Q1 2025 Aon PLC Earnings Call
Speaker Change: Good morning, and thank you for holding. Welcome to Aon PLC's first quarter 2025 conference call.
Speaker Change: So this time, while parties will be in listening 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.
Speaker Change: 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 that differ materially from historical results or those anticipated. Information concerning risk factors that could cause such differences are described in the press release covering our fourth quarter 2024 results, as well as having been posted on our website.
Speaker Change: Now is my pleasure to turn the caller into great case. CEO , Aon PLC.
Greg Case: Good morning and welcome to our first quarter earnings call. I'm joined by Edmund Reese, our CFL. As in previous quarters, we posted a detailed financial presentation on our website, which Edmund will reference in his remarks.
Greg Case: We want to start by acknowledging our colleague and friend, Eric Anderson. We announced last month that Eric Prindition from this role as president to serve as a senior advisor.
Greg Case: And in this 28 years with Aon, Eric played a significant role in advancing our Aon United strategy and he's been on leader hoping to execute our three by three plan to deliver more value to our clients and position Aon for continued growth.
Thank you, Eric, for your leadership and friendship. Thank you.
Greg Case: With this organic growth and the addition of NLP, we delivered 16% total revenue growth of 38, 4% margin contributed to 12% adjusted operating income growth and adjusted EPS of $5 67.
Greg Case: And finally, we generated 80 million free cash flow and returned $397 million in capital to shareholders, notably.
Greg Case: Notably, we also announced that we're increasing our quarterly dividend by 10% the 15th consecutive year of dividend growth.
Greg Case: The quarter's strong operating performance marks the start to 2025 on track and right in line with our expectations.
Greg Case: Importantly, we achieved these results in an unpredictable and turbulent business environment that is creating greater complexity for our clients.
Greg Case: Within the four Megatrends that we referenced trade technology, whether in workforce trade is currently and clearly top of mind.
Greg Case: Today tariffs have had limited direct impact on our business and financial results.
Greg Case: Over the medium term, while there could be impact to client discretionary spending we believe the demand benefit is also meaningful given the trust we have established with our clients positioning us to support and help them adapt to new trade rules.
Greg Case: And to mitigate risk and capture new opportunities.
But for many clients tariffs of challenge the global landscape closing a significant risk.
Greg Case: And against this challenge we are army clients with real time insights they need to make better decisions. A few examples include using our supply chain risk diagnostic tool to advise clients on effectively diversifying are reconfiguring their supply chain operations.
Greg Case: We're tailoring credit solutions like political risk insurance surety bonds and trade credit insurance advising on human capital issues like restructuring employee stock grants further our expertise in abf's capabilities are helping clients fortify their operations to maintain stability despite trade disruptions ulta.
Greg Case: Ultimately, our unique and connected capability and the increased complexity of the global trade environment is driving demand for Ams advice and solutions.
Greg Case: Yeah.
Greg Case: On our Q4 call we highlighted that on the back of strong performance in year, one of our three by three plan. We were entering 2025 with great momentum and we've continued to execute in the first quarter using ABS capabilities to expand with and better serve clients attracting client facing talent priority areas and utilizing exceptional Nf.
Greg Case: Capability to accelerate middle market growth, which today reached the one year anniversary as part of AI and.
And specifically on MSP, we couldnt be more thrilled job MSP as part of the Aon family.
Greg Case: As we reflect on this year one milestone we would highlight that the business continues to perform in line with high expectations. Our progress guided by the principle of independent and connected is right on track producer retention continues to be higher than pre deal on the NFC acquisition engine continues to add high quality middle market EBITA.
Greg Case: Through targeted acquisitions with a strong pipeline for the remainder of 2025.
Greg Case: This quarter is a testament to the power of the combined NXP and al as we absorbed the peak impact of an increased share count from the transaction.
Greg Case: With the acquisition now annualized we expect <unk> contribution to become even more meaningful as we progress through 2025.
Further on the important people front, we made significant progress on our talent and investment by hiring in priority areas like construction and surety colleagues are choosing aon because they see the power of our capability and connected firm enabled by a b S to win new clients and better serve existing clients.
Greg Case: Finally connect all the dots with one specific client example, we expanded our relationship with a major risk capital client, who is facing soaring health care costs due to high cost climates, we want their human capital mandate, using our health risk analyzer to provide insights and predictive analytics on our clients' future claims helping them manage both their risks and benefits budge.
Greg Case: In this example highlights the strength of our three by three plan to drive financial results.
Greg Case: As we look ahead, while it's clear we're operating in a complex economic environment, we remain confident in the resilience and strength of our business and financial model we.
Greg Case: We have a track record of sustained performance across both markets recessions economic shocks and changing political landscapes and in fact, our integrated solutions and Aon United strategy bring differentiated and substantial client benefit in periods of greatest uncertainty we view the current environment as an opportunity to further strengthen our client relationships and reinforce.
Greg Case: Aon as a trusted advisor.
Greg Case: In our daily interactions with clients, we have not seen a pullback in demand rather we see an increase in clients looking for guidance and offerings to navigate the increasing complexity of their business challenges and as a result.
Greg Case: We are reaffirming our 2025 full year guidance, including mid single digit or greater organic revenue growth.
Greg Case: Margin expansion strong earnings growth and double digit free cash flow growth.
Greg Case: To summarize we want to reiterate our conviction about the opportunity ahead.
Greg Case: But he owns advice and solutions are even more valuable to clients as they navigate increased complexity in their businesses.
Greg Case: We continue to see momentum across our business from the high quality talent, we're attracting to aon to the progress, we're making to attack the $31 billion middle market opportunity the major wins with both new and existing clients and we remain on track to deliver against our 2025 financial goals.
Greg Case: Of course, none of this would be possible without our global team we want to thank our 60000 colleagues around the world for their commitment to excellence and innovation your extraordinary leadership and hard work is what enables us deliver for our clients and.
Greg Case: And finally and to focus further on our long term strategy and opportunity. We hope you can join us for our Investor Day on June nine Evan and I and the senior executives, leading our three by three plan and look forward to sharing details about aon United is a powerful asset how we'll continue to drive sustainable long term growth and create value for our shareholders.
Greg Case: Promises to be a very productive about now I'll turn the call to Edmund for more detailed review of our financials and outlook.
Edmund Reese: Thank you, Greg and good morning, everyone.
Edmund Reese: I'm excited to be here discussing the results for the first quarter of 2025.
Edmund Reese: Before jumping into the details it's important to filter the quarterly noise, both within our first quarter results.
Edmund Reese: And within the uncertainty of the broader macroeconomic environment.
Edmund Reese: The size of the signals from Q1.
Edmund Reese: That reinforce our confidence in the fundamentals of our business and financial model.
Edmund Reese: Supporting our full year 2025 guidance and ongoing long term growth.
