to the prior period.

Speaker 3: Together, these commitments will drive more value for clients, colleagues and shareholders.

Together these commitments will drive more value for clients.

Legs and shareholders.

Speaker 3: The investment to accelerate our three-year Aon Business Services operating model focuses on the same three areas we've mentioned previously. We see proven benefits and will now accelerate.

The investment to accelerate our three our Aon business services operating model focuses on the same three areas. We've mentioned previously we see proven benefit and we will now accelerate.

Speaker 3: Number one, standardized operating operations, number two, integrating operating platforms, and number three, increasing product innovation and development.

Number one standardized operating operations number two integrating operating platforms and number three increasing product innovation and developments.

Christa Davies: Reported revenue growth of 7% year-to-date includes an unfavorable impact on changes in ethics, 1%, primarily driven by a stronger US dollar versus most current tiers compared to the prior period. I'd also highlight fiduciary investment income, which is not included in organic revenue growth, with 80 million in Q3 and 196 million year-to-date, or 3% of total revenue year-to-date. Moving to operating performance, we delivered strong operational improvement through the first line months of the year with adjusted operating margins of 30.8 percent, an increase of 80 basis points driven by revenue growth, efficiencies from mayors and services, overcoming expense growth, including investment in colleagues and technology to drive long-term growth.

Speaker 3: We've already made considerable progress in standardising our operations, but we see significant opportunity, both within and across our solutions.

We've already made considerable progress in standardizing our operations, but we see significant opportunity both within and across our solution lines.

Speaker 3: The work we're doing to standardize operations will drive integrated service delivery platforms, which provides additional opportunities to standardize how we do business.

The work, we're doing standardized operations will drive integrated service delivery platforms, which provides additional opportunities sundial, how we do business.

Speaker 3: and standard operations combined with integrated platforms enables more effective new product development and innovation at scale.

And standard operations combined with integrated platforms enables more effective new product development and innovation at scale.

Speaker 3: By accelerating standardization across portfolio and establishing fewer more integrated platforms, we'll be able to deliver more analytical tools to colleagues and clients across the entire portfolio.

By accelerating standardization across the portfolio and establishing a more integrated platforms will be able to deliver more analytical tools to colleagues and clients across the entire portfolio.

Speaker 3: With this underlying infrastructure in place, we'll be able to leverage advances in AI and machine learning to further accelerate the product development cycle and unlock new efficiencies across the portfolio.

With this underlying infrastructure in place, we'll be able to leverage advances in AI and machine learning to further accelerate the product development cycle and unlock new efficiencies across the portfolio.

Christa Davies: We translated double-digit adjusted operating income growth into adjusted EPS growth of 15% in Q3 and 8% year-to-date. As noted in our earnings materials, FX had an unfavorable impact to approximately 1% per share in Q3 and an unfavorable impact of 20 cents per share year-to-date. If currency remains stable at today's rates, we would expect a favorable impact of 3 cents per share in the fourth quarter, totaling an unfavorable impact of 17 cents per share for before video 2023.

Speaker 3: Let me provide a bit more financial detail about the Strategic Investment

Let me provide a bit more financial detail about the strategic investments we.

Speaker 3: We expect total annual in-ear savings of 350 million to be achieved in 2026, contributing to ongoing sustainable long-term margining funds.

We expect total annual India savings of $350 million to be achieved in 2026 contributing to ongoing sustainable long term margin expansion I'd note, we expect savings to ramp over time with annual India savings expected to be $100 million in 'twenty 'twenty four children.

Speaker 3: I'd note we expect savings to ramp over time with annual India savings to expected to be 100 million in 2024, 250 million in 2025 and 350 million in 2026. We do not expect material savings or impacts to cash flow in 2023.

$50 million in 2025, and $350 million in 'twenty 'twenty six we do not expect material savings or impacts to cash flow in 2023.

Christa Davies: I'd also note the change in other non-operating expense had a 15 cents per share or 7% unfavorable impact in Q3 and a 59 cents per share or 6% unfavorable impact year-to-date. This reflects an unfavorable impact from an increase in non-cash net periodic pension expense, as well as balance sheet effects remeasurement in the current period and a gale on sale of businesses in the prior period. Turning to pre-cash flow, cash flow from operations decreased $3 million per year, reflecting double-digit operating income growth, offset in part by higher cash tax payments, as we mentioned previously, and the negative impact to working capital in the third quarter caused by temporary invoice in delays associated with the implementation of a new system.

Speaker 3: Cash restructuring charges of 900 million reflect the savings ratio of 2.6 times and a largely for technology costs and workforce optimization.

Cash restructuring charges of $900 million reflect the savings ratio of two six times on a largely it's a technology costs and workforce optimization.

Speaker 3: I'd note you can think of the $900 million cash restructuring charge as less than 10% of underlying free cash flow over the next three years, and the $350 million of savings as a 4% cost takeout relative to our cost base of approximately $9 billion.

You can think of the 900 million cash restructuring charge is less than 10% of underlying free cash flow over the next three years.

The $350 million of savings as a 4% cost take out relative to our cost base of approximately 9 billion.

Speaker 3: We also expect an additional $100 million of non-cash charges largely related to asset and lease impairment.

We also expect an additional $100 million of non cash charges largely related to asset and lease impairments.

Speaker 3: We do not expect significant incremental CapEx associated with the program. We expect CapEx will grow in line with the business in the future from our guidance of $220 million to $250 million in 2023.

We do not expect significant incremental capex associated with the program and we expect Capex will grow in line with the business in the future for my guidance of 220 to 250 million in 2023.

Christa Davies: 3 cash flow decreased 4% to approximately 2 billion, primarily driven by a $77 million increase in CAPEX. CAPEX was elevated in the first time month of the year compared to the prior period, as we executed a number of technology projects to drive long-term growth. I'd note CAPEX could be lumpic water to quarter, and we expect CAPEX to moderate in the fourth quarter for total CAPEX investment of 220 to 250 million in 2023. As we've said before, we managed CAPEX like all of our investments on a disciplined ROIC basis, and we expect it to grow as a business growing forward.

Speaker 3: In the third quarter of 2023, we incurred $6 million of restructuring charges, and we'll communicate charges and savings going forward each quarter.

In the third quarter of 2023, we incurred $6 million of restructuring charges and will communicate charges I'm savings going forward each quarter.

Speaker 3: contemplating the program. As we look forward, we continue to expect mid-tingle digit or greater organic revenue growth for the four year 2023 and over the long term.

Contemplating the program as we look forward, we continue to expect mid single digit or greater organic revenue growth for the full year 2023 and over the long term.

Speaker 3: We expect program savings will contribute to ongoing, sustainable long-term margin expansion, and expect to deliver margin expansion in 2023, 2024, and over the long term. As we've noted previously, over the last 12 years, we've delivered 1120 basis points of margin expansion, or about 90 basis points a year on average.

We expect program savings will contribute to ongoing sustainable long term margin expansion.

But to deliver margin expansion in 'twenty, two 'twenty three 'twenty 'twenty four and over the long term.

Christa Davies: Now, let me share more details about our accelerating Aon United program. As Greg highlighted, we are doubling down on three strategic commitments, including accelerating Aon business services, which in turn enables us to unlock advances in risk capital and human capital, and our Aon client leadership strategy. Together, these commitments will drive more value for clients, colleagues, and shareholders.

As we've noted previously over the last 12 years, we've delivered 1100, and 20 basis points of margin expansion or about 90 basis points a year on average.

Speaker 3: Our outlook for free cash flow remains strong. We expect to deliver high single-digit free cash flow in 2023.

Our outlook for free cash flow remains strong we expect to deliver high single digit free cash flow in 2023.

Speaker 3: I'd note this guidance contemplates the impact from restructuring on free cash flow in Q4, so we do not expect restructuring to have a material impact on cash flow this year.

I'd note this guidance contemplates the impact from restructuring on free cash flow in Q4.

Do not expect restructuring to have a material impact on cash flow this year.

Christa Davies: The investment to accelerate our three-year Aon business services operating model focuses on the same three areas we've mentioned previously. We see proven benefit and will malaccelerate. Number one, standardised operating operations. Number two, integrating operating platforms. And number three, increasing product innovation and development. We've already made considerable progress in standardizing our operations, but we see significant opportunity both within and across our solution lines. The work we're doing standardize operations will drive integrated service delivery platforms, which provide additional opportunities to standardize how we do business.

Speaker 3: While free cash will be reduced in the near term by restructuring, we expect to return to our trajectory of double digit free cash work growth over the long term. So by operating income growth and ongoing working capital improve.

While free cash will be reduced in the near term by restructuring we expect to return to about trajectory of double digit free cash flow growth over the long term driven by operating income growth and ongoing working capital improvements.

Speaker 3: As we've said previously, as we look at the opportunity now in business services and across our client-facing capability, we know that delivering this strategy will result in long-term progress against our key financial metrics, organic revenue growth, margin expansion, and free cash flow growth.

As we've said previously as we look at the opportunity in Ams services and across our client facing capability, we know that delivering the strategy will result in long time progress against our key financial metrics organic revenue growth margin expansion and free cash flow growth.

Now turning to capital allocation.

Speaker 3: Given our strong outlook for free cash flow, we expect share repurchase to continue to remain our highest return on capital opportunity for capital allocation. We believe we're significantly undervalued in the market today, highlighted by nearly 2 billion of share repurchase year to date.

Given our strong outlook for free cash flow, we expect share repurchases to continue to remain our highest return on capital opportunities for capital allocation.

Christa Davies: And standard operations combined with integrated platforms enables more effective new product development and innovation at scale. By accelerating standardization across portfolio and establishing fewer more integrated platforms, we'll be able to deliver more analytical tools for colleagues and clients across the entire portfolio. With this underlying infrastructure in place, we'll be able to leverage advances in AI and machine learning to further accelerate the product development cycle and unlock new efficiencies across the portfolio.

We believe we're significantly undervalued in the market today highlighted by nearly 2 billion of share repurchase year to date.

Speaker 3: We also expect to continue to invest organically and inorganically in content and capabilities that we can scale to address unmet client needs.

We also expect to continue to invest organically and inorganically and content and capabilities that we can scale to address unmet client needs.

Speaker 3: Our M&A pipeline continues to be focused on our global priority areas that will bring scalable solutions to clients' growing and evolving challenges.

Our M&A pipeline continues to be focused on our global priority areas that will bring scalable solutions to clients growing and evolving challenges.

Speaker 3: We will continue to actively manage the portfolio and assess all capital allocation decisions on an ROIC basis.

