Q4 2024 Aon PLC Earnings Call
Good morning, and thank you for holding.
Welcome to Aon Plc's fourth quarter, 'twenty 'twenty four conference call.
At this time all parties will be in 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.
If anyone has injection you may disconnect your lines at this time.
It's important to note that some of the 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 or those anticipated.
Formation concerning risk factors that could cause such differences are described in the press release, covering our fourth quarter 'twenty 'twenty four results as well as having been posted on our website.
Speaker Change: Now, it's my pleasure to turn the call over to Greg case, CEO of Aon plc.
Greg Case: Good morning, everyone and welcome to our fourth quarter and full year conference call I'm joined by Edmund Reese, Our CFO and Eric Anderson, our president.
Greg Case: As in previous quarters, we posted a detailed financial presentation on our website, which had been well referenced in his remarks.
Greg Case: We want to begin by extending our deepest sympathy to our colleagues clients and all of those impacted by recent disasters and in particular, the devastating wildfires in southern California the.
Greg Case: The destruction and loss of life are tragic events and all of US today on our committed to supporting our clients colleagues and partners during the response and recovery.
Greg Case: Now turning to al.
Speaker Change: We're excited to be here this morning to discuss our strong performance in 2024.
Speaker Change: We had great execution in year, one of our three by three plan with all credit to our colleagues around the globe, which I'll cover in more detail at the close of my comments.
That execution is translating into winning more clients, expanding our relationships and keeping clients longer to improve retention.
Speaker Change: And it shows in our financial results for the full year 2024, we grew organic revenue, 6% total revenue 17%.
Speaker Change: We delivered strong margins and grow our operating income, 17% driving 10% adjusted earnings per share growth and continued strong free cash flow.
These results are a strong start to our three by three plan and as we go into 2025 year or two we remain well positioned to continue to deliver mid single digit or greater organic revenue growth continued margin expansion in line with our historic performance strong adjusted EPS growth double digit free cash flow growth and disciplined capital.
Speaker Change: Location.
Speaker Change: As we move forward, it's important to understand the environment in which our clients are operating and the external factors shaping client demand.
Speaker Change: Every day, our clients tell us that increasing volatility and complexity.
Speaker Change: Make decisions regarding risk and people issues more difficult.
Speaker Change: The challenges businesses face reflect a series of profound transitions across the megatrends of trade technology, whether in workforce, which we saw reinforced by events throughout 2024, and which are firmly in place as we move into 2025.
Speaker Change: These four megatrends are causing significant challenges across every sector and every type of business.
Speaker Change: At the same time leaders worried that the organization's arent moving quickly enough to address these risks.
Speaker Change: Our three by three plan is anchored in meeting these intensifying client requirements better serving our clients with a unique content servicing capability and expertise needed to respond to these challenges.
Speaker Change: In this environment for 2024 was a year of tremendous progress across all three pillars of our three by three plan.
Speaker Change: Risk capital and human capital Aon client leadership, and add business services, three commitments where delivery over a three year period.
Speaker Change: First we committed to leveraging our distinctive risk capital and human capital structure to unlock new solutions that address the evolving client demand discussed earlier.
Speaker Change: In 2024, we created and delivered innovative solutions to integrate reinsurance and commercial risk data and analytics solutions using disconnected capability are enabling clients to access capital more efficiently and make better decisions. Our work in the fourth quarter to help source $715 million of alternative reinsurance capacity for a major underwriter.
Speaker Change: And the record 30% increase in Aon client Treaty capacity are just two examples of the power of risk capital.
Speaker Change: Similarly in human capital a global company with over 100000 employees in more than 100 countries ordered us the mandate for their global benefits program.
Speaker Change: Our global team brought together, our regional data and insights from analytics tools to deliver a comprehensive globally consistent and compliant benefits offering.
Speaker Change: What was originally just a small aon relationship in one jurisdiction is now an international relationship across every region. They operate to support their colleagues and enterprise strategy.
This is just one example that demonstrates unique value of our globally connected firm and differentiated data driven advice and solutions.
Speaker Change: For risk capital, we also want to note and officially welcome John Neale to Aon.
Speaker Change: Earlier this month that John will join US from Lloyd's is our global CEO of reinsurance and global Chairman of climate solutions. Upon the completion of his commitments to Lloyd's.
Speaker Change: Not only will Johns arrival, bringing iconic industry leader to help focus on delivering our integrated risk capital capabilities to clients. But his addition also represents another strong testament to the power of our risk capital and human capital strategy.
Speaker Change: Our second commitment is to embed the Aon client leadership model across our enterprise clients large and middle market segments.
Speaker Change: Linkedin and expand client relationships and.
Speaker Change: In 2024, we capitalize on our globally connected approach covering nearly 1000 of our most critically important global clients within our enterprise client group. These clients grew new business five points above the a on average in 2024, as we increase penetration across solution lines and geographies.
Speaker Change: Third we committed to and are accelerating Aon business services to establish a new standard for service delivery and innovation at scale and we made progress and great strides in 2024, giving clients real time insights that help them make better decisions from advanced analytics to customize dashboards. The tools that we launched this year are.
Speaker Change: Any client experiences and outcomes.
Speaker Change: In May we debuted a new suite of risk analyzer tools, enabling our north American clients to receive exposure data quantify loss potential and make better decisions based on total cost of risk and.
Speaker Change: And we've seen great early traction with our analyzers, which continue to open doors brought in discussions with our clients and increased win rates.
Speaker Change: Let me highlight just a few of many examples early in 2024, we released our property risk analyzer.
Speaker Change: Social profiles and data models the tool simulates the impact of insurance policy options to determine which risks should be retained versus transfer.
Speaker Change: In the fourth quarter, we launched the cyber risk analyzer, enabling risk managers and brokers to better evaluate cyber risk and maximize insurance value.
Speaker Change: We also launched our health risk analyzer, a solution that leverages predictive modeling risk optimization and ongoing monitoring to help clients identify and manage costs and plan for a predictable risk accordingly.
Edman: At the same time ABS retired nearly 300 applications and continues to drive greater efficiencies, which are foundational to our sustained margin expansion, which edman will describe.
Speaker Change: The result of meeting these milestones in 2024 is the delivery of highly distinctive capabilities and expertise that has created sustainable momentum for aon.
Speaker Change: We also want to highlight the progress, we're making with NFC eight months in the business is performing very well just as expected integration.