Edmund Reese: First our Q1 performance underscores our commitment to making the investments that support sustainable mid single digit or greater organic revenue growth.
Edmund Reese: Vesting and hiring in client facing talent.
Edmund Reese: Strengthening and accelerating our ABS capabilities and increasing our aon client leaders to expand with our existing clients organic revenue growth reached 5% for the quarter with retention trucking one point better than Q1 dollars 24 in market impact.
Edmund Reese: Rising and exposures, reflecting some pressure, but slightly better than our expectations and still within our estimated range.
Edmund Reese: Second relentless execution on our accelerating Aon United restructuring program.
Edmund Reese: Notably and ABS is creating 85 basis points of margin expansion in the quarter.
Edmund Reese: Creating capacity to fund the investments that I, just referenced and strengthening the foundation for ongoing operating leverage from scale benefits.
Edmund Reese: Third we continued our balanced capital allocation discipline.
Edmund Reese: Remaining on track to meet our leverage objective, while simultaneously continuing our middle market tuck in acquisition to drive growth.
Edmund Reese: And returning $397 million in capital to shareholders through the dividend and share repurchases.
Edmund Reese: Additionally, our continued focus on portfolio management positions us to further strengthen our capital position double down on growth in our core business.
Edmund Reese: Stay healthy capital returns to shareholders.
Edmund Reese: So the drivers of full year 2025 growth.
Edmund Reese: Investing for sustainable organic revenue growth.
Edmund Reese: <unk> margin expansion and our strong capital position remained stable.
Edmund Reese: And we are executing our plan.
Edmund Reese: Spite the uncertainty in the macroeconomic environment and the noise in the first quarter, specifically from FX given the dollar is 3% to 7% stronger than it was in Q1 24, where we have currency exposure.
Edmund Reese: Months of additional impact on margin from in that Pete.
Edmund Reese: Higher interest and shares driven by the acquisition of <unk>.
Edmund Reese: All items that we communicated as part of our 2025 guidance.
Edmund Reese: We have a high level of confidence in delivering on our financial objectives and achieving full year results in line with our 2025 guidance.
Edmund Reese: So now turning to the first quarter results and the financial summary on slide six.
Edmund Reese: Total revenue increased 16% to $4 7 billion.
Edmund Reese: We delivered 5% organic revenue growth in the quarter.
Edmund Reese: Adjusted operating income margin was 38, 4% down 130 basis points as we recognize the impact of in that team and the Q1 2005 results.
Edmund Reese: Adjusted EPS was $5 67, reflecting the impact of higher interest and shares.
Edmund Reese: And finally, we generated 84 million and free cash flow.
Edmund Reese: So let's get into the details of these results starting with organic revenue growth on slide eight.
Edmund Reese: Organic revenue growth reached 5% in Q1 2025.
Edmund Reese: <unk> to be in line with our mid single digit or greater guidance range.
Edmund Reese: In commercial risk organic revenue growth was 5% with the biggest contribution coming from our international P&C business is.
Edmund Reese: Additionally, the growth reflected continued strength in our north American core P&C business.
Edmund Reese: While deal activity was slower than expected when entering the year, we had a modest tailwind from M&A services relative to Q1 'twenty four.
Edmund Reese: Reinsurance with 4% organic revenue growth was driven by growth in treaty placements in double digit growth in both facultative placements and insurance linked securities.
Edmund Reese: This growth was partially offset by the impact of a multiyear extension with a significant client at higher limits and adjusted Commission.
Edmund Reese: Looking ahead to the second quarter, we expect softer market conditions was April one property rates in both the U S and Japan down 5% to 20%.
Edmund Reese: Importantly, we expect full year organic revenue growth in line with our mid single digit or greater objective as we see a strong second half driven by higher limits at July one renewals.
Edmund Reese: Growth in our international facultative placements and strength in our strategy and technology group.
Edmund Reese: Health solutions also delivered 5% growth.
Edmund Reese: Driven by a double digit increase in our core health and benefits business, which was particularly strong in our international markets.
Edmund Reese: The growth was fueled by net new business and market conditions that continue to stimulate rising health care costs and.
Edmund Reese: And talent, we saw high single digit growth in our advisory business offset by lower data analytics sales, which were impacted by our data delivery schedule.
Edmund Reese: We still expect our talent business to deliver mid single digit or greater full year growth.
Edmund Reese: And finally well.
Edmund Reese: <unk> was our highest growing solution line in the quarter.
Edmund Reese: <unk>, 8% organic revenue growth, primarily driven by an S T asset inflows and market performance.
Edmund Reese: And continued regulatory work across the U K and EMEA.
Edmund Reese: Note that in the second quarter, we will be growing over an elevated Q2 2024.
Edmund Reese: Our Q1 organic revenue growth continued to be powered by new business, which contributed nine points from both existing and new clients.
Retention was one point better than a year ago with commercial risk steadily improving as we deploy our risk capital analyzers supporting our net new business contribution of four points to organic revenue growth.
Edmund Reese: The net market impact, which measures the impact of exposures and rate contributed one point to organic revenue growth squarely within our zero to two point estimated range.
Edmund Reese: Reinsurance was flat as rate declines were mitigated with increased sideways coverage and rate pressure in commercial risk was offset with limit and coverage increases across our book.
Edmund Reese: Although the well had positive net market impact as we continue to see increasing costs in health and positive market impact and wealth.
Edmund Reese: And one final point on revenue.
Edmund Reese: First quarter fiduciary investment income was down 15% versus last year to $67 million as the increase in average balances was more than offset by lower interest rates. As a reminder, would not include fiduciary investment income and our organic revenue growth calculation.
Edmund Reese: On slide nine adjusted operating income was up 12% for the quarter to $1 8 billion.
Edmund Reese: Adjusted operating margin was 38, 4% in the first quarter inline with expectations and down from 39, 7% in Q1, 'twenty four reflecting the impact of the <unk> acquisition, which closed in late April 2024, as well as the interest rate impact on the investment income.
Edmund Reese: Fiduciary balances.
Edmund Reese: Adjusted operating margin continued to benefit from the scale in our business, particularly through Aon business services.
Edmund Reese: And from a restructuring initiative to accelerate our three by three plan.
Edmund Reese: Specifically restructuring savings in the first quarter were $40 million, which contributed approximately 85 basis points to adjusted operating margin.
Edmund Reese: Looking ahead.
Edmund Reese: We continue to expect $150 million of savings for the full year 2025.
Edmund Reese: And are well on track to achieve our stated goal of $350 million of run rate savings in 2026.
Edmund Reese: Our organic revenue growth and the actions we are taking through Aon business services to standardize our operations and integrate our platforms are creating capacity to fund our growth investments.