We will continue to actively manage the portfolio and assessed all capital allocation decisions on an hourly basis.

Christa Davies: Let me provide a bit more for natural detail about the strategic investments. We expect total annual India savings of 350 million to be achieved in 2026, contributing to ongoing sustainable long-term margin expansion. I'd note we expect savings to ramp over time with annual India savings expected to be 100 million in 2024, 250 million in 2025, and 350 million in 2026. We do not expect material savings or impacts to cash flow in 2023.

Turning now to our balance sheet and debt capacity.

Speaker 3: We remain confident in the strength of our balance sheet and manage liquidity risk through a well-ladded debt maturity profile and expect to add incremental debt as EBITDA grows over the long term while maintaining a strong investment grade credit profile.

We remain confident in the strength of our balance sheet and manage liquidity risk through a well lettered debt maturity profile and expect to add incremental debt as EBITDA grows over the long term, while maintaining a strong investment grade credit profile.

Speaker 3: In summary, our strong financial results in the quarter and year-to-date reflect strong operational performance driven by our Aon United strategy and our Aon Business Services plan.

In summary, our strong financial results from the quarter and yesterday reflect strong operational performance driven by our Aon United strategy and I am missing services platform, we see an opportunity to accelerate the next stage of our Aon United strategy and expect this investment will contribute to sustainable long term top and bottom line growth.

Speaker 3: We see an opportunity to accelerate the next stage of our Aeon United Strategy and expect this investment or contribute to sustainable long-term top and bottom line growth and ongoing shareholder value career.

Christa Davies: Cash restructuring charges of 900 million reflect the savings ratio of 2.6 times, and a largely for technology costs and workforce optimization. I'd note you can think of the 900 million cash restructuring charge as less than 10% of underlying free cash flow over the next three years, and the 350 million of savings as a 4% cost takeout relative to our cost base are approximately 9 billion. We also expect an additional 100 million of non-cash charges largely related to asset and lease impairments. We do not expect significant incremental capex associated with the program, and we expect capex will grow in line with the business in the future, from our guidance of 220 to 250 million in 2023.

Ongoing shareholder value creation.

Speaker 3: With that, I'll turn the call back over to the operator, and we'd be delighted to take your questions.

With that I'll turn the call back over to the operator, and we'd be delighted to take your questions.

Speaker 1: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Thank you.

To ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star Ts.

We will poll for questions.

Speaker 1: Our first question is from Rob Cox with Goldman Sachs, please proceed.

Our first question is from Rob Cox with Goldman Sachs. Please proceed.

Speaker 4: Hi. Thanks for taking my question. I'm just curious on the free cash flow. I just want to make sure I understand what exactly is driving the lower free cash flow guide, because it sounds like the restructuring isn't material this year, and you mentioned the invoicing was a temporary issue. So just trying to understand what exactly is driving that guide lower.

Hi, Thanks for taking my question I'm, just curious on the free cash flow.

Christa Davies: In the third quarter of 2023, we encode 6 million of restructuring charges and will communicate charges and savings going forward each quarter. Contemplating the program. As we look forward, we continue to expect mid-tingle digit or greater organic revenue growth for the fall of year 2023 and over the long term. We expect program savings will contribute to ongoing sustainable long-term margin expansion and expect to deliver margin expansion in 2023, 2024, and over the long term.

I just wanted to make sure I understand what exactly is driving the lower free cash flow guide because it sounds like the restructuring isn't material. This year and you mentioned the invoicing was a temporary issue. So just trying to understand what exactly is driving that guide lower.

Speaker 3: Yeah, it's really about the temporary invoicing delay, Rob. We had that in Q3. And while we're addressing the system issue, we could continue to see temporary impacts to working capital in the fourth quarter.

Yeah, it's really about the temporary invoicing delay Rob we had that in Q3 and while we're addressing the system issue. We could continue to see temporary impacts of working capital in the fourth quarter.

Christa Davies: As we've noted previously, over the last 12 years, we've delivered 1120 basis points of margin expansion, or about 90 basis points a year on average. Our outlook for free cash flow remains strong. We expect to deliver high single-digit free cash flow in 2023. I'd note this guidance contemplates the impact from restructuring on free cash flow in people, so we do not expect restructuring to have a material impact on cash flow this year.

Speaker 4: Okay, got it. Thank you. And just on the restructuring program.

Okay got it thank you and just on the the restructuring program.

Speaker 4: Just, you know, compare it to your history with these programs and some peers.

Just compared to your history with these programs and in some peers.

Speaker 4: The 2.6x saving ratio maybe seems a little conservative for a program that includes an element of workforce rationalization. So, just curious if management views it that way and if we could potentially see more savings come to light beyond the three-fifths.

Two six X saving ratio, maybe seems a little conservative for a program that includes an element of workforce rationalization. So just curious if there's management views it that way and if we could potentially see more savings come to life beyond the $3 50.

Christa Davies: While free cash will be reduced in the near term by restructuring, we expect to return to our trajectory of double-digit free cash flow growth over the long term, driven by operating income growth and ongoing working capital As we've said previously, as we look at the opportunity now in business services and across our client based in capability, we know that delivering the strategy will result in long-term progress against our key financial metrics, organic revenue growth, margin expansion and free cash flow growth.

Speaker 2: Rob, we're glad you asked the question when you appreciated. So I think it's worth stepping back here a little bit and really making sure you understand exactly what we're trying to get accomplished here. Because this is different than anything you certainly ever seen from us before and we're very excited about it.

Rob We're glad you asked the question where you appreciate it listen I think it's worth stepping back here, a little bit and really making sure.

You understand exactly what we're trying to get accomplished here because this is different than anything you certainly ever see from us before and we're very excited about it.

Speaker 2: We've said before, look, our clients and our colleagues, they're demanding better solutions. You're seeing it every day. The survey I described, you know, identifies some of the challenges they see really around risk capital, beyond our solution lines and human capital. And to be clear, we're delivering on those solutions here on United. But they're demanding we go further faster and they're asking us about this. Our colleagues see it and they're incredibly excited about our ability to deliver on it. And for us, the opportunity is clear.

Christa Davies: Now turning to capital allocation, given our strong outlook for free cash flow, we expect share approaches to continue to remain our highest return on capital opportunity for capital allocation. We believe we're significantly undervalued in the market today, highlighted by nearly two billion of share approaches here today. We also expect to continue to invest organically and in organically in content and capabilities that we can scale to address unmet client needs. Our M&A pipeline continues to be focused on our global priority areas that will bring scalable solutions to clients growing and evolving challenges. We will continue to actively manage the portfolio and assess all capital allocation decisions on an ROIC basis.

We've said before look our clients and our colleagues, they're demanding better solutions, you're seeing it every day of the survey I described.

<unk> identified some of the challenges they see really around risk capital beyond our solution lines with human capital and to be clear, we're delivering on those solutions through Aon United.

But they're demanding they go further faster and they're asking us about this our colleagues see it and they are incredibly excited about our ability to deliver on it and for US the opportunities clear we've got a M business services, we got the platform in place we have a long way to go on it but supported by 15000 colleagues. We know we can accomplish that.

Speaker 2: We've got AM business services, we've got the platform in place, we have a long way to go on it, but supported by 15,000 colleagues, we know we can accomplish this objective around clients, and we can do it faster and accelerate the strategy and build a stronger client-facing firm. So that's basically the focus of what we're trying to do. And to be clear, this is easy to say, but hard to do. I mean, data analytics, the operating platforms have all got to be connected and integrated.

Objective around clients and we can do it faster and accelerates our strategy and build a stronger client facing firm. So that's basically the focus what we're trying to do and to be clear. This is easy to say, but hard to do I mean data analytics. The operating platforms are all going to be connected and integrated teams they've gotta be aligned to accomplish the goal and that's exactly the path we're on and now we're gonna access.

Christa Davies: Turning now to our balance sheet and debt capacity. We remain confident in the strength of our balance sheet and manage liquidity risk through a well-rounded debt maturity profile and expect to add incremental debt as EBITDA grows over the long term while maintaining a strong investment grade credit profile.

Speaker 2: Teams have got to be aligned to accomplish the goal. And that's exactly the path we're on. And now we're going to accelerate it. And as Christo observed, for a firm that really obsesses around return on investment capital, we believe this investment is going to be one of the most compelling ever. But I'm thinking, Eric, to bring it to life, it's just so important that everyone understands exactly what we're doing. How does this show up from a client standpoint in your view?

And as you know crystal observed for a firm that really obsessing around return on invested capital. We believe this investment is going to be one of the most compelling ever but I'm thinking Eric you know the bring up of life. It's just so important that everyone understands exactly what we're doing how does this show up from a client standpoint in your view.

Christa Davies: In summary, our strong financial results from the quarter and year-to-date reflect strong operational performance during our Aeon United strategy and our Aeon Business Services platform. We see an opportunity to accelerate the next stage of our Aeon United strategy and expect this investment will contribute sustainable long-term, top and bottom line growth and ongoing shareholder value creation.

Speaker 2: Sure Greg, and maybe I'll do, to an example, might be the easiest way to forget the life because it's evolving so quickly that, you know, as clients are looking at these exposures and these developments, they're pressing us for more insight, more analytics.

Sure Greg maybe I'll do two an example might be the easiest way to to bring them to life because it is evolving so quickly that you know as clients are looking at these exposures in these developments there they're pressing us for more insight more analytics and maybe just one on one that's come to mind around climate, which is such a topic today weird.

Operator: With that, I'll turn the call back over to the operator and we'd be delighted to take your questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We will pull for questions.

Speaker 2: And maybe just one that's come to mind around climate, which is such a topic today. We had a client in Asia Pacific that was looking at severe weather and how it was going to affect their loan portfolio, how it was going to affect their future financial obligations in terms of disclosure. And we engage with them because they had asked us about their future. They asked us about the physical climate risk that was coming, but as we began to talk to them.

Clients in Asia Pacific that was looking at severe weather and how it was going to affect their loan portfolio, how it was going to affect.

There are future financial.

Obligations in terms of disclosure.

We engage with them because they had asked us about their future. They asked us about the physical climate risk that was coming but as we began to talk to them. They were really starting to press for a baseline of their loan exposures today, which.

Speaker 2: they were really starting to press for a baseline of their loan exposures today.