Speaker Change: Integration is right on track producer retention is strong and the acquisition is driving top line growth as we build on Nsp's strong client relationships by bringing in additional content capabilities and tools to the team.
Speaker Change: Clients have responded well to the potential for NSP under the Aon umbrella given us even more confidence in our ability to achieve our sales and cost synergy goals in 2025 and 2026.
Speaker Change: And against this operating backdrop Aon closed the year with a strong fourth quarter that drove another year of financial performance aligned with our objectives.
Speaker Change: As we begin year two of the three by three plan, we entered 2025 with momentum and have a strong foundation to build upon the.
Speaker Change: The progress achieved in 2024 demonstrated the potential of our strategy and now we will events each component to drive further success.
Speaker Change: Looking ahead as we onboard recent hires were continue to invest to support top line growth, particularly client facing talent and prioritize growth areas and an innovative new technology driven solutions enabled through Aon business services. In addition, the efficiencies we gain with rehab business services continue to support margin expansion.
Speaker Change: As a result, we expect to deliver another year of mid single digit or greater organic growth continued margin expansion strong adjusted EPS growth and double digit free cash flow growth for 2025.
Speaker Change: To summarize before I hand, the call to Edmund for more detailed review of our financials and outlook, we want to reinforce how excited our leadership team is for the opportunity ahead.
Speaker Change: We're executing against our strategy through the three by three plan our solutions are helping clients as they face increasing volatility and complexity in their businesses.
Speaker Change: We're delivering results, including mid single digit organic revenue growth margin expansion and free cash flow growth in line with our long term financial model in 2024.
Speaker Change: He is right on track and finally, the significant progress we made in 2024 positions Aon for another strong year in 2025 to deliver on our client colleague and financial objectives.
Of course, none of this would be possible without aam's global team.
Speaker Change: And on behalf of Edmond, Eric and me I will conclude my comments by first reinforcing our foundational commitment to our team.
Speaker Change: To ensure that Aon fosters a culture and work environment strengthened by the power of inclusion built to attract develop and retain the best talent in the world from all backgrounds.
Speaker Change: And second the shout out a huge thank you to our 60000 colleagues around the world for serving our clients with distinction and for making 2020 for a tremendous year.
Speaker Change: Let me now turn to Edmund to walk through the financials and provide additional insight around our expectations for 2025.
Edmund Reese: Thank you, Greg and good morning, everyone.
Speaker Change: Im excited to be here discussing the results from yet another strong quarter. The caps strong full year 2020 for performance and positions us to achieve our 2024 to 2026 three by three plan financial objectives.
Speaker Change: Before jumping into these results and providing 2025 guidance I wanted to take a moment to highlight some critical milestones achieved in 2024.
Speaker Change: Demonstrate the strong progress that we've made toward our commitments.
Speaker Change: First our full year performance is right in line with our objectives and guidance for mid single digit or greater organic revenue growth adjusted operating margin and free cash flow.
Speaker Change: In particular.
Speaker Change: Organic revenue growth reached 6% for the year given.
Speaker Change: Giving us confidence that our three by three plans and our investments in hiring client facing talent developing client facing ABS capabilities and expanding our enterprise client group.
Speaker Change: We will support mid single digit or greater organic revenue growth.
Speaker Change: Second we completed the acquisition of <unk>.
Speaker Change: Which expanded our presence in the $31 billion in fast growing middle market in.
Speaker Change: In 2024, we saw strong producer retention better than 2023 accretive.
Speaker Change: Accretive top line financial results and $36 million in middle market acquired EBITDA with a robust Q1 dollars 25 pipeline.
Speaker Change: All in line with our expectations.
Speaker Change: Third we paid down $2 1 billion in debt and returned $1 6 billion in capital to shareholders through the dividend and share repurchases.
Speaker Change: The lowering our leverage in line with our objectives and continuing our balanced capital allocation discipline.
Speaker Change: We are executing our plan.
Speaker Change: These milestones emphasize that with year one of our three by three plan complete.
Speaker Change: We have momentum.
Speaker Change: And continued execution gives us a high level of confidence in delivering on our three by three financial objectives, including a double digit three year CAGR and free cash flow from 2023 through 2026.
Speaker Change: You can see from the financial summary on slide six net full year total revenue increased 17% to $16 billion and we delivered 6% organic revenue growth.
Speaker Change: Adjusted operating income increased 17% and adjusted operating margin was 31, 5% up 90 basis points relative to 'twenty three baseline that includes <unk>.
Speaker Change: Adjusted EPS was up 10% to $15 60.
Speaker Change: And finally, we generated $2 8 billion of free cash flow.
Speaker Change: Reflecting strong adjusted operating income growth.
Speaker Change: <unk> working capital improvements.
Speaker Change: Turning to the fourth quarter.
Speaker Change: Organic revenue growth was also 6%.
Speaker Change: Marking our third consecutive quarter of growth at 6% or greater.
Speaker Change: Adjusted operating margin was 33, 3% expanding 140 basis points relative to 'twenty three baseline that includes <unk> and adjusted EPS was up 14% to $4 42.
Speaker Change: Let's get into the detail of these results starting with organic revenue growth on slide eight.
Speaker Change: In Q4 organic revenue growth of 6% was right on track and in line with our mid single digit or greater guidance range.
Speaker Change: In commercial risk organic revenue growth was 6% in Q4 it was broad based.
Speaker Change: Reflecting strengthened our north American core P&C business.
Speaker Change: Continued strong contribution from our international businesses.
Speaker Change: And an uptick in construction as we are beginning to see the impact from specialty hires.
Speaker Change: We also benefited from double digit growth in M&A services increased transaction activity continued to be a modest tailwind.
Speaker Change: Reinsurance organic revenue reached 6% in Q4 dollars 24 growing over an elevated Q4 'twenty three on the <unk>.
Speaker Change: Back of continued strength in our strategy and technology group store.
Speaker Change: Strong treaty placements with existing clients.
Speaker Change: Increased insurance linked securities.
Speaker Change: Specifically interest in catastrophe bonds continued to grow as investors seek unique asset classes with uncorrelated returns and E on as a leading industry provider in cat bonds placements.
Speaker Change: Health solutions grew 5% in Q4 24 also against a high Q4 dollars 23 comparable.
Speaker Change: Growth in core health and benefits as well as in NSP decorative benefits and pharmacy benefits was partially offset by lower revenue and talent solutions.
Speaker Change: Finally, well solutions delivered 8% organic revenue growth in Q4.
Speaker Change: Driven by continued strong demand for pension risk transfer consultant.