Edmund Reese: Setting the foundation for ongoing margin expansion through operating efficiencies and scale of our business.
Edmund Reese: We remain committed to driving full year adjusted operating margin expansion of 80 to 90 basis points in 2025.
Edmund Reese: Moving to interest other income and taxes on slide 10.
Edmund Reese: Interest income of $5 million was $23 million lower than last year. When we earned interest on funds utilizing the <unk> acquisition.
Edmund Reese: We expect interest income to be negligible in Q2 dollars 25 compared to the 31 million in Q2 24.
Edmund Reese: Interest expense of 206 million was up $62 million versus last year, reflecting 7 billion and higher debt driven by the <unk> acquisition.
Edmund Reese: We expect $209 million of interest expense in Q2 25.
Edmund Reese: Other expense increased 23 million year over year, primarily due to higher noncash pension expense.
And finally, the Q1 tax rate was 29%.
Edmund Reese: 160 basis points lower than Q1, 'twenty four reflecting the geographic mix of income growth and the favorable impact of discrete items.
Edmund Reese: Our tax guidance for the full year remains at 19, 5% to 25%.
Edmund Reese: Turning now to free cash flow and capital allocation on slide 11.
Edmund Reese: We generated $84 million of free cash flow in Q1, reflecting strong operating income growth and DSO improvements, partially offset by higher incentive interest and restructuring payments.
Edmund Reese: We continue to expect double digit free cash flow growth in 2025.
Edmund Reese: And a double digit three year CAGR on free cash flow from 2023 to 2026.
Edmund Reese: In the quarter, our leverage ratio was three five times and we continue to be on track to achieve a two eight to three times leverage ratio in Q4 of 2025 <unk>.
Edmund Reese: Consistent with the objective that we set when we announced the <unk> acquisition.
Edmund Reese: Additionally, we remained active in M&A continuing.
Edmund Reese: Continuing our targeted tuck in acquisitions across priority areas.
<unk> middle market acquisitions through N P, which acquired 19 million in EBITDA in Q1.
Edmund Reese: Pipeline remains strong, especially with opportunities in commercial risk.
Edmund Reese: And we continue to expect to acquire $45 million to $60 million of EBITDA in that piece.
Edmund Reese: Middle market acquisitions in 2025.
Edmund Reese: Finally, we returned $397 million in capital to shareholders through the dividend and $250 million in share repurchases in Q1.
Edmund Reese: Additionally, and as Greg mentioned in April we increased our quarterly dividend by 10% to 74 per share.
Edmund Reese: Marking 15 consecutive annual dividend increases, reflecting the strength of our business and financial model and our confidence in achieving double digit free cash flow growth.
I will conclude my prepared remarks on slide 12, with our 2025 guidance and some final thoughts.
Edmund Reese: The first quarter of 2025 performance signals the start to the year that was right in line with our expectations.
Edmund Reese: We are executing our three by three plan and have momentum is being reflected in our first quarter results.
Edmund Reese: Removing the noise and elevating what matters for full year 2025 guidance, let me highlight the following.
Edmund Reese: We achieved 5% organic revenue growth in the first quarter meeting our objectives. So we are reaffirming our mid single digit or greater 2025 full year guidance for organic revenue growth.
Edmund Reese: We continue to get scale benefits.
Edmund Reese: We are achieving our restructuring goals and we continue to actively manage the portfolio. So we are still expecting and reaffirming 80 to 90 basis points of margin expansion for the full year 2025.
Edmund Reese: We also continue to expect strong earnings growth for the full year and I will note that we are excited.
Edmund Reese: But today marks the one year anniversary of the N F. P acquisition and as a reminder, the late April 24, close will impact Q2, 'twenty five margin and earnings just as we expected.
Edmund Reese: For modeling purposes, we are estimating 15% to 18% adjusted EPS growth in Q2 25.
Edmund Reese: And finally, our earnings growth, including NSP will contribute to double digit free cash flow growth in 2025, and the double digit three year CAGR for 'twenty three 'twenty six.
Edmund Reese: Our guidance demonstrates the strength and resiliency of our business and financial model.
We are prioritizing investments that support sustainable organic revenue growth.
Edmund Reese: Our execution in Aon business services supporting top line growth, creating investment capacity and delivering margin expansion.
Edmund Reese: We expect to deliver strong earnings per share growth and to generate double digit free cash flow growth.
Edmund Reese: And we continue to have disciplined capital allocation balancing between high return growth investment and capital return to shareholders.
Edmund Reese: Finally, as Greg mentioned, my 60000, plus colleagues and I are excited to host an investor day on June nine a first in 20 years and I look forward to your participation.
Rob: So with that Rob, let me hand, it back to you and we'll jump into questions.
Edmund Reese: Thank you.
Rob: They have been conducting a question and answer session.
Speaker Change: Like 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.
Rob: You May press star two if he like to withdraw your question from the queue.
Speaker Change: For participants that are using speaker equipment may be necessary to pick up your handset before pressing the star keys.
Rob: One moment, please we poll for questions and Thats Star one thank you.
Rob: Thank you and our first question today is from the line of Andrew Klingerman with TD Securities. Please proceed with your questions.
Andrew Klingerman: Hey, good morning.
Rob: So.
Speaker Change: You just edman just mentioned a one year kind of anniversary of having acquired an M. P.
Rob: Sounds like things are going really well there.
Speaker Change: Now that you've got this year under your belt.
Speaker Change: How are you feeling could you give us a little color on the M&A pipeline.
Speaker Change: I know in the <unk>.
Speaker Change: Slides it mentions that it's robust.
Speaker Change: Any.
Speaker Change: <unk> could you do a big acquisition, if you feel that there is the right one out there I mean, how are you thinking about M&A for NSP as we move into through 25 2025.
Andrew Klingerman: Andrew Thanks for the question and I'm really looking forward to this one.
Andrew Klingerman: Step back the overall capital allocation piece and as we can comment on this as well is really what drives what we do drives everything around capital allocation, we're always looking for opportunities to strengthen the firm.
Andrew Klingerman: And reinforce what we do from a return on invested capital standpoint, and the good news is I'll tell you. It's been a it's been a great year with NLP, it's been terrific to have them as part of the overall Aon family a lot of good things happening in the middle market with lots of opportunities. There as you are indicating and we're certainly looking to that and we're certainly going to continue to execute.
Andrew Klingerman: On the programmatic work that we've been doing from an acquisition standpoint, just a superb superb engine in place at NSP, but theres a broad set of opportunities. We'll continue to look at Youll note were making substantial organic investment in the firm, we're making investments.
Andrew Klingerman: On the M&A front as well as other areas as well so look for us to continue to do that and so.
Andrew Klingerman: All I can say, we see lots of opportunities and while we will always continue to evaluate those in the context of everything that's going on around capital allocation <unk>.