Robert Cox: Our first question is from Rob Cox with Goldman Sachs. Please proceed. Hi, thanks for taking my question. Just curious on the free cash flow. I just want to make sure I understand what exactly is driving the lower free cash flow guide because it sounds like the restructuring in the material this year and you mentioned the invoicing was a temporary issue. So just trying to understand what exactly is driving the guide lower.

Speaker 2: Which required climate analytics that that are cutting edge and are really just coming to the fore. And so what they're doing with it today is they're looking at integrating that climate analytics into their risk modeling themselves as they go forward as a business.

Which required climate analytics that are that are cutting edge in are really just coming to the fore.

And so what they're doing with it today is we're looking at integrating that climate analytics into their risk modeling themselves as they go forward as a business.

Speaker 2: And I guess the point of it is that capability, as it's being developed and being brought to the market, really allows all types of clients to look at.

I guess the point of it is that capability as it is being developed and being brought to the market really allows all types of clients to look at climate physical risk put it into their own business model as they go forward, but they're starting from one place and often ending in another but to be able to deliver those analytics in the form that they can use.

Speaker 2: climate physical risk, put it into their own business model as they go forward, but they're starting from one place and often ending in another. But to be able to deliver those analytics in the form that they can use to be able to build their own business and business services provides that engine to be able to aggregate the data, to be able to put it in usable format going forward. So we're really excited about what this gives us and the ability to replicate that across the globe as financial institutions of all type are being pressed to understand their climate.

Robert Cox: Yeah, it's really about the temporary invoicing delay, Rob. We had that in Q3 and while we're addressing the system issue, we could continue to see temporary impacts working capital in the fourth quarter. Okay, got it. Thank you.

To be able to build their own business Aon business services provides that engine to be able to aggregate the data to be able to put it in usable format going forward. So we're really excited about what this gives us the ability to replicate that across the globe as financial institutions of all types are being pressed to understand their climate risk.

Robert Cox: And just on the restructuring program. I'm just, you know, compared to your history with these programs and some peers, the 2.6X saving ratio, maybe seems a little conservative for a program that includes an element of workforce rationalization. So just curious if management views it that way and if we could potentially see more savings come to life beyond the three fifths.

Speaker 3: And then just in terms of the financial piece, Rob, it is 900 million of cash restructuring charge to live a 350 million of savings in year in 2026.

And then just in terms of the financial piece Rob.

Is $900 million of cash restructuring charges to live a $350 million of savings in year. In 2026, we don't expect to go above that guidance. We do expect in terms of financial guidance to continue to expect mid single digit organic revenue growth or great. After the full year 2023 and over the long term, we expect to deliver adjusted operating margin.

Speaker 3: We don't expect to go above that guidance, we do expect in terms of financial guidance to continue to expect mid-single digit organic revenue growth or greater for the full year 2023 and over the long term. We expect to deliver adjusted operating margins for the full year 2023, full year 2024 and over the long term and we expect these program savings will contribute to ongoing sustainable long-term margin expansion.

Gregory Case: Rob, we're glad you asked the question when you appreciated it. Listen, I think it's worth stepping back here a little bit and really making sure you understand exactly what we're trying to get accomplished here because this is different than anything you certainly ever seen from us before and we're very excited about it. We said before our clients and our colleagues, they're demanding better solutions. You're seeing it every day, the survey I described, you know, I identified some of the challenges they see really around risk capital beyond our solution lines of human capital and to be clear, we're delivering on those solutions through United, but they're demanding we go further faster and they're asking us about this.

For the full year 2023, full year 2024, and over the long time, and we expect this program savings will contribute to ongoing sustainable long term margin expansion and then while free cash flow will be impacted in the short term, we expect to return to box trajectory of double digit free cash will go out over the long term driven by operating income growth and ongoing working capital improvements and then loss.

Speaker 3: And then while free cash will be impacted in the short term, we expect to return to our trajectory of double-digit free cash over the long term, driven by operating income growth and ongoing working capital improvements.

Speaker 3: And then lastly, with Greg said, we look at all of these investments across A on on a Discipline ROIC basis. And I want to reiterate, we focus intentionally on cash and we think about all investments on this Discipline basis. This investment is no different. It'll name us to accelerate the work we're doing across the firm and ultimately contribute to great long-term, shall the value creation across our key metrics in line with our track records.

As Greg said, we look at all of these investments across Aon on a disciplined ROIC basis, and I want to read there. It right. We focus intensely on cash and we think about all investments on this disciplined basis. This investment is no different it will enable us to accelerate the work we're doing across the firm and ultimately contribute to great longtime shareholder value creation across our key metrics in line with ours.

Gregory Case: Our colleagues see it and they're incredibly excited about our ability to live on it and for us, the opportunity is clear. We've got a business services, we've got the platform in place, we have a long way to go on it, but supported by 15,000 colleagues, we know we can accomplish objective around clients and we can do it faster and accelerate the strategy and build a stronger client-facing firm. So that's basically the focus what we're trying to do and to be clear, this is easy to say but hard to do.

Track record.

Okay. Thanks, I appreciate all that color.

Speaker 1: Our next question is from Paul Newsome with Paper Sandler. Please.

Our next question is from Paul Newsome with Piper Sandler. Please proceed.

Speaker 5: Good morning. Thanks for the call. Congratulations on the quarter. I want to ask about whether or not the restructuring charge here, the costings from the restructuring charge, we're looking at, is really additive to the ongoing margin.

Good morning, Thanks for the call Gratulation from the quarter.

Gregory Case: We're giving data analytics, the operating platforms, we've all got to be connected and integrated, keys have got to be aligned to accomplish the goal and that's exactly the path we're on and now we're going to accelerate it. And as you know, Christo observed for a firm that really obsesses around return our justice capital, we believe this investment is going to be one of the most compelling ever, but now I'm thinking Eric, you know, to bring it to life, it's just so important, everyone understands exactly what we're doing.

I wanted to ask about whether or not the restructuring charge here.

Hmm cost savings from the restructuring charge.

We're looking at is really attitude to be ongoing margin.

Speaker 5: improvement in other words, would you need to have do you need to have this effort to continue that margin expansion? I think given how good the margins are people sometimes wonder if there's a limit here and if you more extraordinary things need to happen to continue to have that margin.

Improvement in another words.

Would you need to have do you need to have this effort to continue the margin expansion I think given how good the margins are people, sometimes wonder if theres a limit here in more extraordinary things need to happen do you think.

Eric Andersen: How does this show up from a client standpoint in your view?

Eric Andersen: Sure Greg, and maybe I'll do an example might be easiest way to bring it to life because it's evolving so quickly that as clients are looking at these exposures and these developments, they're pressing us for more insight, more analytics, and maybe just one one that's come to mind around climate, which is such a topic today. We had a client in Asia Pacific that was looking at severe weather and how it was going to affect their loan portfolio, how it was going to affect their future financial obligations in terms of disclosure.

To me to have that margin expansion.

Speaker 3: Thanks so much for the question, Paul. And look, the way we think about financial guidance going forward is mid-single digital, greater organic revenue growth in 23 in the long-term, margin expansion in 23, full year 24 and over the long-term, and then double-digit free cashflow growth long-term.

Thanks, very much for the question, Paul and look the way, we think about financial guidance going forward is mid single digit or greater organic revenue growth and 23 in the long time margin expansion in 'twenty three 'twenty 'twenty four and over the long time, and then double digit free cash flow growth long term.

Eric Andersen: And we engage with them because they had asked us about their future, they asked us about the physical climate risk that was coming, but as we began to talk to them, they were really starting to press for a baseline of their loan exposures today, which required climate analytics that that are cutting edge and are really just coming to the floor. And so what they're doing with it today is they're looking at integrating that climate analytics into their risk modeling themselves as they go forward as a business.

Speaker 3: We do expect this program to help us accelerate the strategy.

We do expect this program to help us accelerate the strategy and we expect the savings to contribute to margin expansion next year.

Speaker 3: and we expect the same to contribute to margin expansion next year.

Speaker 3: but what we'd also say is we think about margin expansion holistically, Paul, and so each year we've continued to say this, we have a gross margin expansion that's higher than what we met.

We'd also say as we think about margin expansion Holistically, Paul and so each year. We've we've continued to say this we have a gross margin expansion that's higher than what we met you know.

Speaker 3: you know, generate the shareholders and we continue to invest. And you've seen that in calendar year 2023 as well, where we've continued to invest in technology, you can see technology, it's ventures up.

Generate for shareholders and we continue to invest and you've seen that in calendar year 2023, as well, where we've continued to invest in technology. You can see technology expenses, all capex, where we're investing and longtime technology platforms to drive long term productivity and so we're investing in the long term strategy as we generate great results for shareholders each and every year.

Speaker 3: CapEx where we're investing in long-term technology platforms to drive long-term productivity.

Eric Andersen: And I guess the point of it is that capability as it's being developed and being brought to the market really allows all types of clients to look at climate physical risk, put it into their own business model as they go forward. But they're starting from one place and often ending in another, but to be able to deliver those analytics in the form that they can use to be able to build their own business and business services provides that engine to be able to aggregate the data to be able to put it in usable format going forward. So what we're really excited about what this gives us and the ability to replicate that across the globe as financial institutions of all type are being pressed to understand their climate risk.

Speaker 3: And so we're investing in the long-term strategy as we generate great results for shareholders each and every.

Speaker 2: Maybe I said one other point on this, Paul, when you think about margin, we often get asked about this as, you know, it's almost like it's treated like a zero sum game, the split between, you know, clients and colleagues and shareholders. We don't, we don't see it that way. We see it around value. The example Eric described is really around incremental value to a client, asking a question they hadn't asked before. We provide an insight around analytics.

Maybe just add one other point on this but when you think about margin we often get asked about this as you know it's almost like it's treated like a zero sum game, but split between clients and colleagues and shareholders. We don't we don't see it that way, we see it around value.

<unk>, Eric described is really around incremental value to a client asking the question. They had masked before we provided insight around analytics, that's simply not possible without aon business services on a scale basis, we provide incremental value. We get we get we get obviously compensated for that that actually that contribution is really what drives margin over time.

Speaker 2: That's simply not possible without AM business services on a scaled basis. We provide incremental value, we get obviously compensated for that. That actually, that contribution is really what drives margin over time. So greater value means more margin. And so that's what you're hearing today, sort of how we're going to invest.

Christa Davies: And then just in terms of the financial piece, Rob, it is 900 million a cash restructuring charge to deliver 350 million of savings in year in 2026. We don't expect to go above that guidance. We do expect in terms of financial guidance to continue to expect mid single digit organic revenue growth or greater for the full year 2023 and over the long term. We expect to deliver adjusted operating margins for the full year 2023 full year 2024 and over the long term and we expect these program savings will contribute to ongoing sustainable long term margin expansion.