Speaker Change: Regulatory work from policy changes across the UK, and EMEA and new clients and market performance and that Pete.
Speaker Change: Our Q4 organic revenue growth was powered by new business.
Speaker Change: Which contributed 12 points from both existing and new clients as well as a modest contribution from M&A services as I mentioned earlier.
Speaker Change: And with continued high retention in the mid nineties.
Speaker Change: Supported by the increasing deployment of our ABS capabilities as Greg mentioned.
Speaker Change: Net new business drove the six points of organic revenue growth.
Speaker Change: The net market impact from growth in exposures and rate was flat.
Speaker Change: Reinsurance did have a modestly negative rate impact in the fourth quarter consistent with early views of one one renewals this capital capacity up 7% for the year outstrip demand.
Speaker Change: We saw the lower rates in the reinsurance offset with modest rate benefit across commercial health and wealth.
Speaker Change: For the full year each of the solution lines across risk capital and human capital well within or above our mid single digit or greater growth objectives with commercial risk at 5% and all other solution lines growing at or above 6%.
Speaker Change: And I'll add that measured separately in the P&L are both generating mid single digit organic revenue growth.
Speaker Change: Turning now on the margins on slide 10.
Speaker Change: Adjusted operating margin for Q4 was 33, 3%.
Speaker Change: Spanning 140 basis points from our combined baseline within that Pete.
Speaker Change: A full year basis, adjusted operating margin was 31, 5% and we delivered 90 basis points of margin expansion relative to our combined baseline within that Pete.
Speaker Change: We continue to drive adjusted operating margin expansion in the scale in our business, particularly through Aon business services, our continued portfolio management and the shift in mix to higher margin businesses as well as ongoing expense discipline.
Speaker Change: Importantly, the benefit from our restructuring initiatives to accelerate our three by three plan.
Speaker Change: We ended the year $10 million ahead of our restructuring plan objective of savings in the fourth quarter were $40 million, resulting in a $110 million of savings for full year 'twenty four.
Speaker Change: Restructuring savings contributed approximately 100 basis points in Q4, and approximately 70 basis points to full year margin expansion.
Speaker Change: Looking ahead.
Speaker Change: We continue to expect an incremental $150 million of savings in 2025 and are well on track to achieve our stated objective of $350 million of run rate savings in 2026.
Speaker Change: Our strong organic growth and the actions that we're taking through ABS to standardize our operations and integrate our platforms are setting the foundation for ongoing margin expansion in <unk>.
Speaker Change: Operating leverage in our business.
Speaker Change: Moving to interest other income and taxes on slide 11.
Speaker Change: Interest expense of $206 million in the quarter was up $82 million versus last year, primarily reflecting the issuance of $7 billion of debt to fund the <unk> acquisition.
Speaker Change: We expect approximately $205 million of interest expense in Q1 25.
Speaker Change: Other income expense was $60 million benefit year over year, primarily due to the favorable net impact of gains from balance sheet currency exposures and our hedging program.
Speaker Change: And finally, the Q4 tax rate was 17%.
Speaker Change: Bringing the full year rate to 20% with.
Speaker Change: With the year over year increase driven by growth in higher tax geographies.
Speaker Change: Favorable impact of discrete items and policy changes across the globe.
Speaker Change: Let's now discuss free cash flow and capital allocation on slide 12.
Speaker Change: We generated $2 8 billion of free cash flow in 2024, reflecting strong operating income growth.
Speaker Change: And continued working capital improvements driven by the continued progress on our goal to improve days sales outstanding.
Speaker Change: While free cash flow was impacted in 2024 by extraordinary items, all of which we previously communicated including the NXP transaction and integration costs restructuring and legal settlement expenses.
Speaker Change: We remain confident in the underlying free cash flow growth.
Speaker Change: We continue to expect free cash flow to grow at a double digit three year CAGR from 2023 2026.
Speaker Change: Our strong free cash flow allowed us to pay down $2 1 billion of debt in 2024, and coupled with earnings growth lowered.
Speaker Change: Lowered our debt to EBITDA leverage from four one times to three four times.
Speaker Change: So we are right on track to achieve the two eight times that three times leverage ratio in Q4 2025.
Speaker Change: Consistent with the objective that we set when we announced the <unk> acquisition.
Speaker Change: Additionally, we remained active in M&A, continuing our targeted tuck in acquisitions across priority areas, including continued middle market acquisition.
Speaker Change: <unk>, which acquired $36 million in EBITDA in 2024 and has a healthy pipeline of expected closings in Q1 25.
Speaker Change: Our independent and connected strategy is resonating in the marketplace and we continue to expect to acquire 45% to $60 million of EBITDA through MSP middle market acquisition in 2025.
Speaker Change: Finally in 2024, we returned $1 6 billion in capital to shareholders, including $1 billion of share repurchases.
Speaker Change: Our performance in 2024 is a great demonstration of our disciplined capital allocation modeling beginning with strong free cash flow generation and capital allocation that balances high return investments for growth with capital return to shareholders.
Speaker Change: I'll wrap up on slide 13, with our 2025 guidance in a few concluding thoughts.
Speaker Change: In summary, our full year 2025 guidance.
Speaker Change: Mid single digit or greater organic revenue growth.
Speaker Change: Adjusted margin expansion.
Speaker Change: Strong adjusted EPS growth.
Speaker Change: And double digit free cash flow growth.
Speaker Change: Let me highlight the drivers of each guidance points, starting first with organic revenue growth.
Speaker Change: We expect mid single digit or greater organic revenue growth driven primarily from winning recurring new business from both new logos and existing clients.
Speaker Change: Continued high retention and zero to two points from the net market impact of rate and exposure.
Speaker Change: I will note that our increased talent acquisition of revenue generating roles in specialty areas and enterprise client group hires up 4% in 2024 is expected to contribute to organic revenue growth.
Speaker Change: Additionally, organic revenue growth is benefiting from our progress driving revenue synergies and NSP.
Speaker Change: And we remain committed to $80 million in FTE revenue synergies in 2025.
Speaker Change: Moving to adjusted operating margin.
Speaker Change: We expect to deliver continued margin expansion in 2025.
Speaker Change: And as we model the drivers of margin expansion there are four components to consider.
Speaker Change: First the net impact of four additional months of then that Pete given late April 2020 for closing.
Speaker Change: And achieving $30 million and Opex synergies will.
Speaker Change: We will dilute margins by 20 basis points.