Greg Case: Included in the debt pay down but have been what else would you go yes, yes, greg's exactly right there's tons of opportunity on the M&A front, but your question is about 2025 and in 2025 as part of our disciplined capital allocation you know the prime objective for US. The number one objective is to get back to our leverage ratio target.
Greg Case: And I think we're well on track to do that in Q1 I'm sorry in Q4 2025, that's the first step we're very excited the fact of just increasing the dividend and the remaining capacity is what we'll look to analyze the opportunities that greg's talking about to ensure that they fit within.
Greg Case: Our overall strategy are three by three plant and have the right financial return criteria before we deploy capital to M&A and of course, we're going to continue to balance capital returned to shareholders. So in 2025. The key point is I think we have the right free cash flow generation to get to the right place from a leverage.
Greg Case: Ratio standpoint, we have the free cash flow to allow us to continue to get $45 million to $60 million and M&A in the middle market space to <unk> and the rest of this year, we take a focus on capital returns to shareholders.
Speaker Change: Got it thanks.
Speaker Change: And then with respect to commercial risk solutions.
Speaker Change: You know really solid 5% plus organic revenue growth.
Speaker Change: I think you mentioned that the market.
Speaker Change: Impact was flat in the in the release.
Speaker Change: Could you give a little color.
Speaker Change: Around the backdrop of how pricing influenced.
Speaker Change: The 5% plus how exposures influenced the 5% plus.
Speaker Change: It seemed you know one of your competitors reported a deceleration.
Speaker Change: In that area in organic growth.
Speaker Change: Investors felt a little concern so I'd like to get a little sense of.
Speaker Change: What these these different market impacts are more granularly.
Speaker Change: And why you feel so confident that you can continue to do and I know, it's for the whole organization, but more focused on Crs why do you think you can do 5% or mid single or better.
Speaker Change: Excellent question and a lot to unpack there because you really talked about commercial risk overall for everyone within.
Speaker Change: The context is that whats going on commercial risk pricing. So maybe maybe we will take our first start governing thought with Aon and maybe go to pricing or if you're okay with that shortly at Edmonton.
Speaker Change: Chime in here as well.
Speaker Change: Youre absolutely right, we as we reflect on the first quarter we.
Speaker Change: We're very pleased with the progress.
Speaker Change: What's under the Hood for US is really what's most prevalent and it's another quarter. As you described of organic revenue at 5%. It really does reflect the new business and strong retention. That's really the drivers of that and had mentioned sort of a market impact was was.
Speaker Change: Was limited but.
Speaker Change: It held steady within our expectations. This was growth for us by the way across all major geographies strength in core P&C, and especially in international fantastic, but more than anything and it really is we're seeing traction on what we're doing with the three by three plants and this is risk capital.
Speaker Change: It really delivered through Aon client leadership and powered by Aon business services and these are our risk analyzers theyre opening doors brought into discussions or frankly, increasing win rates for us in rfps.
Speaker Change: Same on retention have been talked about a point increase in retention. This is driven by <unk>.
Speaker Change: Service enhancements that are substantial like the certificate platform that we've talked about before and then the impact of hiring which is just beginning to really have an effect in terms of where we are we're continuing to invest and drive that so for us we feel very good about the overall program and.
Speaker Change: And progress in Q1 did for us in commercial risk and really did across the board is just highlight progress and reinforce our conviction around mid single digit or greater for the year. So that's the overall overall business and maybe even comment on that a bit and then I'll turn it back to Andrew key point on pricing.
Speaker Change: Yeah sure I mean, Greg I think you hit all the points on the commercial risk when we even when we go back to the key points on pricing I think the answer is very much similar in that the growth here is driven primarily by new business that was 10 points in the quarter. When we think about commercial risk and the retention I talked about that.
Speaker Change: Being better sequentially and year over year, better than last quarter and better than the year before and a lot of that is driven by the investments and the deployment of our analyzers as Greg just had helping in Rfps, that's driven by our <unk>, our enterprise client group going out and expanding with our relationships and despite.
Speaker Change: The pressure and clients on certain lines the outlook in the second half is that we continue to have strength in commercial risk, particularly as we think about the hires that we've been doing priority areas like construction, which we think will pick up in the second half and the actions, we're taking to drive limit and coverage increases to offset any modest.
Speaker Change: Pricing impacts so we're going to continue to focus on that net new business and the retention component of it.
Speaker Change: And then so and does that answer your question on the Aon from Danone when it come to pricing specifically, yes, I don't want to I don't understand.
Speaker Change: That was perfect okay.
Speaker Change: Pricing for a minute and just we just want to offer a couple of things here.
Speaker Change: First because it's been it's part of all the conversations it seems of late and typically.
Speaker Change: Typically Andrew everybody's on unit pricing, that's the sole topic will continue to remind everyone. Its unit price and insured values. This is sort of the market impact. That's what everyone was describing before we came into the quarter kind of zero to two expectations were at one <unk>.
Speaker Change: I do want to highlight irrespective of what's going on currently the long term trends here long term trends. This is critical are increasing in terms of levels of risk because the cyber supply chain, whether it's social inflation, so not a macro level. The need is increasing so that has implications on sort of overall demand and pricing having said that we also want to be.
Speaker Change: It's been described by my colleagues as kind of the current market really reflects the current trading environment and Thats generally more buyer friendly and.
Speaker Change: So generally because there is no really macro market here, it's a bunch of micro markets property rates are softening a bit, particularly in large property in the U S and a little bit more in Asia Pacific as well.
Speaker Change: And that's really by the way not surprising that's where the big increases were.
Speaker Change: Bit softer on the financial line side, and cyber as well overall, the exception and by the way Andrew on the other side as things like U S auto and excess in excess casualty, which again a lots of different reasons, why that's going up in an increasing and we would say middle market similar conditions on the stressors, absolutely maybe it's slightly more muted because the.
Speaker Change: Segment doesn't have the same peaks and valleys as some of the large market piece of it but certainly the same pressures, but we also as we always do we're working with clients to understand the conditions and improve their programs change limits by coverage as they lost in the hard market reduced all of those things you can imagine Andrew we're working on and then one thing that was interesting as alternative risk transfer.
Speaker Change: Continues to be highly prevalent and work we're doing with reinsurance in the commercial risk arena on alternative risk transfer is substantial.
Edmund Reese: But net net as it relates to <unk> I, just want to finish with Edmunds point for us, it's about client wins and retention and that's exceptionally strong in the three by three plant is really supported US which is why in this environment.
Edmund Reese: We are reinforcing our conviction around mid single digit or greater but that's a little more color on the pricing side.
Edmund Reese: Great great to hear and very helpful.
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 reinsurance on I know you mentioned, a multiyear extension that I think had a negative impact in the quarter I was hoping to get more details and quantification there.