So greater value means more margin and so that's what you're hearing today is sort of how we're going to invest great greater capability to deliver more value for clients and that really is the engine around margin improvement, which is why we're so confident now even more so with this investment to continue margin improvement over time.

Speaker 2: Great, greater capability to deliver more value for clients and that really is the end.

Speaker 2: around margin improvement, which is why we're so confident now we've been more so with this investment to continue margin improvement over time.

Speaker 5: So it's, it's been pointed out to me this morning that the restructuring charge that folks are planning on taking relative to the ongoing stages. It's on the larger end of where historically, folks have done a lot of these sort of efforts successfully. Is there any structurally different with what you're doing here as compared to some of the other efforts, other charges and gave me the effort that you've done?

So it's it's been pointed out to me.

This morning that the restructuring charge.

<unk> planning on taking relative to the onslaught of stages.

Christa Davies: And then while free cash will be impacted in the short term, we expect to return to our trajectory of double digit free cash over the long term driven by operating income growth and ongoing working capital improvements. And then lastly, it's Greg said, we look at all of these investments across a on a discipline ROIC basis. And I want to reiterate, we focus intentionally on cash and we think about all investments on this discipline basis. This investment is no different. It'll name us to accelerate the work we're doing across the firm and ultimately contribute to great long term shoulder value creation across our key metrics in line with our track record.

On the larger end.

Of where historically you folks have done you've done a lot of the sort of.

Efforts successfully.

Is there anything structurally different with what you're doing here as compared to some of the other efforts.

Robert Cox: Thanks, appreciate all that color.

And so the efforts that you've done in the past.

Speaker 3: It is. Yeah, it is very different. So what we would say, and I think Greg said this earlier, is it's responding to client need and meeting unmet client needs. And we are seeing more of that than ever before. And you saw that in our risk survey where clients have

It is normal it.

Yeah. It is very different so what we would say and I think Greg said. This earlier is it's responding to client needs are and meeting unmet client needs and we are seeing more of that than ever before and you saw that in our risk survey, where clients have significant unmet client needs, but I almost the services at the catalyst here and we're really building on our proven track record.

Speaker 3: significant on that client needs, but A&B businesses services at the Codalus here. And we're really building on a proven track record of success. And we see A&B businesses services at the Codalus which drives risk capital, human capital and our A&B client leadership strategy.

Paul Newsome: Our next question is from Paul Newsome with Paper Sandler. Please proceed. Good morning. Thanks for the call. Congratulations on the quarter. I want to ask about whether or not the restructuring charge here, the costings from the restructuring charge. We're looking at is really additive to the ongoing margin improvement. In other words, would you need to have do you need to have this effort to continue that margin expansion? I think given how good the margins are people sometimes wonder if there's a limit here and if you more extraordinary things need to happen to continue to have that margin expansion.

A success and we see I understand services with a catalyst, which drives risk capital human capital and and client leadership strategies and they brought together a set of new leaders and developed a three year strategy to further strengthen and connect off up and this strategy accelerates our ability to deliver on standardized platforms standardized operations on innovative products at scale I'm sorry.

Speaker 3: And we've brought together a set of new leaders and developed a three-year strategy to further strengthen and connect our firm. And this strategy accelerates our ability to deliver on standardized platforms, standardized operations, and innovative products at scale. And so that is very different than what we've done before, Paul. And that really is much more sustainable long-term strategy development that's gonna benefit clients, gonna benefit colleagues, and gonna benefit shareholders.

It is very different than what we've done before Paul and that really is much more sustainable long term strategy development, that's going to benefit clients going to benefit colleagues I'm going to benefit shareholders.

Speaker 2: If you think about it, Paul, we've got tremendous reinforcement around risk capital and human capital and how we're approaching clients in that regard. Everyone can talk about a piece of good work for an individual client. We're talking about taking the Eric example.

I mean, if you think about it Paul we've got tremendous reinforcement around risk capital and human capital and how we're approaching clients in that regard.

Everyone can talk about a piece of good work for an individual client we're talking about taking the Eric example.

Speaker 2: And really, how do you scale that and do that all over the world? And then when you're done with that, keep getting it better and better.

And really how do you scale that and do that all over the world and then when you're done with that keep getting it better and better you can't do that without you know different services. I mean, this is 15000 colleagues around the world with a team led by Christa Brookfield on many Simon and other she brought talent from really outside of our industry or help us think about how to evolve that and.

Paul Newsome: Thanks so much for the question Paul and look the way we think about financial guidance going forward is mythical digital greater organic revenue growth in 23 in the long term margin expansion in 23 for the year 24 and over the long term and then double digit free cash flow growth long term. We do expect this program to help us accelerate the strategy and we expect the same to contribute to margin expansion next year.

Speaker 2: You can't do that without a hand in service. I mean, this is 15,000 colleagues around the world. With the team led by Christa, Dr. Gettart, Mindy Simon, and others, who brought talent from really outside of our industry. I hope I speak about how to involve all that.

Speaker 2: And the strength of that is extraordinary in our ability to actually scale, you know, new integrated analytics. This is the structural investment that we now see we can do much faster. In fact, clients are required to do it much faster than we would have done over time. That's what's fundamentally different. This is very different than anything you've ever seen before. And the reason we're, you know, we're so excited about it is because, again, clients are demanding, our colleagues are excited to deliver it.

The strength of that is extraordinary and our ability to actually scale new integrated analytics. This is the structural investments that we now see a we can do much faster than top clients have requirements to do it much faster than we would have done over time, that's what's fundamentally different this is very different than anything we've ever seen before and the reason. We're so excited about it is.

Paul Newsome: But what we'd also say is we think about margin expansion holistically Paul and so each year we've we've continued to say this we have a gross margin expansion that's higher than what we met. You know generate the shareholders and we continue to invest and you've seen that in calendar year 2023 as well where we've continued to invest in technology can see technology centers up capex where we're investing in long term technology platforms to drive long term productivity.

Because again clients are demanding our colleagues are excited deliberate and this is a this is a structural moves that really that's on our history we have.

Speaker 2: And this is a structural move that really bets on our history.

Speaker 2: We've already made progress. This is the strategy. We're doubling down and investing on it in a structural way that will help it scale and really innovate more effectively. Great. Thank you.

Already made progress. This is the strategy, we're doubling down and investing in a structural way it'll help us scale and and really innovate more effectively.

Paul Newsome: And so we're investing in the long term strategy as we generate great results for shareholders each and every year. Maybe it's at one other point on this point you think about margin we often get asked about this is you know it's almost like straight to like a zero some game the split between you know clients and colleagues and shareholders we don't we don't see it that way we see it around the value.

Great. Thank you always appreciate the help patients.

Speaker 1: Our next question is from Charlie Letterer with Citi.

Our next question is from Charlie Lederer with Citi. Please proceed.

Paul Newsome: The example Eric described is really around incremental value to a client asking a question they hadn't asked before we provide an insider and analytics. That's simply not possible without a business services on a scale basis we provide incremental value we get we get we get we get obviously compensated for that that actually that contribution is really what drives margin over time. So greater value needs more margin and so that's what you're hearing today sort of how we're going to invest to create greater capability to deliver more value for clients and that really is the engine around margin improvement which is why we're so confident now we've been more so with this investment to continue margin improvement over time.

Speaker 6: Hey, good morning. I'll ask another on the acceleration program. It sounds like a revenue synergy play in a lot of ways to am I digesting that correctly? And can you talk about how it will differentiate you from your competitors?

Hey, good morning.

I'll ask another on the acceleration program.

But it sounds like a revenue synergy play and a lot of ways to and digesting that correctly and can you talk about how it will differentiate you.

From your competitors.

Speaker 3: Yeah, so let me describe what I would tell you is this is absolutely using A-Ondersen Services as a catalyst. And the A-Ondersen Services strategy is really around standardizing operations, creating scale and standardized platforms, and then building on top of those platforms to create products at scale that really drives innovation for clients.

Yeah. So.

Let me describe what I would tell you is this is absolutely I'm using aon business services is the catalyst and the Aon business services strategy, it's really around standardizing operations, creating scale and standardized platforms and.

And then building on top of those platforms to create products that scale that really drive innovation for clients.

Paul Newsome: So it's it's a point out to me this morning that we're starting to charge that folks are planning on taking relative to the ongoing stages it's on the larger end of where historically folks have done a lot of these sort of efforts successfully. Is there any structurally different with what you're doing here as compared to some of the other efforts the other charges and saving efforts that you've done past. It is yeah it is very different so what we would say and I think Greg said this earlier is it's responding to client need and meeting on met client needs and we are seeing more of that than ever before and you saw that in our risk survey where clients have.

Speaker 3: And then if you think about it, if you bring all of those people, as Greg said, 15,000 people in A&B as a services, a thousand data scientists driving analytics, better analytics.

And then if you think about it if you bring all of those you know people as Greg said 15000 people an eye onto the services a thousand data scientists driving analytics data and analytics are then you could actually apply AI, whether that's machine at the machine learning and all the generative AI ads across these platforms and services.

Speaker 2: then you could actually apply AI, whether that's at the machine learning end or the generative AI end, across these platforms and services to drive greater analytical insight and greater value for clients. But Eric, I mean, you see this every day with clients. What would you add here? Absolutely, Chris. But listen, the whole strategy is predicated upon bringing our risk capital and human capital colleagues together to be able to do more for clients.

To drive greater analytical insight and and greater value for clients, but Eric I mean do you see this every day and you know with client yeah, I wish a lot here I absolutely crushed it looks at the whole strategy is predicated upon bringing our risk capital and human capital colleagues together to be able to do more for clients or we can talk about a lot of examples.

Speaker 2: We can talk about a lot of examples, and I'll use one, the parametric business, which is actually bringing reinsurance knowledge to commercial clients as well on the healthcare side, where we're using bonds to be able to do resilient to the other things. That just doesn't happen by accident. It needs capability, it needs analytics, it needs connectivity, and it needs an enterprise client strategy where we can deliver those capabilities right at the largest most complex client. So, you're really excited about the opportunity at the hall.

I'll use one of the parametric business, which is actually bringing reinsurance knowledge to commercial clients as well on the health care side, where we're using bonds to be able to do resiliency and other things that just doesn't happen by accident it needs capability and need the analytics in these connectivity and it needs an enterprise client strategy, where we can deliver those keep.