Speaker Change: I'll note that the impact of four additional months of NSP will primarily be a Q1 impact with the remaining impact in April 2025.
Speaker Change: Second.
Speaker Change: The interest rate impact on investment income from fiduciary balances is expected to dilute margins by 20 basis points.
Speaker Change: Third and as I mentioned earlier, we expect an incremental $150 million and restructuring savings, which will drive approximately 85 basis points of margin expansion.
Speaker Change: Finally, we expect 35% to 45 basis points of margin expansion from the operating leverage in our business given the progress that we've made in ABS to drive scale in our ongoing disciplined expense management.
Speaker Change: The net impact of these four items allows us to fund ongoing growth investments while.
Speaker Change: Still driving continued margin expansion in line with our historical performance.
Speaker Change: Given our outlook for mid single digit or greater organic revenue growth adjusted margin expansion and accretive in that peak performance, we expect to deliver strong adjusted EPS growth in 2025.
Speaker Change: This guidance reflects our continued strong operating performance, partially offset by an approximately 30 to set or two EPS headwind from FX rates based on today's FX rates remaining stable.
Speaker Change: It's also important to note that in Q1 25, we estimate an approximately $110 million FX impact on total revenue and approximately 16 cent or three point EPS headwind.
Speaker Change: Also embedded in this guidance is an expected expected tax rate of 19, 5% to 25% excluding any extraordinary discrete items.
Speaker Change: This tax rate considers the geographic mix of our growth in policy changes in the geographies, where we are located.
Speaker Change: Additionally, we expect non cash pension and <unk> to be $88 million compared to $48 million in 2024.
Speaker Change: This performance positions us for double digit free cash flow growth in 2025, including over $300 million from MSP driven.
Speaker Change: Driven by adjusted operating income growth and <unk>.
Speaker Change: Working capital improvements.
Speaker Change: Additionally, we expect to continue to return capital to shareholders in 2025 <unk>.
Including $1 billion and share repurchases.
Speaker Change: Our 2025 guidance demonstrates the strength of our business and financial model.
Speaker Change: And prioritizes investments to support sustainable organic revenue growth.
Speaker Change: Our execution and ABS is supporting both topline growth and creating investment capacity through margin expansion.
Speaker Change: As a result, we expect to deliver strong adjusted earnings per share growth and to generate double digit free cash flow growth.
And finally, we continue to have balanced capital allocation.
Speaker Change: Vesting in growth and returning capital to shareholders.
Speaker Change: And before closing one logistical note.
Speaker Change: Effective this quarter, we will disclose adjusted operating income and adjusted operating margin for two operating segments risk capital and human capital.
Speaker Change: <unk> capital includes commercial risk and reinsurance and human capital includes health and wealth.
Speaker Change: These changes align our external reporting chart three by three plan and how we go to market to serve clients and they provide increased transparency to our investors on our ability to drive margin expansion across the enterprise.
Changes do not impact AOS reported revenue or consolidated results.
Speaker Change: And we will also provide recast the financials for the past three years, and our 10-K, which will be filed and posted on our website in the coming weeks.
Speaker Change: I will close with four messages.
Speaker Change: First <unk> delivered strong Q4 financial results to close out a strong 2024 in line with our financial guidance.
Speaker Change: Second we.
Speaker Change: We are executing on our three by three plan.
Speaker Change: Including our investments in client facing capabilities in Aon business services.
Speaker Change: Middle market expansion and priority hiring to drive continued strong performance.
Speaker Change: Third with our 2025 guidance, we are well positioned to continue <unk> long track record of delivering mid single digit or greater organic revenue growth.
Adjusted margin expansion strong adjusted EPS growth and double digit free cash flow growth.
Speaker Change: Finally, we continue to have balanced capital allocation priorities investing in growth, while returning capital to shareholders. So with that let's jump into your questions, Rob I'll turn it back to you.
Rob: Thank you.
Speaker Change: To ask a question at this time you May press Star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if you'd like to withdraw your question from the queue.
Speaker Change: Speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment. Please so we poll for questions. Thank you.
Speaker Change: Our first question today comes from the line of Andrew <unk> with TD Securities.
Speaker Change: With your question.
Andrew: Hey, good morning so.
Speaker Change: NSP it sounds like <unk>.
Greg Case: Eight months in you have said the integration is on track Edmund you cited $45 million to $60 million in targeted acquired EBITDA. This year.
Greg Case: How does that 45 to 60 kind of stacked up too.
Speaker Change: Past years, when NSP was independent and I'm. Most curious about you know how.
Speaker Change: How well integrated as the platforms such that you could you could do another big deal like if you if you were.
Speaker Change: How do I say.
Speaker Change: If you felt.
Speaker Change: A nice opportunity was out there would you be able to do it now or is this something thats going to take.
Speaker Change: Take another <unk>.
Speaker Change: Six to 12 months before you're comfortable.
Speaker Change: Well, Andrew first of all about really appreciate the questions and the background I wanted to focus on the here and now and NSP in particular and and get Eric to comment on this as he is leading this across the across the firm's listen.
Speaker Change: We had such high expectations with NFU coming in in.
Speaker Change: They've really been exceeded on every front.
Speaker Change: This combination the independent and connected has worked exceptionally well from a client leadership standpoint, and Eric can give some examples of that the platforms have come together exceptionally well Aon business services is connected to.
Speaker Change: <unk> has been extraordinarily positive so from our standpoint.
Speaker Change: Really from a from a revenue standpoint, organic standpoint, and operating standpoint free cash flow standpoint as had been described feeling very good about the about the combination and all of this has come with it.
Speaker Change: So the $31 billion market. So from our standpoint. This has been absolutely terrific. It's eight months in is Edmond highlighted with a long way to go but my gosh are we making progress in every single aspect of this but Eric you are leading the day to day what are your thoughts.
Eric Anderson: Sure Gregg and Andrew nicely review I would say on the M&A piece on the historical context.
Eric Anderson: <unk> to what they have done historically, they've always been very specific as they look to bring firms into their platform. So.
Eric Anderson: The process in terms of what they've been doing historically and we've just been excited to see the opportunities that have come our way and a lot of it is about this independent and connected strategy that we've engaged both within our firm and also within the broader marketplace.
Eric Anderson: It is helping us identify M&A targets people that want to come to us that understand what we're doing around keeping the platform independent but connecting it with the capabilities that <unk> has.
Speaker Change: They had been in Greg both said.