Speaker Change: Thank you pointed to some softer conditions in the second quarter. So I guess is the expectation Q2 could be similar to Q1, and then things pick up in the back half I was hoping to kind of flush.
Elyse Greenspan: Both of those things out and I think the reinsurance.
Speaker Change: So maybe at least if you don't mind, there's a little macro point on kind of the overall reinsurance and what the first quarter told us because one of the themes that sort of Edmond chartered with is really understanding kind of the underlying kind of performance factors that we saw in Q1. There was obviously a lot of noise for us as we as we closed and opinions and all of the pieces around that but reinsurance no different the commercial risk.
Speaker Change: Exceptionally positive in terms of what we saw in what's indicated for the rest of the year, which is why again, we are at the same same expectation mid single digit or greater than net net think about what's going on in reinsurance right now for US we're building on core momentum.
Speaker Change: And really this is what we do at a segment level with our with our clients, but really differentiating on analytics and what we've invested in.
Speaker Change: And does the services and withdrew its capital has been really for us meaningful.
Speaker Change: Toward a force, we're winning more than ever before in this context on the reinsurance on the commercial side and this risk capital construct is also meaningful.
Speaker Change: The level of of Cat bonds and parametric work, we're doing is exceptional and driven by risk capital and then the strategic and technology group had been mentioned also reinforcing and driving progression and so the 4%, which seven in the first quarter of last year. It's treaty placements as had been described its double digit growth in facultative is another.
Double digit growth on the insurance linked securities so in net debt.
Speaker Change: Strong progression overall, and then I'll, just highlight and I mentioned the piece.
Speaker Change: Round around the multiyear extension this was a phenomenal outcome for this client. This was a massive let me just say massive program and what we did is what we always do we talk about value creation and what we're trying to do on their behalf and and then we get paid on value by the way it affects timing, sometimes and in this case in Q1 it affected timing.
Speaker Change: But overall the impact for this client was huge the impact for Aon is huge we're excited about this progression but.
Speaker Change: But it showed up in Q1, but you shouldn't confuse the Q1 impact with the overall year opportunity and sort of what it's going to look like over time and that gets us back to mid single digit or greater so anyway, that's a bit of a background, but have been anything else you would add in some of that just because the last point that you made we obviously don't have the continued impact client impact which is a.
Speaker Change: Extremely positive thing for us exactly what we want to do extend and expand with our clients. So at least I want to be clear in your question that you Shouldnt expect that impact obviously, the carryover into Q into Q2, and while we do have line of sight into just as you've heard others talk about the U S and Japan April one renewals.
I think the.
Speaker Change: The strong performance that we had Q1 ex that extension you should seek flow over into Q2, and then when we go out in the second half of the year. This is a business where we do have line of sight, we can see sort of like where we're tracking and when I look at the second half of the year. The July one renewals, we have good line of sight too.
And that looks strong increase limit. We also will see the continued growth in our international fact, facultative placements one of the things that was very strong in Q1 as well in the STG group. So I think Q2 Q4 should be in line with our mid single digits.
Speaker Change: Guidance and the overall year in line with that as well.
Speaker Change: Thanks.
Speaker Change: My follow up question is on free cash flow.
Speaker Change: I just wanted to.
Speaker Change: Eight confirmed that its double digit growth right on I think it's on a reported $2 8 billion from 24, So I guess the.
Speaker Change: A key contribution will help and get to the double digits I just wanted to make sure I'm thinking about the free cash flow growth off a device based on what the message is there.
Speaker Change: Is there any seasonality to the back three quarters.
Speaker Change: It's about in terms of hitting that double digit target for the full year.
Speaker Change: But the short answer is yes, you hit it exactly exactly right.
Speaker Change: We are talking about the baseline of 2020 for double digit growth I think youll see growth that double digit growth a contribution from NSP, but also our core operating performance and the continued improvement that we have on DSO.
Speaker Change: There's two things in Q1, you asked the question about seasonality. So there are two things I'll point out to you in Q1, that's going on we still have the integration.
Speaker Change: From an FTE, we have restructuring payments I called that out are related to our <unk> program and we have higher incentives. We've been hiring more we had strong performance in Q2, 'twenty four and it's typically our lowest quarter of free cash flow in Q1, that's what I would call out from seasonality, but as we go into the back half of the year you have two things correct.
Speaker Change: You have the right denominator the rates starting baseline you have the in the P contribution, but I would also add the contribution from the core the core performance of the business both on the working capital side and the operating income side.
Speaker Change: Thank you.
Speaker Change: Our next questions are from the line of David motivated with Evercore ISI. Please proceed with your questions.
Hi, good morning.
Speaker Change: And then you'd spoken about.
Speaker Change: Some of the hires.
Speaker Change: And I know you guys added I think it was 4%.
Speaker Change: New hires in certain revenue producing roles last year.
Speaker Change: And it sounded like we haven't really gotten the contribution from those new hires.
Speaker Change: In the first quarter here it doesn't sound like it's really going to come next quarter, but you're really pointing to the second half.
Speaker Change: So I'm wondering if you could just elaborate on some of the head count growth and productivity enhancement.
Speaker Change: As we think about the cadence of the organic growth within commercial risk.
Speaker Change: Yes.
Speaker Change: First the first point I'd make is that we're a growth company and so we're committed to making the investments and the head count. We did talk about that growth number last year at 24, and frankly, we want to do better than that as we come into 2025, and we're off to a great start in the right areas in areas like health construction.
Speaker Change: Those those places coming into 25, I think it's still the short answer to your question is still too early to see the exact impact and let me maybe be a little bit more specific with that.
Speaker Change: When we look at the Q1 vintages from 2024, we're now in much 12 to 15 for those vintages still early I talked about starting to see the impact on contribution to growth between months 18 to 24 and beyond as we look at it but the early signs suggest that the average revenue for these early.
Speaker Change: Vintages are coming in at a profitable high return and I expect that they will.
Speaker Change: Soon be a contribution to the organic revenue growth.
Speaker Change: Did point out in Q4, we saw growth in some of those priority areas.
Speaker Change: Was quite strong in construction and energy. So all the signs are suggesting that we continue to lean into the investment for priority hires in.
Speaker Change: In these in these areas as we move forward and we will share information as we see as we see the metrics evolve.
Speaker Change: And two things I would just add to that David if I could.
Speaker Change: Two messages and embedded in Evans comments. One is this is a continuing process around priority areas.
Speaker Change: And those will evolve over time, but we're going to continue to drive in a continuous process. The second is you don't hear us backing up on margin as it relates to this this is literally we're making these investments in the context of everything else, we're doing and we're covering them with ABS capability and efficiency that comes with.
Speaker Change: The positive pieces around revenue off with ABS as well and so for US. This is just part of an investment we are now prepared to make on an ongoing basis. It strengthens our firm.