Paul Newsome: Significant on met client needs but a on business services with the catalyst here and we're really building on a proven track record of success and we see a on business services with the catalyst which drives risk capital human capital on our own client leadership strategies. And we've brought together a set of new leaders and developed a three year strategy to further strengthen and connect offer and this strategy accelerates our ability to deliver on standardized platforms standardized operations and innovative products scale.

Abilities right at the largest most complex clients so.

I'm really excited about.

All of that together.

Speaker 6: Got it. Thanks. And I guess, do you guys feel like you have the data science talent in your workforce today to have this or are those hires kind of part of this plan?

Got it.

And I guess do you guys feel like you have the data science talent in your workforce today too.

Paul Newsome: And so that is very different than what we've done before Paul and that really is much more sustainable long term you know strategy development that's going to benefit clients going to benefit colleagues and going to benefit share. We could think about it all. We've got tremendous reinforcement around Ritz Gafflin, Unicapital, and how we're approaching clients in that regard. Everyone can talk about a piece of good work for an individual client. We're talking about taking the Eric example.

Have this or are those hires kind of part of this plan.

Speaker 2: But we have a thousand scientists across our risk capital business. And so we feel like we're we're cutting edge in that area. The other piece you're kind of come.

But we have 1000 data scientists across our risk capital business and so it feels like we are.

Were cutting edge in that area.

The other piece you kind of come back to this is what.

Speaker 2: These individual pieces are around the farm. They're phenomenal. They're tremendous in their own right. What Chris is describing is the wiring, the mechanism to connect them more effectively.

These individual pieces are around the firm, but phenomenal they're tremendous in their own right.

Christmas describing as the as the wiring the mechanism to connect more effectively so it's not just a thousand it's a thousand interconnected against a strategy around analytics and prioritization around analytics against specific client issues. So it's a thoughtful strategy that we can actually execute that's aon business services and the acceleration as we would've done that over time now.

Paul Newsome: And really, how do you scale that and do that all over the world. And then when you're done with that, keep getting it better and better. You can't do that without any other business services. I mean, this is 15,000 colleagues around the world with a team, you know, led by Christa and brought together many time and others who brought that talent from really outside of our industry, to help us speak about how to evolve that.

Speaker 2: So it's not just the 1000. It's a thousand interconnected against a strategy around analytics and prioritization around analytics against specific client issues. So it's a thoughtful strategy that we can actually execute that they own business services.

Speaker 2: And the acceleration is we would have done that over time. Now we're going to double down and do that. This is what's going to change the relevance, for our client.

Paul Newsome: And the strength of that is extraordinary in our ability to actually scale, you know, new integrated analytics. This is the structural investment that we now see. We can do much faster and talk to clients who require us to do much faster that we would have done over time. That's what's fundamentally different. This is very different than anything you've ever seen before. And the reason we're, you know, we're so excited about it is because again, clients are demanding our colleagues are excited to deliver it.

We're going to double down and do that this is what's going to change the irrelevance profile for our clients.

Speaker 2: These are the questions they're asking. And so it's not just the 1000 and whatever it ends up becoming over time, it's how that 1000's gonna work together. And the level of comparable data they're gonna have around the world. And the example erodes are given, is given it's not just in single analytics and commercial risk or re-insurance. It eventually will cut across talent. It'll cut across health.

The questions, they're asking and so it's not just the thousand and whatever it ends up becoming over time, its how that thousands going to work together and the level of comparable data theyre going to have around the world. Many example, eric's are giving is giving us just as not just a single analytics and commercial risk reinsurance and eventually what kind of crops talent and what kind of cross health and sort of how is that.

Paul Newsome: And this is, this is a structural move that really bets on our history. We've already made progress. This is the strategy we're doubling down and investing on it and a structural way to help it scale and really innovate more effectively. Thank you.

Speaker 2: And so to have that integrated platform that you can actually do the analytics upon with the talent on top of it is huge. And, you know, some of the folks that Chris has brought in and Simon brought in have come from outside the industry, literally from some companies who are, you know, world class at analytics. And they see an opportunity to really help the world understand risk and volatility differently. And they find it incredibly compelling.

Integrated platform that you can actually do the analytics upon with the talent on top of it is huge and some of the folks that Christa has brought in when you signed when you brought them have come from outside the industry literally from some companies who are world class at analytics and they see an opportunity to really up the world understand risk and volatility differently. They find it incredibly compelling.

Gregory Case: I always appreciate the health patients.

Charlie Lederer: Our next question is from Charlie letterer with city. Please proceed. Hey, good morning. I'll ask another on the acceleration program. It sounds like a revenue synergy play in a lot of ways to am I digesting that correctly and can you talk about how different you from your competitors. Yeah, so let me describe what I would tell you is, this is absolutely using a on business services as a catalyst. And the a on business services strategy is really around standardizing operations, creating scale and standardized platforms and then building on top of those platforms to create products scale that really drives innovation for clients.

Speaker 2: And so our view is this is a great opportunity for colleagues in a way that really unlocks a lot of opportunity for them because they're going to be talking to clients about these types of issues.

So our view is this is a great opportunity for colleagues in a way that really unlocks a lot of opportunity for them because theyre going to be talking to clients about these these types of issues.

Yeah.

Thank you.

Speaker 1: Our next question is from Elyse Greenspan with Wells Fargo.

Our next question is from Elyse Greenspan with Wells Fargo. Please proceed.

Speaker 7: Hi, thanks. Good morning. My 1st question is on commercial risk growth slow there in the quarter. I was hoping to get more color and what's driving that. Is that still a slowdown in the M and a and activity or is there something else going on within that business in the quarter?

Hi, Thanks. Good morning, My first question is on commercial risk.

Charlie Lederer: And then if you think about it, if you bring all of those, you know, people as Greg said, 15,000 people in a on business services, 1000 data scientists, you know, driving analytics, better analytics, then you could actually apply AI, whether that's machine at the machine learning and all the generative AI ends across these platforms and services to drive, you know, greater analytical insight and greater value for clients. But Eric, I mean, you see this every day in, you know, with clients.

Well there in the quarter I was hoping to get more color on what's driving that is that still a slowdown in M&A and IPO activity or is there something else going on within.

Within that business in the quarter.

Speaker 2: So hi, Elyse, this is Eric. We continue to see strong activity across EMEA, Pacific, and core P&C, very solid new business retention, all the sort of underpinnings that you would look for. We did continue to see a slowdown in M&A and what I call M&A services, which are the things that come off of mergers and acquisitions, whether it's DHEL one-off, whether it's reps and warranties, things like that, continue to slow down pretty significantly.

So at least one hi. This is Eric we continue to see strong activity across EMEA Pacific core P&C very solid new business retention all the sort of underpinnings that you would look for we did continue to see you.

Slowdown in M&A, and what I'll call M&A services, which are the things that come off of mergers and acquisitions, whether it be a one off whether it's reps and warranty things like that continue to slow down pretty significantly in the quarter.

Speaker 2: And we've said it last time, I think, on the call, we love this area and this team. They are phenomenal. We just got such great capability here. And Eric and team have continued to kind of double down and invest behind content capability. You know, we're quite confident that transactions will come back at some point in time. When they do, we're unbelievably well-positioned and we'll absorb the headwind in the process. But very, very bullish on the future in this category.

And we said this last time I think on the call at least this we love. This this this area in this team they're phenomenon, we've just got such great capability here.

Charlie Lederer: Yeah, absolutely. Absolutely, Chris. Listen, the whole strategy is predicated upon bringing our risk capital and human capital of colleagues together to do more for clients. We can talk about a lot of examples and I'll use one the parametric business, which is actually bringing re insurance knowledge to commercial clients as well. On the healthcare side, where we're using bonds to be able to do resilient to the other things, that just doesn't happen by accident.

Eric and team have continued to kind of double down and invest behind content capability.

We are quite confident that transactions will come back at some point in time, when they do we're unbelievably well positioned and will absorb the headwind in the process, but very very bullish on the on the future in this category.

Speaker 7: So until the activity comes back, would you expect like the organic growth is in commercial risk to stay in like a four to five percent range or was there anything unique to the third quarter?

So until the.

Charlie Lederer: It needs capability, it needs analytics, it needs connectivity. And it needs an enterprise client strategy where we can deliver those capabilities right at the largest most complex clients. So, you know, really excited about the opportunity. Got it. Thanks. And I guess you guys feel like you have the data science talent in your workforce today to have this or are both higher kind of part of this plan. We have a thousand scientists across our risk capital business, and so we're cutting edge in the area.

The activity comes back would you expect like the organic growth within commercial with to stay in like 4% to 5% range or was there anything unique to the third quarter.

Speaker 2: Well, there was nothing unique in the third quarter when we look at, you know, some of the strong areas around the world, some of the specialty businesses like construction that continue to have, you know, very solid performance. You know, we're pretty happy with the way the business has been performing and when that area comes back, we've held a team and are really excited about the future.

So there was nothing unique in the third quarter. When we look at some of the strong areas around the world. Some of the specialty businesses like construction that continued to have very solid performance.

We're pretty happy with the way the business has been performing in that.

Area comes back.

We've held a team and we're really excited about the future opportunities.

Speaker 7: And then I want to come back to the savings program so 350 million by 2026. Are you expecting the entirety of that to fall to the bottom line and that and you guys mentioned and in your comments as well as in the slide that there is, you know, platforms for the patient technology, you know, there's some workforce changes. Can you suck it? You know, can you break down the 350 million by the areas that are specifically driving the saving?

And then I want to come back to the savings program, So 350 million by 2026.

Charlie Lederer: The other piece you kind of come back to, and this is what these individual pieces are around the firm, they're phenomenal, they're tremendous in their own right. The Christmas describing is the wiring, the mechanism to connect them more effectively. So it's not just a thousand, it's a thousand interconnected against a strategy around analytics and prioritization around analytics against specific client issues. So it's a thoughtful strategy that we can actually execute that they own business services.

Expecting.

The entirety of that to fall to the bottom line and then I know you guys mentioned in your comments as long as in the slides that there is you know.

Black ones for casing technology, you know, there's some workforce changes can you bucket.

You know can you break down the $350 million by the areas that are specifically driving the savings.

Charlie Lederer: And the acceleration as we would have done that over time, now we're going to double down and do that. This is what's going to change the relevance, you know, profile for our clients. These are the questions they're asking. And so it's not just the thousand and whatever it ends up becoming over time, it's how that thousand is going to work together. And the level of, you know, comparable data they're going to have around the world.