Speaker Change: We saw some great growth across all three of their main core platforms, but maybe if I could just to describe it for you because I think it would help people to understand exactly what we mean by connected and when you think about it in kind of three buckets.
Speaker Change: Got the let's call it the utilization of our network.
Speaker Change: Just an example, what are the NLP clients as a major sports League where would they used our global Broking Center in London, accessing the Aon client treaty to get more capacity for a challenging renewal that they were facing.
Speaker Change: The other the second one would be industry and product specialization.
Speaker Change: As another example entity at a at a professional services client who they were working at the health Arena.
Speaker Change: And they were able to partner with our team that had a focus in that industry in the risk area and together, we're able to now provide risk capability services for that client.
Speaker Change: And then the third is sort of a cross risk capital.
Speaker Change: They have an MGA that needed reinsurance support and so we were able to use AI and reinsurance capability to help the MGA that is part of NXP get capacity and better reinsurance terms. So there's a lot happening the connection between the teams always hard to describe on a call like this but the work and effort and energy and positive intent.
Speaker Change: Around creating growth opportunities across the platforms has been as Greg said, it's exceeded our expectations and really looking forward to getting getting added in 'twenty five.
Speaker Change: Got it. Thank you and then my follow up question is around.
Speaker Change: Reinsurance solutions, I mean that 6% organic growth was great because it was really tough comps and one of the areas. You you called out was the ILS market, where Youre your number one and I think on the call.
Speaker Change: Maybe Edmond mentioned.
Speaker Change: Cat bonds.
Speaker Change: It seems like <unk> is really just proliferating <unk> cyber behind us now.
Speaker Change: How big of a business relative to the overall revenues.
Speaker Change: Reinsurance is ILS.
Speaker Change: Yes.
Speaker Change: Could that be a big driver of.
Speaker Change: Continued.
Speaker Change: Better than expected organic growth.
Speaker Change: So I would say the ILS business continues to be a very sort of boutique business.
Speaker Change: Within reinsurance in terms of the scale of the traditional reinsurance treaties on property cat and liability and specialty that you would know I think one of the interesting things about the ILS market that we're so excited about sort of fits underneath this risk capital framework the ability to bring that type of capability, whether it's cat bonds for property, whether it's cyber issue.
Mentioned over into the corporate space and being able to sit down with a large corporate client who has a huge real estate portfolio very diversified in their own right and have access to capital that is essentially driven by the ILS structure into the capital markets. Just gives them. Another another tool as they look to transfer risk across so.
Speaker Change: The insurers are obviously still users.
Speaker Change: <unk> continues to manage the tail risk what you would call a cat bond, but you are seeing interest in the corporate market on the primary market looking at those types of structures, whether in the form of a parametric bond or in ILS.
Speaker Change: Cat bond.
Speaker Change: And that's just one of the examples where the teams the reinsurance and insurance are working closely together, but had been what would you add yes, let me just add one point.
Speaker Change: Relative to the overall portfolio Andrew.
Speaker Change: Waller component, but it is driving growth in that part of the beauty of the reinsurance business, but overall as the broad based growth that we're seeing so we saw a contribution from the Io Securities. We saw contributions from our strategy and technology group. If you listened to my prepared remarks, you saw that I actually called that out first and <unk>.
Speaker Change: <unk> to our ongoing growth with the largest part of our reinsurance business in treaty and in fact as well so that dynamic is across each one of our solution lines, where it's broad based and we're seeing growth maybe incrementally in one area relative to the others, but at the end of the day. It comes back to me it comes back down to.
Speaker Change: Our ability to be able to retain these reinsurance clients and our ability to bring more capital solutions and other.
Speaker Change: Other options to the table for them to be able to drive that growth with our existing clients and bringing new clients to it. So that's the key thing when we think about the overall growth impact on profile for moving forward.
Speaker Change: Yeah.
Speaker Change: Thanks, much for the insights.
Speaker Change: Our next question is from the line of David motivated with Evercore ISI. Please proceed with your questions.
Speaker Change: Okay.
Speaker Change: Good morning, I had a question on some of the components for that mid single digit or greater outlook.
Speaker Change: Thanks.
Edmund Reese: Thanks, Edmund for for some of those I guess I'm wondering.
Edmund Reese: The zero to two points from the net market impact of rate and exposure.
Edmund Reese: Could you help me think through retention improvement efforts that might be a tailwind to growth as well as what you guys have assumed for a rebound in M&A services versus where it was in 2024.
Edmund Reese: Yeah Yeah.
Edmund Reese: Yeah.
Greg Case: Sorry, I think Greg was on mute, maybe saying something there soma jump in here on this and Greg are you backer.
Edmund Reese: Go ahead go ahead, sorry, sorry about that we were just having a little.
Edmund Reese: Difficult to get it's a great question like the components of your question was really on the retention. It was on the M&A services, but organic revenue growth overall, so just step back but the key thing for me first of all is that we just finished a strong quarter and a strong year, 6% organic revenue growth that gives me a lot of confidence that what we're doing to be able to drive it.
Edmund Reese: Across the broad base set of solutions that I just talked about is a strong position to be in year, one of our plan, but importantly, it's the momentum going into fiscal 2025, and that's where your question begins what are the drivers with that first for me. It really is the new business and from existing clients.
Edmund Reese: New clients in the trends there are healthy right. We just I think I said in my remarks, Q4 ended with 12 points of contribution in that space, including the M&A service, which is modest right now given where it is and.
Edmund Reese: Commented that you need.
Edmund Reese: Superior growth, maybe four times, the overall business to be a significant impact to our business and it's modest right now we're seeing a pickup there, but the trends are healthy 12 points of contribution from net new business, including M&A in Q4 10 points in the full year sort of 0.1.
Edmund Reese: I think as you think about your modeling and the things that is going to sustain our growth be aware of the priority hiring we specifically called out the double digit growth in construction, we called out or at least I'll call available of double digit growth that I saw and energy those are areas that we've been focused in hiring on and we're starting to see contribution from.
Eric Anderson: M as well that will support our mid single digit organic growth and then you just heard Eric just highlighting the strength of NLP over the first month and so that point that we made about $80 million in synergies that will also.
Eric Anderson: One of the things that strengthens and gives us confidence in that mid single digit growth I. Appreciate the fact that you brought up retention because we've been seeing strengthening retention, particularly in our commercial risk business, particularly in North America, given the work that Laurie and our leadership team in North America have been driving so I expect continued mid single 90.