Speaker Change: And reinforces accretion on the topline, but also also in performance NOI and finally the piece I'd just highlight is listen we're not bringing in folks in his account.
They're coming in to be better when we actually identified capability in priority areas and kind of how do we use our analyzers and our retention in all of the pieces that come with this essentially not bigger not bigger better.
Speaker Change: And by the way that's one of the reasons people are excited to be part of the firm when they see the $1 billion spend on Aon business services and the analyzers in the service pieces.
Speaker Change: It's why we've been able to attract talent some of these areas, but it's important you understand the.
Speaker Change: The investment in the context of our overall strategy.
Speaker Change: Got it thanks and then.
Speaker Change: Maybe just another question.
Speaker Change: More of a numbers question just on the margin.
Speaker Change: So I guess I'm just wondering.
Speaker Change: The noise with the NSP.
Speaker Change: Deal and sort of resetting the base.
Speaker Change: Can we get.
Speaker Change: Sort of a combined.
Speaker Change: Margin base.
Speaker Change: For I guess as we should think about it for the first quarter.
Speaker Change: Just given the type of 2024, and how much sort of core margin improvement or lack thereof, there would've been.
Speaker Change: This corner.
Speaker Change: Sort of on a combined basis I know Ed menu had called out the 85 basis points from.
Speaker Change: Cost saves.
Speaker Change: But I was hoping to just get a little bit more color. There as we think about the ramp up over the next.
Speaker Change: Several quarters I wouldn't give you the short answer just so that we can clarify is not the lack thereof is as you just meant that mentioned theyre adjusting for the three months of NSP would've had us at over 100 basis points of margin expansion in Q1 think about that relative to the 90 basis points in 'twenty four think about that.
Speaker Change: All of them to the decade before 24 being at 126 basis points. So continued margin expansion is what youre seeing in our business.
Speaker Change: When you when you take a look at the impact of an a P. There the areas that focus on exactly what we gave in the 2025 guidance and I would say those.
Speaker Change: Those areas those four areas that I talked about are right in line with what we are expecting a slightly better we talked about the MFP impact three additional months in Q1, four additional months for the year offset by the Opex synergies diluting margins by 20 basis points.
Speaker Change: No reason to think that we are not going to do be at those levels or better. The second impact we talked about was the interest rate impact on fiduciary investment income. If you look at the rate the average rate on fiduciary investment income that was 110 basis points lower.
Speaker Change: In the quarter.
Speaker Change: That margin impact was right in line with the 20 basis points that we talked about there.
Greg Case: Did point out in my prepared remarks, the continued performance on the restructuring from a use of 85 basis points. There that's exactly what we said in the guidance and then I think just the operating leverage Greg made an extremely important point. His second point in the last answer about ABS, creating capacity to fund investment.
Greg Case: That's the operating leverage in our business. That's what I think is 35 to 45 basis points and that's why we are confident in reaffirming and maintaining the 80 to 90 basis points. So I think the way you think about it is that we are in fact, expanding both in the core business and in that peak given the margin synergies.
Speaker Change: Great. Thank you for that color.
Speaker Change: Thank you. The next questions are from the line of Paul Newsome with Piper Sandler. Please proceed with your question.
Paul Newsome: Good morning.
Paul Newsome: Just wanted to revisit a couple of the major topics here. The first one and I apologize if I missed it was.
Paul Newsome: The MLP.
Paul Newsome: The accretive to organic growth in the quarter and I guess bigger question does it have a bigger impact in.
Speaker Change: Retirement benefits businesses versus commercial because if I recall that.
Speaker Change: It's business was weighted more towards the health business.
Speaker Change: P&C business.
Speaker Change: Paul I appreciate it and thanks for the question listen as we step back it is.
Speaker Change: Just reiterate it's been it's been an amazing year Nnpc's brought such great capability and content and it's been great to watch NLP connect with Aon Aon connect with NSP and we've seen.
Speaker Change: Meaningful opportunities and new client situations and existing client situations.
Speaker Change: <unk> utilized aon client treaty and some of the capabilities, we've got but also as aon.
Speaker Change: <unk> has benefited from the incredible client connections that MFP has as well and.
Speaker Change: And so this is a long winded way of saying listen this is about.
Speaker Change: So in the end, yes. There was there was there was 5% organic contributions from NSP Fantastic contribution survey and fantastic, but more important Q1 for US was an indicator of what's to come that's.
Speaker Change: That's true on the three by three and analyzers in the core business is also true on the MSP front. So it was really across the board good contribution on the MLP front. Good contribution on the overall Aon Trumpf and really across the board in terms of the business its commercial risk well.
Speaker Change: Health all across the pieces, so we're not going to be breaking out MSP as a construct because there's just too much connectivity that is happening.
Speaker Change: In the connectivity is not worth parsing, we essentially want to reinforce connectivity as opposed to breakout.
Speaker Change: Separate pieces and this is the beauty of independent and connected independent in the day to day in the field and what's happening in the leadership and the M&A engine and all of the pieces around that really connected from the standpoint of content and capability in ways that actually helps our producers do more with clients every day so.
Speaker Change: Just suffice it to say all all contributed all on track and all we were very.
Speaker Change: Excited about the high expectations, we had as we came into the year.
Speaker Change: Great.
Speaker Change: And then revisiting pricing a little bit one of the questions through the quarter through the industry has been.
Speaker Change: What appears to be differentiating behavior between large account commercial and small and mid <unk>.
Speaker Change: I'm just curious if you had any thoughts upon that if that was indeed, what youre seeing as well within your book and if you think that that's a potential continuing trend.
Speaker Change: In the future.
Andrew Klingerman: Yes, we would say well the point I was trying to make before Andrew <unk> question was really around look.
Andrew Klingerman: Generally the trading conditions are softer in specific areas property.
<unk> cyber with some exceptions as I said on the auto side on the casualty side of course on the <unk>. We saw similar trends similar trends in mid market slightly more muted although they have.
Andrew Klingerman: Are there moments, but slightly more muted just given that there was not as much peaks and valleys overall I would bring you back though to the macro points around the long term trends all the things that are happening cyber supply chain.
Andrew Klingerman: Climate weather social inflation these affect the middle market to our middle market clients as we're finding with MMP very sophisticated set of needs and when you can bring real solutions to them they matter and they matter even more in the current environment. So.
Andrew Klingerman: I think directionally, you're probably we would agree but the nuance matters because it shows up one client at a time.
Andrew Klingerman: And as.
Andrew Klingerman: That's why we've been we have success because we can bring solutions in a very specific tailored way on a client by client basis, but but generally I would say youre directionally right.
Speaker Change: Alright, thank you through thoughtful answers and always appreciate the help.
Speaker Change: Our next questions are coming from the line of Meyer Shields K B W.