Speaker 3: So thanks so much for the question, Elise. The first answer is yes, we do expect the 350 million to drop to the bottom line. We obviously are continuing to invest in the business as I described earlier. You know, a good example of that is the investments we've made in technology in the first line months of the year. You see then our technology expense and our capex expense both being up, funding investments in long term, you know, operations, technology platforms and product development to meet client needs.

But thanks, so much for the question Elyse.

Answer is yes, we do expect the $350 million drop to the bottom line. We obviously are continuing to invest in the business are as I described earlier you know a good example of that is the investments we've made in technology in the first nine months do you see that in that technology expense not capex expense both being up.

Charlie Lederer: In the example erodes are given, it's given, it's just, it's not just in single analytics and commercial risk careers, but in the future, it eventually will cut across talent, it'll cut across health. And so to have that integrated platform that you can actually do the analytics upon with the talent on top of it, it's huge. And, you know, some of the folks that Chris has brought in, when you sign up and brought in, have come from outside the industry, literally from some companies who are, you know, world class analytics and AC and opportunity to really up the world understand risk and volatility differently, and they find it incredibly compelling.

Funding investments and longtime operations technology platforms and product development to meet client needs are and so you know.

Speaker 3: And so, you know, we will see those savings drop to the bottom line, but they are in the context of our overall financial guidance, which is mid-single, digital, greater, organic revenue growth for 2023 and the long-term, margin expansion in 2023-24 and the long-term, and long-term double-digit free cash flow growth.

We will see those savings dropped to the bottom line, but they are in the context of our overall financial guidance, which is mid single digit or greater organic revenue growth of 23 on the long term.

Margin expansion in 'twenty, three 'twenty, four and the long term and long term double digit free cash flow.

Gregory Case: And so our view is, this is a great opportunity for colleagues in a way that really unlocks a lot of opportunities for them because they're going to be talking to clients about these types of issues.

Speaker 3: And then in terms of the breakout, we do expect the breakout of the $900 million to be primarily technology expense and workforce optimization. We have not provided specific details on that, and we will report on it each quarter.

And then in terms of the breakout we do expect the breakout of the 900 million to be primarily technology expense and workforce optimization. We have not provided specific details on that and we will report on it each quarter.

Gregory Case: Thank you.

Elyse Greenspan: Our next question is from Elise Greenstand with Wells Fargo. Please proceed. Hi, thanks. Good morning.

Thank you.

Speaker 1: Our next question is from Jimmy Boulard with JP Morgan, please.

Our next question is from Jimmy Buhler with J P. Morgan. Please proceed.

Elyse Greenspan: My first question is on commercial risk. Well, there on the quarter, I was hoping to get more color on what's driving that. Is that still a slowdown in the M&A and IPO activity or is there, you know, something else going on, you know, within that business in the quarter.

Speaker 8: Hi, good morning. So, 1st, just on organic growth, are you able to quantify how much of a headwind. The slower and transactions related to this activity has been to your growth, maybe either in an absolute sense versus normal, or maybe versus a year ago, just so we get a sense of. How your results would be versus peers that have less of that.

Hi, Good morning. So first just on organic growth are you able to quantify how much of a headwind.

The slower M&A and transaction related activity has been to your growth maybe either in an absolute sense versus normal or maybe versus a year ago. Just so we get a sense of how your results would be versus peers that have less of that.

Eric Andersen: So, hi, Elise, why don't I take this is Eric, be continued to see strong activity across the media, Pacific and Corp and see very solid new business retention, all the sort of underpinnings that you would look for.

Okay.

Speaker 2: Sure, this is Eric. We don't disclose that number, but I would just say if you track M&A from outside sources, certainly down 30%, year on year, and that continues to show headwinds. And I would just say, listen, as that recovers, we will recover with it. We've maintained the team, we've maintained the relationships. We continue to stay very close to those clients. And when they react, we will be right there with them.

Sure. This is Eric we don't disclose that number but I would just say if you track.

Eric Andersen: We did continue to see a slowdown in M&A and local M&A services, which are the things that come off of mergers and acquisitions, whether it's the help went off, whether it's reps and warranties, things like that continue to slow down pretty significantly in the quarter. And we said it last time, I think on the call, at least this, we love this, this area and this team, they're phenomenal. We just got such great capability here.

M&A from outside sources is certainly down 30% year on year and that continues to show headwinds and I would just say listen as that recovers we will recover with it we've maintained the team we've maintained the relationships. We continue to stay very close to those clients and when they react and we will be right there with them, but it.

Speaker 2: But it's a good business for us. We really think it provides great value to them and the ultimate clients. And we continue to hold.

Eric Andersen: An Eric and team is continue to kind of double down and invest behind content capability. You know, we're quite confident the transactions will come back at some point time when they do we're unbelievably well positioned and will absorb the end win in the process, but very, very bullish on the on the future in this category.

It's a good business for us, we really think it provides great value to them and ultimate clients.

We continue to hold and invest in that team.

Speaker 8: And then on free cash flow should be assumed that it'll get to double digit growth in 2026. Once the program done or is it after that earlier than that?

And then on free cash flow it should be assumed that it'll get to double digit double digit growth in 2026. Once the program done or is it up to that earlier than that.

Eric Andersen: So until the activity comes back, would you expect like the organic growth is in commercial risk to stay in like a four to five percent range or was anything unique to the third quarter? There was nothing unique in the third quarter when we look at, you know, some of the strong areas around the world, some of the specialty businesses like construction that continued to have very solid performance. You know, we're pretty happy with the way the business has been performing and when that area comes back, we've held the team and are really excited about the future.

Speaker 3: So we haven't given specific guidance on the timing. What we have said is that we absolutely expect long-term free cash flow growth. We run the firm on free cash flow. We are extremely bullish on long-term free cash flow growth to my operating income growth and working capital improvements. And so this will absolutely contribute to that. And so we're very, very excited about the outlook for free cash flow growth long-term.

So we haven't given specific guidance on the timing, but we have said is that we absolutely expect longtime free cash flow growth. We run the fab on free cash flow. We are extremely bullish on long term free cash flow growth are driven by operating income growth or working capital improvements and so this will absolutely contribute to that and so we're very very excited about the out.

Free cash flow growth long term.

Speaker 8: Okay, and then just lastly, we've gotten a lot of questions on the sort of impacts on your business from the Vestu fallout. And do you expect any financial impact or reputational or otherwise, or have you seen anything that you're able to discuss beyond what's in your regulatory body?

Okay, and then just lastly, we've gotten a lot of questions on the sort of impact on your business from the that's still fall out and do you expect any financial impact or reputation or otherwise or have you seen anything.

Elyse Greenspan: And then I want to come back to the savings program. So 350 million by 2026. Are you expecting the entirety of that to fall to the bottom line? And then I know you guys mentioned and in your comments as well as in the slides that there is, you know, platforms for communication, technology, you know, there's some workforce changes. Can you suck it?

And that you're able to discuss beyond what's in your regulatory filings.

Speaker 2: Listen, I would say from a bestie's, oh, go ahead, Chris, I'm sorry.

What's sort of I would say from investors.

Chris I'm sorry.

So you got arc.

Speaker 2: But I would just say, Vestu is one of the many parties that have been involved in the business, whether it's re-insurance, whether it's other areas, and we continue to monitor the situation very carefully, working with our clients, helping them to provide options to replace that lost capital. And we continue to see that work being done and our expectation is it will continue to evolve as their bankruptcy process works its way through.

With that I would just say best do is one of the many parties that had been involved in the business whether its reinsurance whether it's other areas and.

Christa Davies: You know, can you break down the 350 million by the areas that are specifically driving the savings? So thanks so much for the question, Elise. The first answer is, yes, we do expect the 350 million to drop to the bottom line. We obviously are continuing to invest in the business, as I described earlier, you know, a good example of that is the investments we've made in technology in the first line month of the year.

We continue to monitor the situation very carefully working with our clients, helping them to provide options to replace that lost capital and we continue to see that work being done on and our expectation is it will continue to evolve as their bankruptcy process works its way through.

Alright, thank you.

Christa Davies: You see that in our technology expense and our capex expense, both being up, funding investments in long term, you know, operations, technology platforms and product development to meet client needs. And so, you know, we will see those evidence up to the bottom line, but they are in the context of our overall financial guidance, which is mid single digital greater organic revenue growth to 23 and the long term, margin expansion in 2324 and the long term, and long term double the digital free cashflow growth. And then in terms of the breakout, we do expect the breakout of the 900 million to be primarily technology expense and workforce optimization.

Yeah.

Speaker 1: Our next question is from David Motomatin with Evercore ISI. Please

Our next question is from David <unk> with Evercore ISI. Please proceed.

Speaker 6: Hi, thanks, good morning. I just had a question on the accelerated A on United program.

Hi, Thanks, good morning.

Had a question on the accelerated Aon United program.

Speaker 6: Um, you know, more so on the, on the revenue side and, and, you know, how we can think about that. It sounds like a big opportunity. Um, I guess I'm a little surprised that you aren't making any changes to your organic growth outlook. The mid single digit or greater, so, um, maybe could you just talk about, um, how much you would expect this program to contribute to accelerate organic growth. Um.

You know more so on the on the revenue side and how we can think about that it sounds like a big opportunity.

I guess I'm, a little surprised that you aren't making any changes to your organic growth outlook.

The mid single digit or greater so.

Christa Davies: We have not provided specific details on that and we will put on at each quarter.

Maybe could you just talk about how much you would expect this program to contribute to accelerated organic growth.

Elyse Greenspan: Thank you.

Speaker 6: You know, it would be helpful just to, you know, maybe put some numbers around it. I'm sure you guys look at it internally. So yeah, I'm just trying to get a sense for how we can think about the revenue opportunity here.

Yeah.

Jimmy Boulard: Our next question is from Jimmy Boulard with JP Morgan, please proceed. Hi, good morning. So first just on organic growth, are you able to quantify how much of a headwind, the slower M&A and transaction related activity has been to your growth, maybe either in an absolute sense versus normal or maybe versus a year ago, just so we get a sense of how your results would be versus beer.

Would be helpful.

Maybe put some numbers around it I'm sure you guys look at it internally.

So yes, I'm just I'm just trying to get a sense for how we can think about the revenue opportunity here.

Speaker 2: David, I would come back and just think about, literally this is about client relevance. They're describing very well. What this is gonna do is help us innovate and be more relevant to clients on the issues that matter both of them. That will, you know, that will have impact over time. What we wanna be clear though is in terms of sort of the progress.