Eric Anderson: Ninety's performance, there that will actually add the rollout of the ABS capabilities that Greg mentioned in his comments is also supporting that retention now market impact is the thing that moves up and down I think it's a reasonable Ah.
Eric Anderson: Assumption to have that it would be zero to two points impact this year here and I think the early signs that we see from things like one one renewals suggests that we're right in line with our plan here. So I'll just have super high confidence in margin.
Eric Anderson: Top line growth and maybe I'll, just turn it to Eric for any comments to that.
Eric Anderson: Sure I think it sort of goes into the talent question in terms of as you mentioned and that would be specific hires that we're making in the growth areas around energy around construction around middle market, where I think the culture and the message in the analytic tools that we are developing for clients is actually drawing talent in but when you think about the go back to that.
Eric Anderson: Tension question. The reality is getting our 65000 colleagues, making sure that they are well trained well supported ego through industry specialization.
Speaker Change: Segmentation all of that provides a better outcome for our clients. So when you think about the team and its expertise and you match. It with the tools that are being developed in ABS, followed by the service capabilities all of that delivers the client experience that we're looking for for them and that comes across in the three by three strategy that Greg was talking.
Speaker Change: You're about in his opening remarks, so I think when you put all that together getting that strong foundation client retention is the key to growth.
Speaker Change: That is Q2 sort of long term value creation for clients.
Speaker Change: Great. Thanks, and then maybe admin you had just following up there on you had commented that you're seeing strengthening retention.
Speaker Change: In North America.
Speaker Change: Within commercial risk.
Speaker Change: Is that back or is that sort of at historic levels below historic levels.
Speaker Change: Their continued room for improvement there specifically.
Speaker Change: Yes, just as just to get back to where we were historically or some some elaboration on at that point it would be helpful.
Speaker Change: Sure. Maybe this is Eric I'll take that one there is always room for improvement in retention and fill at about 100%. So we're maniacally focused on making sure. We are keeping all of our clients and serving them all well.
But to get to your direct question of is it back towards historical norms. The answer to that is yes.
Speaker Change: But we are looking.
Speaker Change: Never satisfied with historical norm, we're always trying to improve which is what's driving the and when you think about the three by three strategy and the risk capital Human capital framework. That's one of the reasons, we did it the ability to show a client the global capability around.
Speaker Change: Capital.
<unk>, it's the ability to connect the global network and talk about talent and helping well together to provide more value to clients and then powered by a series of tools and capabilities that are unmatched in the industry that you put that around segmentation strategy in an industry focus strategy and that's a winning formula for us.
Speaker Change: Not only for clients, but for perspective people to join the firm and so we feel good about the progress. We've made on 24, there's always work to do but we feel good as we're going into 'twenty five.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question.
Elyse Greenspan: Hi, Thanks. Good morning. My first question is on commercial Wes can I guess.
Elyse Greenspan: Set up into the Q1 right. We've had a couple of brokers that are flat I guess seasonally softer Q1.
Speaker Change: In our retail brokerage business is but I would think for you guys.
Speaker Change: Some of the items, you mentioned admin like hiring coming online et cetera.
Speaker Change: But also you guys have an easier comp. So do you think does that.
Speaker Change: Setup for Q1 theme seasonally stronger in commercial risk.
Speaker Change: Lease over lease.
Speaker Change: Yeah.
Speaker Change: Right.
Speaker Change: I think overall lease.
Speaker Change: <unk>.
Speaker Change: There's nothing about our Q1.
Speaker Change: To highlight.
Speaker Change: In terms of seasonality the things that I'd point out within our guidance or just on.
Speaker Change: On the top line the FX impact that I pointed out in my prepared remarks.
Speaker Change: When we think about the interest rate impact of fiduciary.
Speaker Change: Investment income, which doesn't impact organic but it does happen.
Speaker Change: Impact on total revenue those are the only two things that I would say our out of.
Speaker Change: Out of normal sort of performance in Q1 other than that Theres nothing that I would highlight about our seasonality our performance there.
Speaker Change: And I captured it very well.
Speaker Change: Stepping back for a second if you think about overall, where we are from a growth standpoint.
Speaker Change: We are very committed to the mid single digit or greater as you think about 2025 across the board again just to come back why on a macro level look we operate in a very diverse market.
Speaker Change: Across risk retirement health talent and that includes on the commercial restaurant the markets. If we said are growing.
Speaker Change: Literally these megatrends.
Speaker Change: We've talked about on various calls around trade technology, well whether in workforce are meaningful they are real our clients are seeing them every day I remember the market is still relatively underpenetrated and you take all of that and you essentially say demand is increasing and we've got to be able to react to it to react to it requires a connected response.
Speaker Change: And all that we're doing with <unk> advisory so literally we're going to show up on Monday, and the property symposium.
Speaker Change: Miami, it's going to be 500 clients strong the entire property market is going to stand still for three days, what's the biggest buyers in the biggest markets in the world sitting here looking at the next iteration of our analyzer tool on the property side and really talking about their strategies on property. So for us, it's really about demand and how it's evolved and about archive capability to respond.
Onto it and why we're committed to achieving the mid single digit or greater and expect that through 2025.
Speaker Change: Thanks is the 45 to 60 million of EBITDA and then M&A from MSP that you mentioned admin is that included within your 2025 guidance.
Speaker Change: Yes, yes. It is both on the revenue impact associated with that is captured in the margin and the overall earnings growth as well so all of that is about it.
Speaker Change: And then one last one on <unk>.
Speaker Change: Sorry go ahead.
Speaker Change: No go ahead I'm sorry, it was go ahead.
Speaker Change: On the $1 billion you guys gave the buyback for 25, and you said, you'll kind of be within your leverage target at the end of the year. So we could we should we expect that maybe we could see a step up in.
Speaker Change: Share repurchase in 2006.
Speaker Change: Just given that you'll be done with leverage management actions post NFC.
Yeah, So I'll start off.
Speaker Change: If I say capital free cash flow generation in particular was a point of strength for us in 2024, right. We are certainly focused on continuing to generate strong free cash flow in 2025, thats going to come from the operating income is going to come from the earnings.
Speaker Change: Going to pay down the debt get to the leverage ratio and be focused on that we think that allows us to have capacity as we think about the pipeline that we have an M&A right now and still return that capital.
Speaker Change: In 25 to shareholders as we get through 'twenty, five but closer to the 2026 will come in.
Speaker Change: Guidance on that point more with more detail.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Jimmy <unk> with Jpmorgan. Please proceed with your question.