Speaker Change: Two questions.
Speaker Change: Great. Thanks, so much.
Speaker Change: The outlook in terms of a tougher comp for wealth solutions in the second quarter and I guess the back half of the year I was hoping you could add a little color in terms of the specific businesses and underlying factors that were so strong in the first quarter of this year, but what is it that actually drove the investment growth.
Speaker Change: Well listen maybe you come back.
Speaker Change: We've loved our execution has been fantastic with the team's been able to do over really a multi year period again I would come back on the wealth side start with macro trends and then talk about the Aon team and what the drivers of success are.
Speaker Change: And remember by the way this business overall, it's kind of two thirds retirement, one third investments the investments business has a core investments piece, but it also as an advisory piece embedded in it as well so thats kind of the macro business, but think about the macro trends.
Speaker Change: It's retirement readiness, 20% of the world's ready for retirement, that's a that is a massive.
Speaker Change: A massive challenge for the world as this evolves we can address retirement readiness huge second wealth transfer. If you think about sort of what's going on also very very substantial and then the piece you can't lose is the regulatory challenges that seem to come up the.
Speaker Change: The year after year after year and so from our standpoint, we've got an amazing team across each one of those pieces are now even stronger.
Speaker Change: And up to the NOP front and the team is exceptional and the drivers of success for US has been much like it was on the commercial risk side, new business and retention new business and retention. It really is client leadership and <unk>.
Speaker Change: New capabilities, new clients, and then retaining them longer the second big pieces pension risk transfer so you've seen us do some things in that arena that really no. One else has been able to do in the U S and the European and the U K or in particular, and then finally on the retirement side, which everyone comes back and says this is the challenge on defined benefit to defined contribution and it is.
Speaker Change: In the fullness of time, but my gosh in its current world with the regulatory challenges it really creates opportunity for us to help clients think about that overall strategy. So those are the very specific things that are really driving success on the wealth side and it had been quite rightfully talked about some of the some of the pressures.
Speaker Change: In Q2, as something to be mindful of those but but the team has done a phenomenal job.
Speaker Change: Progressing here.
Speaker Change: We're looking forward to continued success.
Speaker Change: Okay. Thank you that's very helpful. If I can switch gears.
Speaker Change: Talk about the individual I guess.
Speaker Change: Your extension within reinsurance.
Speaker Change: And Greg you described that as a really good deal for the client, which is what you should be doing does that mean that we should expect other such deals not necessarily with the client but others.
Speaker Change: Listen we'd come back Meyer is philosophically.
Speaker Change: But just to answer specific this is a very unique situation. Let me just address very unique and very substantial in terms of both the size and the value creation that we brought forward. So for US we're always looking for innovative ways to think about how to bring value to clients and do you think about aon's history, we will never be low price, we're not going to be low.
Speaker Change: So we're going to be high value, we cost the dollar and we can prove to our client we give them back to dollars. When we can quantify that and they actually understand as they can touch it that can feel that they know what either FX volatility, which is value creation of our actual costs et cetera that is how we go by the way if a competitor comes in and says there are 50, but can only.
Speaker Change: We returned 52 cents of a client believes that and understand that they go with us if they don't believe it they don't our analytics make us stronger and stronger in that regard and this case very unique let me just add very unique and very substantial.
Speaker Change: We went from kind of the the.
Speaker Change: A more annual periodic piece to a very long term engagement, but enables us to do some things on their behalf that they are exceptional until it was really in that context, we did what we would call great value creation and we got recognized for that value. So I think this was for us great outcomes on both sides and.
Speaker Change: We'd love to do more of these in a way that really can add to this kind of value. But this is a very as I said last time very unique situations. The downside is it add some pressure in timing and you saw that in the first quarter, but so be it.
Speaker Change: We want to we want to do what's right Greg It had pressure in reinsurance in the quarter, we have a diversified business across multiple solution lines commercial reinsurance health and wealth and the reason that we're still able to deliver the mid single digit is because of that because we're operating across solution lines. Because we are operating in multiple countries.
Speaker Change: Because we have the operating leverage in our business and so when the opportunity comes to grow with the client.
Speaker Change: A significant way and still be able to deliver on our results of course, we're going to jump on that.
Speaker Change: Okay I thought that that was very helpful. Thank you.
Speaker Change: Okay.
Jimmy: Thank you. The next question is from the line of Jimmy <unk> with Jpmorgan. Please proceed with your question Hey, Good morning. So a question for Greg I know you affirmed.
Jimmy: Affirmed your guidance, but obviously theres been a lot of volatility in the macro and geopolitical environment. So just wondering where.
Jimmy: If any there are changes in your expectations for your various businesses.
Jimmy: Worse as early in 2025, I know Theres, a lot of optimism about capital markets activity picking up that hasn't happened in our inflation is higher but just.
Jimmy: If you could touch on your major businesses in there maybe you're more optimistic there you're seeing some headwinds.
Speaker Change: I appreciate that Jim and I'll start and <unk> can add some color as well.
Speaker Change: The trauma, Israel Youre seeing it every day I would remind you step back remember Jimmy we've been talking for quite some time about increased volatility and we talked about we call. It four megatrends trade technology, whether and workforce and remember all of those that was before.
Speaker Change: For the house before the tariffs.
Speaker Change: And this has been substantial they are all there. They all continued to drive volatility and in many respect create risk for clients, which means demand. If we can help them understand that volatility and reduce something about it clearly today trades at the forefront and no doubt about that clients aren't sitting there essentially saying look we don't really have to understand what's going on and we gotta do something about it.
Speaker Change: Covid taught us anything in actions not a productive option you've got to do something got out the plan. So we're engaging it really is across every one of our businesses really on their own.
Speaker Change: The risk capital side commercial and reinsurance on the human capital side with our talent business healthy retirement, and we're active with clients and we're helping them trying to understand the complexity and then what they can do about it. So I'll describe the supply chain diagnostic our analyzers Jimmy in terms of how to help them understand what is going on and we just did we just did a massive the biggest parametric.
Speaker Change: The biggest parametric on a severe convective storm thats ever been done for a big steel company.
Speaker Change: And it really was in the face of this new set of risks there on the horizon, how they can deal with that.
Speaker Change: So for US, we're tailoring solutions against Us now.
Speaker Change: There are no doubt there are puts and takes here and there will be pressures on areas of discretionary spend so we should recognize that that will come in that will be real.
Speaker Change: But it's also offset in many respects by what I'm, just describing our ability to react to client demand and so for US we step back right now and look at the world's changed a lot and even in the last 30 days in terms of pressure, but when you look at where the world is right now and and we will say listen we feel we are convinced.
Speaker Change: Actions about mid single digit.
Our greater growth, where we are.