David I would come back and just think about this is about client relevance as Eric described I think very well what this is.

It's going to do is help us innovate and be more relevant to clients on the issues that matter most to them.

That won't that will have impact over time, what we want to be clear, though is in terms of sort of the progress.

Eric Andersen: And I think that is the reason that has less of that. Sure, this is Eric. We don't disclose that number, but I would just say if you track, you know, M&A from outside sources, certainly down 30%. You know, year on year, and that continues to show headwinds. And I would just say, listen, as that recovers, we will recover with it. We've maintained the team. We've maintained the relationships. We continue to stay very close to those clients. And when they react, we will be right there with them. But it's a good business for us.

Speaker 2: We're staying with mid-to-late-year greater organic revenue growth, continuing margin expansion, and double-digit-free cash flow growth.

We're staying with mid single digit or greater organic revenue growth continued margin expansion and double digit free cash flow growth for us that won't be the validation.

Speaker 2: For us, that will be the validation. And this, you know, accelerates that strategy and certainly increases probability and ups and downs against that in every way, shape, or form. And if there's opportunity to be on that fantastic, but, you know, you start with that, we love that story. And we're incredibly excited about what this does with that story, which is just really, really delivered on it.

And this accelerates that strategy and certainly increase its probability of.

A success against that in every way shape or form.

There's opportunity beyond that fantastic.

With that we love that story and we're incredibly excited about what this does would that story, which is just really really delivers on it.

Eric Andersen: We really think it provides great value to them and the ultimate clients and we continue to hold and invest in that team.

Speaker 6: Got it. Thanks. And then maybe, you know, this is an acceleration of Aeon United.

Got it thanks, and then maybe you know this.

This is an acceleration of Aon United.

Christa Davies: And then on free cash flow should be assumed that it'll get to double digit, double digit growth in 2026, once the program done, or is it after that earlier than that? So we haven't given specific guidance on the timing. What we have said is that we absolutely expect long term free cash flow growth. We run the firm on free cash flow. We are extremely bullish on long term free cash flow growth by operating income growth and working capital improvements. And so this will absolutely contribute to that. And so we're very, very excited about the outlook for free cash flow growth long term.

Speaker 6: Yeah, but you, I believe it was a number of, you know, maybe 5, 6 years ago that you guys had initially instituted the strategy to and United strategy. So, I'm wondering if you just, if I, you know, not thinking about the new program, but looking at a on United in the past, you know, once you instituted that program, is there any way to.

But you I believe it was a number of you know maybe five six years ago that you guys had initially instituted the strategy to Aon United strategy. So I'm wondering if you just if you're not thinking about this new program, but looking at Aon United in the past.

Once you instituted that program.

Is there any way to size here.

Speaker 6: you know, historically how much that program contributed to the organic growth that we saw.

Historically, how much of that program contributed to the organic growth that we saw.

Speaker 6: you know, I guess maybe leading up to the COVID pandemic.

I guess, maybe leading up to our.

To the Covid pandemic.

Speaker 2: Well, this is very important, because we obviously tracked and looked at this all the time. This is why, as we described in the opening, we came to a level of conviction that said, we're not going to evolve this. We're doing it now. We're moving now.

So this is this is very important because we obviously track and look at this all the time. This is why as we described in the opening we came to a level of conviction that said, we're not gonna have all of this we're doing it now we're moving now we're gonna, making investments now to accelerate faster than we would have before because of the track that we've laid this continues to get more.

Gregory Case: Okay, and then just lastly, we've gotten a lot of questions on the sort of impact on your business from the best to fall out. And do you expect any financial impact or reputational or otherwise, or have you seen anything that you're able to discuss beyond what's in your regulatory planning. Listen, I would say from a best to stay. Oh, go ahead, Chris, I'm sorry. Oh, you go, Eric. But I would just say, best to is one of the many parties that have been involved in the business, whether it's reinsurance, whether it's other areas.

Speaker 2: We're going to make the investments now to accelerate faster than we would before because the track that we've laid is discontinuous to get more relevant for clients. To think about it 10 years ago, we talked about increasing risk. It turns out 10 years later, my God, you know, we might have been right on that. There's risk everywhere around the world. Interconnected climate real all of a sudden. Everything's real.

Relevant for clients to think about it 10 years ago, we talked about increasing your risk turns out 10 years later my God, we might've been right on that there's risk everywhere around the world interconnected climates real all of a sudden everything's real cyber everything and so our clients are asking for more and the fundamental aspect of that everybody can talk about delivering up unless you're connected firm truly supporting each other.

Speaker 2: cyber everything and so our clients are asking for more and the fundamental aspect of that everybody can talk about the living it but unless you're a connected firm truly supporting each other around the globe you cannot deliver on it and you certainly can't innovate at a level that equates to what client demand is and so that's what Ann united

Gregory Case: And we continue to monitor the situation very carefully, working with our clients, helping them to provide options to replace that lost capital. And we continue to see that work being done. And our expectation is it will continue to evolve as their bankruptcy process, you know, works its way through.

Around the globe you cannot deliver on it.

We can innovate at a level that equates to where client demand is and so that's what and United has given us what you've seen us do over the last bit of time is really structurally double down on that risk capital and human capital you know only 567 months ago structurally you know really connected how do we bring analytics across the entire risk.

Speaker 2: What you've seen us do over the last bit of time is really structurally double down on that. Rift capital, even capital, only five, six, seven months ago.

Gregory Case: All right, thank you.

Speaker 2: structurally really connected how we bring analytics across the entire risk spectrum. Not just in commercial risk reinsurance, but also the risk spectrum on talent, on health, etc. All these things come together, and that's the next step sort of in the process. So for us, it isn't about, it equated to a dollar value here or there, or revenue or margin here or there. It's fundamental DNA. This connectivity around A.N. United allowed us to do risk capital and human capital.

David Motemaden: Our next question is from David Motomaden with Evercore ISI, please proceed. Hi, thanks. Good morning. I just had a question on the accelerated A on United program. You know, more so on the on the revenue side and, you know, how we can think about that, it sounds like a big opportunity. I guess I'm a little surprised that you aren't making any changes to your organic growth outlook, the mid single digital greater.

Spectrum, not just in commercial risk reinsurance, but also the risk spectrum on talent on health et cetera. All of these things come together and that's the next step sort of in the process. So for us it isn't about it equated to a dollar value here or there or revenue or margin here or there. It's fundamental DNA. This connectivity around around aon, United allowed us to Derisk.

Capital and human capital it allowed us to do it and business services, that's an impossibility without aon, United and what we've got now with Eric in the.

Speaker 2: It allowed us to do it on business services. That's an impossibility without AON United. And what we've got now with Eric in the team, leading risk capital and human capital, is a chance to accelerate it into the market with innovation. Under Krista's leadership with AON Business Services, a chance to really enable it.

Medium risk capital and human capital for the chance to accelerated into the market with innovation under Chris's leadership with with Aon business services, a chance to really enable it structurally in ways. We've never done before so this for US is a it's a natural step that we would have evolved in the process and all you're hearing about today is that excitement level is higher than ever before not because of us.

David Motemaden: So maybe could you just talk about how much you would expect this program to contribute to accelerate organic growth? You know, it would be helpful just to, you know, maybe put some numbers around it. I'm sure you guys look at it internally. So yeah, I'm just I'm just trying to get a sense for how we can think about the revenue opportunity here.

Speaker 2: structurally in ways you've never done before. So this for us is a if a natural step that we would have evolved in the process and all you're hearing about today is That excitement level is higher than ever before not because of us but because the clients and our colleagues and we need this We want to deliver it and what you see us doing today is saying okay. We're gonna show that right and drive it and that's really what the investments about

But because our clients and our colleagues, saying we need this we wanted to deliberate and what you see us doing today is saying, okay, we're going to accelerate and drive it and that's really what the investments at all.

Gregory Case: David, I would come back and just think about literally this is about client relevance. They're describing very well. What this is going to do is help us innovate and be more relevant to clients on the issues that matter most of them. That will, you know, that will have impact over time. What we want to be clear though is in terms of sort of the progress. We're staying in mid single digital greater organic revenue growth, continuing margin expansion and double digital free cash flow growth for us.

Understood I appreciate the color.

Speaker 1: Our next question is from Yaram Tanar with Jeffries, please proceed.

Our next question is from E. R M Qunar with Jefferies. Please proceed.

Speaker 9: Hi guys, good morning. This is Charlie on for your own. You guys in the past have pointed to a multi-year track record.

Hi, guys. Good morning. This is Charlie on for your own you guys in the past I've pointed to.

Our multi year track record of roughly 90 bps of annual margin expansion.

Speaker 9: roughly 90 bits of annual margin expansion. And I guess should we expect the new cost savings program to be incremental on top of that? Or should we continue to expect roughly 90 bits here?

Gregory Case: That will be the validation. And this is, you know, accelerate that strategy and certainly increases probability and success against that in every way, shape or form. And if there's opportunity beyond that, fantastic, but you know, you start with that, we love that story. And we're incredibly excited about what this does with that story, which is just really, really delivered on it.

And I guess should we expect the new cost savings program to be incremental on top of that or should we continue to expect roughly 90 bps year over year.

Speaker 3: Thanks so much for the question, Charlie. So you're right, for the last 12 years, we've delivered 1120 basis points of margin expansion to our approximately 90 basis points a year. And what we've said with this program is the 350 million of savings in year and 2026 will fall to the bottom line.

Thanks, so much for the questions Holly So you're right for the last 12 years, we've delivered 1100 and 20 basis points of margin expansion. So approximately 90 basis points a year and what we started with this program is the 350 million of savings in year in 2026 will fall to the bottom line.

Gregory Case: Got it. Thanks. And then maybe, you know, this is an acceleration of a on united. You know, but you I believe it was a number of, you know, maybe five six years ago that you guys had initially instituted the strategy to an united strategy. So I'm wondering if you just if I, you know, not thinking about the new program, but looking at a on united in the past, you know, once you instituted that program.

Speaker 3: They are incorporated into and a part of our long-term sustainable margin expansion where we will deliver margin expansion in 2023, for the year 2024 and over the long term.

<unk> incorporated into and a part of our long term sustainable margin expansion, where we will deliver margin expansion in 2023 fully of 'twenty 'twenty four and over the long term and as I mentioned earlier, what were really doing in Chile is we are investing in the business and client facing innovation in content and capability and data on.

Speaker 3: And as I mentioned earlier, what we're really doing Charlie is we are investing in the business.