Speaker Change: Hi, first of that just had a question on your financial guidance. It seems like Youre fairly specific on organic growth and on cash flows, but somewhat vague on EPS growth. So just trying to think about what strong EPS growth means does it mean double digits or.
Speaker Change: If not then just maybe highlight some of the key points that could make it would be double digits or fall short of that yeah and in fact, I think that the.
Speaker Change: The guidance that we gave is quite detailed when you when you tick through it.
Speaker Change: And as we get it we gave detailed guidance because we have such high confidence in the plan. So I just talked about the organic revenue growth component and if you think about what I said in the prepared remarks about margin expansion, that's quite detailed for components that should net.
Speaker Change: 80% 90 basis points of margin expansion. So that gives you a sense there on the operating side of the business we've talked about.
Speaker Change: Revenue growth I gave you four items, that's quite clear on the margin.
Speaker Change: Spansion that should net to 80 90, 80% to 90 basis points, which is right in line with our historical performance to continue with Etfs I think there are a couple of other things to keep in mind. The nonoperating items. The FX impact of 32 cents for two points headwind the oi impact from pension.
Speaker Change: That drives into it and you should be able to get depending upon your assumption for mid single digit organic revenue growth.
Speaker Change: Greater organic revenue growth you should be able to get to an adjusted EPS number. So again I think that is quite detailed guidance.
Speaker Change: We have a high level of confidence in that plan the guidance corresponds with it. So we're excited to continue to execute and we think we're right on track to be able to hit our 2025 and our overall three by three objectives.
Speaker Change: And Jimmy just if I could add to that a little bit first I, just I do want to step back and what's the point around.
Speaker Change: The insight and the guidance provided.
Speaker Change: We've completed the year.
Speaker Change: <unk> is a substantial step up for Moreover, foresaw credits Edmund and the finance team for bringing that perspective and view. It really does help you decompose in a more effective way and as I've mentioned in his comments.
Speaker Change: As intended fully to give you more confidence in our ability to continue to maintain would've been a decade long trends in terms of operating improvement.
Speaker Change: You see that you do step back think about at all the different challenges and opportunities that have been set up.
Speaker Change: Encountered those for the last for the last decade, plus and if you think about it it's 11% free cash flow growth and 11% EPS growth over a decade plus in the context of movements in FX and movements in interest rates and movements in inflation and movements in the market.
Speaker Change: And so we wanted to give you as much transparency as we can but.
Speaker Change: Be confident we're going to work to play.
Speaker Change: What we do to drive.
Speaker Change: And colleague impact, but the yields and outcomes around financial performance.
Speaker Change: And Thats, what Youll see us see us too.
Speaker Change: And then maybe a follow up on your long term strategy for share buybacks or is there a change going forward than what you've done in the past I guess in 2025.
Speaker Change: You are sort of gonna be deleveraging, but beyond that should we assume that you're going to be.
Speaker Change: Fairly consistent in terms of deploying capital towards buybacks or is the balance going to be more shifting to for M&A or other.
Other uses.
Speaker Change: Listen I want to comment on that specifically, but just for backdrop step back Jimmy remember our view, we're focused on clients and colleagues with an outcome and a yield that comes out of that is driven by free cash flow and free cash flow growth.
Speaker Change: And Thats, the 11% number for the decade, plus part of that is capital allocation absolutely central. So your question is exactly right, but step back and understand our orientation is what it has always been.
Speaker Change: Return on invested capital cash on cash return, we're making allocations inorganic we're making allocations in buyback and M&A and building the strength of our firm and in doing so we're going to we're going to drive the yields that I. Just described so for us that has it changed at all and we'll continue to evaluate and drive what we do based on that.
Speaker Change: And what we hope you come away with is a renewed enthusiasm for what the three by three plans done for that investment and risk capital and human capital.
Speaker Change: <unk> real opportunity for us enterprise clients and client leadership for its real opportunity for US and then really ABS is such a unique asset that we have cultivated for seven plus eight plus years that is now really coming online as part of the three by three plant all of which is we think going to generate extraordinarily strong free cash flow again.
Speaker Change: First by NSP, so from our standpoint, we've got a lot to do with a great free cash flow pool coming online and we will take the same approach we've always taken in the context of overall allocation.
Speaker Change: Things come along but I mean, what would you add to that you're coordinating this and orchestrate not much Greg because I think you hit it when you said theres been no change to the capital allocation policy right. Here. We are to your point very much focused on investing for growth and capital returns to shareholders and having that balance right. So in 2025, we're clearly going to be folk.
Speaker Change: Just on getting back to the leverage objectives that we want but we think the free cash flow strength gives us capacity to evaluate weight the right opportunities that meet our strategic criteria and meet our financial criteria and if not returning that capital back to shareholders that has worked.
Speaker Change: For our shareholders and benefited our shareholders long before I came here. So we're certainly not changing that.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question is from the line of Mike Zaremski with BMO capital markets. Please proceed with your question.
Charlie: Hey, Good morning, this is Charlie on for Mike.
Charlie: First question does the tax rate guidance contemplate.
Charlie: Our ACD pillar two agreements.
Charlie: While uncertainty around tax rates there in the coming year.
Charlie: Yes, there is there's always uncertainty around tax, but let me just maybe step back and the short answer to your question that it is.
Charlie: It contemplates what we know today.
Charlie: Obviously this is an environment that is changing.
Charlie: So it contemplates what we know today when you step back though the complexity of operating in 120 countries. Our tax rate really just comes down to.
Charlie: Growing in those higher tax geographies.
Charlie: Germany's at three 3% Australia is at 30%, Canada is at 27% the impact of discrete says a number two item in there is a long tail for the impact of tax returns from prior years and recently the policy changes like the ones that you were just mentioning the complexity, though in calibrating those three items.
Charlie: <unk>.
Charlie: Over a multiyear time periods that complexity is real but to a point that Greg made earlier, we took some extra time, we've talked through the scenarios because we have an objective to getting to a target range for tax that we're confident in and that we'd feel comfortable sharing externally and that range is $19 <unk>.
Charlie: 25%, which is right in line with 2024 and captures all that we know today. The key point from my perspective is that allows us to continue to grow internationally, which means more resilient earnings for us and that tax rate still allows us to invest so we feel comfortable with that range given all the work that will that we've done and what we know today.
Charlie: If more reveals itself will come back and let you know.
Charlie: And Charlie just reinforces the if you think about historically our capability.
Charlie: On the balance sheet capital side, and what's happening in this category too it's been very very strong and with Edmund and the team have done.