Speaker Change: Not changing guidance based on what we've seen in the first quarter and some of the underlying factors that we really see on the positive side, we talked about on the call around what's happening with our three by three plan. All those are good in that context, that's where we are and we say Jimmy that's across the board.
Speaker Change: Reinsurance that's commercial risk.
Speaker Change: What we're doing in health and that's what we're doing in well so for us we see opportunities everywhere.
Speaker Change: We see the challenges they are real but against that said, we also see mid single digit or greater and that's what we're that's what we're focused on and that's the mission to achieve and that's what.
Speaker Change: That's our guidance as of today.
Paul Newsome: And it doesn't mean, it's Paul.
Speaker Change: Sure go ahead.
Speaker Change: Go ahead.
Speaker Change: To give you some I agree with Greg put about mid single digit or greater when we think about confidence in the second half and go through our solution lines, specifically it will continue to come through the new business and the retention construction core P&C, the MSP pipeline and synergies those things are improving as we look in the second half of.
Speaker Change: The year and we will have meaningful contribution in reinsurance I mentioned earlier the July one renewals with more limit again, we have line of sight, there the international facultative and the health.
Speaker Change: Solution line, we have the <unk>.
Speaker Change: Core benefits remember, we just said that was double digit in three of out of our four regions and 9% in the other so we continue to expect benefit and growth there as well as now we're getting the benefit of the talent business as we recognize revenue and data and analytics and on the world side I think we have great line.
Speaker Change: For Q2 on the asset component that Greg was talking about but that regulatory component.
Speaker Change: Pension risk transfer and the strong retention those are the things that are driving growth in the second half of the year and of course, we will see some benefit from the investment hires when I think about that and the absence of the headwinds that we had in Q1, it's really important to think about 13 points of EPS.
Speaker Change: Headwinds from the increase in interest and the increase in shares from the <unk> acquisition those things won't be there as we go around in a year and so that together is what gives us confidence in the second half of the year and while we are reaffirming the guidance here.
Speaker Change: Got it.
Speaker Change: And then just on the performance of the NFC business. If you could just comment on how its tracked versus what you would've expected because if you looked at the contribution to revenues from acquisitions and dispositions.
Speaker Change: Both in RIS and in health It was lower this quarter than it's been the last few quarters, and obviously, a big number there, but any comments on the performance of the acquired business.
Speaker Change: Jimmy I'll just start macro levels as we said before listen we had high expectations and they've been exceeded in terms of what we're trying to do underlying connectivity.
Speaker Change: Thesis around independent and connected.
Speaker Change: Exactly as we'd hoped the retention on the producer side phenomenal can ultimately this is all about how our clients AC individuals' see more opportunity as we brought the firms together and Thats, where you continue to work on we have work to do no doubt about it but we've made great progress and.
Speaker Change: And at an underlying level is edmund as highlighted throughout the call. We just reiterated as all this comes together.
Speaker Change: Going to deliver it's gonna be together more accretive from a revenue standpoint accretive from an operating standpoint, and certainly accretive from a free cash flow standpoint, so for US all of those things have come together and we feel fantastic about kind of the work in the first year.
Speaker Change: In this first anniversary and looking forward to continuing with this with the strategy in the middle market.
Speaker Change: Thank you.
Speaker Change: Thank you. Our final question today is from the line of Casey <unk> with Deutsche Bank. Please proceed with your question. Thank.
Speaker Change: Thank you.
Speaker Change: First question is on the Investor day.
Speaker Change: First one in 20 years I'm just wondering is there something specific that you think the street is under appreciating maybe in terms of like the power of the Aon United platform Your ABS capabilities or the three by three plan.
Speaker Change: Or is it a new approach to communication than maybe we should expect more regular investor day going forward.
Speaker Change: I don't know if TV more investor days.
Speaker Change: Every 20 years might be the right answer we will see.
Speaker Change: But listen we're really excited about this and I really I really hope.
Speaker Change: Those listening who have an interest can come.
Greg Case: This for US is is we think there is something here around next generation client experience. We spent 15 years working on our platform on a connected global firm. We've made no apologies when we conduct our global firm we call it Aon, United but we're not kidding. When we're talking about single brand single Opco single P&L done some things that are really been difficult strides to get us.
Speaker Change: Coordinated when we coordinate well on behalf of clients, we would more we do more with them, we keep them longer.
Speaker Change: What's happened, though in the three by three plant as we saw an opportunity to massively accelerate that and the acceleration gets borne out and something we call. A next generation client experience full stop and risk capital and human capital our organization to sort of think about innovation at a client level and we've seen many examples of that.
Speaker Change: But that wasn't enough we needed a way to deliver it at a client level, that's aon client leadership and that wasn't enough we need at Aon business services, we needed the power of a way to look across data embed the work redone on AI and now generative AI, which we've done and we think we've come to a place.
Speaker Change: And which this next generation client experience is real and powerful and and we didn't want to do it at the beginning of the three by three so we had a year ago. So we're essentially going to update you on that next generation client experience and where we are the specific tangible places, where we think its changing the way clients actually do what they do.
Speaker Change: And it makes them better and so for US we don't.
Speaker Change: Probably tell in my voice, we're pretty excited about this step change and builds on the Aon United thesis around the connected global firm, but a massive acceleration thats why we bought the $1 billion. That's why we put a $1 billion at work to reinforce.
Speaker Change: Aon business services to.
Speaker Change: To innovate around risk and human capital and deliver through Aon client leadership, so youre going to see that mechanics, we're going to provide as much details. We can probably have a few clients. They were talking about how it's different and how it's potentially useful for them as they think about running they're driving their businesses and we hope you enjoy it and then we will see what happens Youll, maybe you could give us your thought on sort of how frequently we might do that.
Speaker Change: But in the meantime, we're excited about June 9th and hope you can join us.
Speaker Change: And again I'm looking for it looking forward to it my my follow up question should be an easy one.
Speaker Change: The second quarter EPS guidance that you gave us 15% to 18% EPS growth growth is that is the baseline to $2 93 reported or is there any adjustments we need to make to the starting point.
Speaker Change: That is the baseline that's exactly right and look we were an annual company, we're going to continue to focus on full year guidance. Because we think the long term drivers of growth are all stable I gave that Q2 guidance because we do have the unique situation I recognize and appreciate from a modeling standpoint, given the timing of the MFP close.
Speaker Change: So you do have the right baseline.
Speaker Change: And hopefully the Q2 is helpful.
Speaker Change: Appreciate this thank you.
Speaker Change: Thank you.
Greg Case: I'll now turn the call back over to Greg case for closing remarks.
Greg Case: I just wanted to say, we appreciate everyone joining us and look forward to June 9th in our next discussion. Thanks, so much.
Greg Case: This will conclude today's conference. Thank you for your participation you may now disconnect your lines at this time.