Speaker 3: in client facing innovation and content and capability and data analytics to help our client need and provide more innovative solutions to clients.

Political to help solve client needs and provide more innovative solutions to clients to help drive better colleague technology and to drive long term productivity and that's really the heart of the ambition that is the strategy, which is really the catalyst for off investing here today.

Gregory Case: Is there any way to size, you know, historically, how much that program contributed to the organic growth that we saw. You know, I guess maybe leading up to the COVID pandemic. This is very important because we obviously tracked and looked at this all the time. This is why, as we described in the opening, we came to a level of conviction that said, we're not going to evolve this. We're doing it now.

Speaker 3: to help provide better colleague technology and to drive long-term productivity. And that's really the heart of the AI Business Services Strategy, which is really the catalyst for us investing here today.

Speaker 9: Okay, um, thanks and then I guess just you guys have talked about expecting cost savings to ramp towards the 350 by 26. how should we. I think about the cave.

Okay. Thanks, and then I guess, just you guys have talked about expecting cost savings to ramp towards the $3 50 by 'twenty six how should we.

Gregory Case: We're moving now. We're going to make the investments now to accelerate faster than we would have before. Because the track that we've laid is discontinuous to get more relevant for clients. We think about it 10 years ago. We talked about increasing risk. It turns out 10 years later, my God, we might have been right on that. There's risk everywhere around the world. Interconnected Climates real all of a sudden. Everything's real. Cyber everything.

Think about the cadence of the $900 million over that same period.

Speaker 3: We have not given specific guidance on the 900 million, Charlie. So what we will do is report charges and savings each quarter.

We have not given specific guidance on the 900 million trolleys say, what we will do its paws charges and savings each quarter.

Okay. Thanks.

Speaker 1: Our last question is from Meyers Sells with KBW. Please proceed.

Our last question is from my yourselves with K B W. Please proceed.

Gregory Case: So our clients are asking for more. And the fundamental aspect of that, everybody can talk about the living it, but unless you're connected firm, truly supporting each other around the globe, you cannot deliver on it. And you certainly can't innovate at a level that equates to what client demand is. And so that's what Ann United has given us. What you've seen us do over the last bit of time is really structurally double down on that risk capital.

Speaker 10: Great thanks. First, conceptual question I guess, maybe for Eric. You talk about being committed to the M&A space with

Great. Thanks first.

Couple of question I guess, maybe for Eric.

<unk> talked about being committed to the M&A space.

With.

Speaker 10: The gestes that there are disproportionate amounts of expensive relatives to current reds.

Suggests that there are disproportionate amount of expenses relative to current revenues can you give us a way of thinking about maybe the margin impact that this.

Speaker 10: Can you give us a way of thinking about maybe the margin impact that this revenue pressure is providing?

Gregory Case: You know, only five, six, seven, but months ago structurally, you know, really connected how we bring analytics across the entire risk spectrum, not just in commercial risk, green turns, but also the risk spectrum on talent on health, etc. All these things come together. And that's the next step sort of in the process. So for us, it isn't about, you know, it equated to a dollar value here or there or revenue or margin here or there.

Revenue pressure is providing.

Speaker 11: Well, listen, I wouldn't think about it that way. I would think about what can we do with the talent while there's a doubt.

Well listen I wouldn't think about it that way I would think about.

What can we do with the talent, while there is a downturn.

Speaker 11: And so the skills that that team has, in terms of client coverage and product expertise, we can redeploy that across the firm and put them to work today while we're waiting out the market. Certainly still working those clients and trying to innovate with new product and opportunities, but at the same time, they bring skill sets around client coverage, industry knowledge, product knowledge that we can use across the firm. So they're not just sitting there, if that was what you're thinking, but we're deploying them into the client base.

So the skills, but those that that team has in terms of client coverage and product expertise, we can redeploy that across the firm and put them to work today, while we're waiting out the market certainly still working those clients and trying to innovate with new products and opportunities, but at the same time, they bring skill sets around client coverage industry knowledge product knowledge.

Gregory Case: It's from the middle DNA. This connectivity around around Ann United allowed us to do risk capital in the capital. It allowed us to do and business services. That's an impossibility without Ann United. And what we've got now with Eric in the team being risk capital and human capital, the chance to accelerate it into the market with innovation under Christus leadership with with our business services, the chance to really enable it structurally in ways you never done before.

So we can use across the firm so they're not they're not just sitting there.

What you're thinking, but we're deploying them into the into the client base.

Speaker 10: Yeah, okay. I wasn't specifically thinking that. That is helpful. Second question that I've gotten, it's sort of an interesting one. We talked about double digit free cash flow growth. Once the charges of this are done, is 2022 still a good base for the compound annual growth rate? Or is that double digit from the now lower cash flows we expect, free cash flow we expect through 2026?

Yeah, Okay. It wasn't explicitly thinking that that is helpful.

A question that I've gotten it sort of an interesting one we talked about double digit free cash flow growth.

Gregory Case: So this for us is a, is a natural step that we would have evolved in the process. And all you're hearing about today is that excitement level is higher than ever before, not because of us but because the clients and our colleagues and we need this, we want to deliver it. And what you see us doing today is saying, okay, we're going to sell that right and drive it. And that's really what the investments about.

David Motemaden: Understood. I appreciate the color.

Once the charges.

Done is 2022 still a good base for the compound annual growth rate or is that double digit from the now lower caseloads, we expect free cash flow, we expect through 2020.

Speaker 3: Thanks so much for the question, Maya. Look, it is off the 2023 baseline. That's the right answer. And I would note that we're really excited about free cash flow growth in 2023. It's high single digit.

Thanks, So much for the question when I look at is after 2023 baseline that's the right answer and I would not that we're really excited about free cash flow growth in 2023, it's high single digits.

Yaram Kenar: Our next question is from Yaram Kenar with Jeffries. Please proceed. Hi guys. Good morning. This is Charlie on for your own. You guys in the past have pointed to a multi-year track record of roughly 90 bits of annual margin expansion. And I guess should we expect the new cost savings program to be incremental on top of that, or should we continue to expect roughly 90 bits every year? Thanks so much for the question, Charlie.

Speaker 3: And so we will report 2023 free cash flow and you should grow double digit long term from there. But what I would say, Mayer, is as you think about the free cash flow growth long term, it's exceptional. We've delivered 13% caguar and free cash flow over the last 12 years.

And so we will report 2023 free cash flow and you should grow double digit longtime from that but what I would say Meyer is as you think about the free cash flow growth long time, it's exceptional would've delivered 13% CAGR on free cash flow over the last 12 12 years are and will continue to drive mid single digit organic mid single digit.

Yaram Kenar: So you're right for the last 12 years, we've delivered 1120 basis points of margin expansion, so approximately 90 basis points a year. And what we've said with this program is the 350 million of savings in year in 2026 will fall to the bottom line. They are incorporated into and a part of our long term sustainable margin expansion where we will deliver margin expansion in 2023 for the year 2024 fall and over the long term.

Speaker 3: And we'll continue to drive civil digit or greater organic group new growth long term, margin expansion in 23, 24 and long term, and double digit free cash flow growth long term. And we're really excited about our free cash flow growth long term.

Greater organic revenue growth long term margin expansion in 'twenty, three 'twenty, four and long term and double digit free cash flow growth long term.

Yaram Kenar: And as I mentioned earlier, what we're really doing Charlie is we are investing in the business in client facing innovation and content and capability and data analytics to help our client need and provide more innovative solutions for clients to help provide better with a colleague technology and to drive long term productivity.

Really excited about our free cash flow growth for a long time.

Okay. That's very helpful. Thank you.

Speaker 1: Thank you. I would now like to turn the call back over to Greg Case for closing remarks.

Thank you I would now like to turn the call back over to Greg case for closing remarks.

Speaker 2: Just wanted to say thank you, everyone joining us, look forward to our conversation, not next quarter. Thanks very much.

Just wanted to say thank you for everyone. Joining us look forward to our conversation next quarter. Thanks very much.

Speaker 1: Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Speaker 12: Thanks for watching!

Okay.

[music].

Christa Davies: And that's really the heart of the our business services strategy, which is really the catalyst for us investing here today. Okay, thanks, and then I guess just you guys have talked about expecting cost savings to ramp towards the 350 by 26. How should we think about the cadence of the 900 million over that same period? We have not given specific guidance on the 900 million Charlie, so what we will do is report charges and savings each quarter. Okay thanks.

Yeah.

Meyer Shields: Our last question is from Meyer Sales with KBW, please proceed. Great thanks.

Okay.

Eric Andersen: Conceptual question I guess, maybe for Eric, you talked about being committed to the M&A base, which the deaths that there are, the support and amount of expensive relative current revenues, can you give us a way of thinking about maybe the margin impact that this revenue pressure is providing? Well, listen, I wouldn't think about it that way. I would think about what do we do with the talent while there's a downturn? And so the skills that those that that that team has in terms of client coverage and product expertise, we can redeploy that across the firm and put them to work today while we're waiting out the market, certainly still working those clients and trying to innovate with new product and opportunities.

Eric Andersen: But at the same time, they bring skillsets around client coverage, industry knowledge, product knowledge that we can use across the firm. So they're not just sitting there if that was what you're thinking, but we're deploying them into the into the client base. Yeah, okay, what specifically thinking that's that helpful.

Christa Davies: The second question that I've gotten is sort of an interesting one. We talked about double digit free cash flow growth once the charges of this are done, is 2022 still a good base for the compound annual growth rate or is that double digit from the now lower cash flow if we expect the cash flow we expect to be 2026? Thanks very much for the question, Maya. Look, it is off the 2023 baseline.

Christa Davies: That's the right answer. And I would note that we're really excited about free cash flow growth in 2023. It's high single digits. And so we will report 2023 free cash flow when you should grow double digit long term from there. But what I would say, Maya, is as you think about the free cash flow growth long term, it's exceptional. We've delivered 13% cager and free cash flow over the last 12 12 years.

Christa Davies: And you know, we'll continue to drive middle digit organic, middle digit or greater organic rip new growth long term margin expansion in 2324 and long term and double digit free cash flow growth long term. And we're really excited about that free cash flow growth long term. Okay, that's very helpful.

Gregory Case: Thank you. I would now like to turn the call back over to great keys for closing remarks. Just wanted to say thank you, but everyone joining us look forward to our conversation next quarter. Thanks very much. Thank you.

Operator: This will conclude today's conference.

Operator: You may disconnect your lines at this time and thank you for your participation.