Charlie: It's really provided a level of clarity.
Charlie: With a 19, 5% to 25.
Charlie: Our guidance for 2025, which is which is a first for us really it gets it gives you a way to kind of think about the modeling of this with the best reflection of we've got reflecting historical strength and our ability to adapt as the world continues to evolve you've highlighted where it might evolve and we'll see how it plays but for now we're very.
Charlie: Comfortable with this and again.
Charlie: Kudos and credit to two or.
Speaker Change: Our broader finance team on the work they did to pull this off and get this in front of you.
Speaker Change: Okay. Thanks, that's very helpful.
Speaker Change: Maybe just going back to free cash flow growth this year.
Speaker Change: Could you go through some of the puts and takes I think you have more.
Speaker Change: Accelerating and United spend ahead of you.
Speaker Change: Maybe you have some integration costs that don't recur I think there was a legal settlement this year, but.
Speaker Change: Any other items.
Speaker Change: Items, we should be thinking about in the context.
Speaker Change: The double digit free cash flow guide.
Speaker Change: What you did a you did a great job of hitting the items, maybe just to round. It all out. So obviously the operating income growth the working capital I start with those two items you hit the extraordinary items when you talked about the integration charges.
Speaker Change: That is winding down, but theres still some impact from that of course, we don't have the legal expense charge that you talked about and there will still be.
Speaker Change: Aon United charges remember when the team gave information on that we said roughly about right.
Speaker Change: About $410 million between 25 and 26, when you think about the overall $900 million that we have the all the key item I'd add to what you said is the P contribution we committed to $300 million in 2025.
Speaker Change: And a free cash flow from that and so I would think about that as well put all of those items together is what gives us high confidence in the double digit growth in 2025.
Speaker Change: And Charlie remember.
Speaker Change: Take a step back for a second we began three by three.
Speaker Change: As you think about where we close 2023 and.
Speaker Change: And we have essentially said we are committed to double digit growth from 2023 to 2026 and beyond.
Speaker Change: But the three by three period was $24 25, and 26%. So as you sort of think about the puts and takes in the middle if you want to make the math simple step back look at the baseline from 'twenty to 'twenty three think about what double digit means and we are absolutely committed to that outcome as we as we finish 2026 with momentum going into 2027 and beyond.
Speaker Change: So it's an easy way to kind of step back and really understand where we are and how we think about free cash flow growth and it absorbs all the puts and takes sort of in the middle to make that happen so be confident in that and what Edmunds described is what happened in 2024, just reinforced that confidence as we think about double digit from from 'twenty three.
Speaker Change: The 26 and beyond.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Last question comes from the line of Rob Cox with Goldman Sachs. Please proceed with your questions.
Rob Cox: Hey, Thanks, good morning.
Speaker Change: And thanks for the comments on the construction and energy hires admin.
Speaker Change: Correct me, if I'm wrong, but I think you said, 4% growth in specialty revenue generating roles or something similar.
Speaker Change: How does that translate into the organic increase in talent for.
Speaker Change: Revenue generating roles and overall risk capital.
Speaker Change: And if you could talk about how that compares to <unk> history, and sort of what you expect going forward.
Speaker Change: Rob I don't I don't think we're going to end up going sort of into all those details ticket step back what you take away from this is where we are investing in priority areas and it is it's the pieces that have been highlighted around energy construction. It's also in health in a number of other areas very very very high priority areas for us and we're going to continue.
Speaker Change: To do that you've seen them begin to come online.
Speaker Change: Scribe. It takes some time here 12 months to 18 months, but they are coming online, but this isn't a onetime thing for us what happens described as a machine in an engine, which generate free cash flow, we're going to continue to allocate to priority hires.
Speaker Change: In frontline areas that matter for us and also remember when somebody comes into Al. This is not about just another person on the line, we want them to have content capability the tools to actually amplify what they do is they come in and Thats really what the analyzers gave us and the service gives us an ABS gives us so for US. This is a this is a priority I highlighted.
Speaker Change: Eric emphasized that as well it will continue to sort of reinforce it isn't fully online now, but you'll see it coming over the course of the next 25 and $26 27 and beyond that it works I think about it it's still relatively small in the scheme of things, but it's not it's not it's meaningful.
Speaker Change: In terms of sort of the 4% addition to sort of overall capability and you see that by the way in risk capital in reinsurance and commercial risk in priority areas you see it in health.
Speaker Change: In retirement and talent in the priority areas too. So it really is across the board and we're going to continue to drive this on an ongoing basis.
Speaker Change: Thanks.
Speaker Change: Helpful and then as a follow up I wanted to switch to reinsurance.
Elyse Greenspan: I know you guys called out the lower reinsurance rate impact in the quarter, but we're still able to strongly outgrow that if I recall correctly Aon is overweight property reinsurance because of benfield.
Elyse Greenspan: Do you think reinsurance solutions can continue to grow at similar levels as we get into the bigger revenue quarters that are more driven by treaty renewals.
Elyse Greenspan: I would say.
Elyse Greenspan: Certainly our ability to grow globally, it's truly a global business is something that team has been very focused on certainly for the last five years that we continue to be optimistic about the future of reinsurance as we go into 2025, both on the property Cat space as you mentioned, but also in what we do for casualty and specialty and facultative and.
Elyse Greenspan: Strategy and technology is really become a full are you fully built portfolio of capability not just property cat. So you should think about it is broader offerings are broader capabilities than just than just property catastrophe certainly there is some market impact as youre alluding to and I think.
Elyse Greenspan: I would just say that you saved clients clients react to declining markets differently.
Elyse Greenspan: Their ability to do buy downs aggregate cover sideways covers top up programs, where they may have pulled back a bit based on pricing. So it's a pretty dynamic market and clients.
Elyse Greenspan: To optimize their portfolios as they look at the amount of spend there.
Elyse Greenspan: But we're excited about it going forward.
Rob Cox: And Rob only one point to add which is embedded in our <unk>.
Speaker Change: Planned in our guidance that we gave are these dynamics that Eric is discussing with the weighting of the portfolio and what happens on the rate and exposure side associated with it so with all of that in mind, we feel very confident in the mid single digit or greater organic revenue growth is where I would leave you at that point.
Speaker Change: Great. Thanks for all the color.
Speaker Change: Thank you I would now like to turn the call back over to Greg case for closing remarks.
Speaker Change: Just wanted to thank everyone for joining us on the call today, we appreciate it and look forward to the next quarter.
Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.