Good morning, and thank you for holding. Welcome to Aon Plc's First Quarter 2024 Conference Call. I would also like to remind both parties that this call is being recorded. If anyone has any objection, you may disconnect your line at this time. It is important to note that some of the comments in today's call may constitute certain statements that are forward-looking in nature as defined by the Private Securities Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. Information concerning risk factors that could cause such differences are described in the press conference covering our first quarter 2024 results as well as having been posted on our website. Now it is my pleasure to turn the call over to Greg Case, CEO of Aon plc.

Good morning, everyone, and welcome to our first quarter conference call. I'm joined by Christa Davies, our CFO; and Eric Andersen, our President. For your convenience, we've posted a detailed financial presentation on our website. As always, we begin by thanking our colleagues around the world for the incredible work they do every day to support each other and deliver the best of our firm to clients. This quarter, I also want to single out one colleague in particular, our Chief Financial Officer; and my friend and partner, Christa Davies. As you know, Christa announced her retirement from her role as CFO earlier this month, following over 16 years of tremendous service. With Christa's guidance, we developed a seamless transition plan. As previously announced, Christa remains in our CFO role for the second quarter earnings, and we're making strong progress against well-defined plans to have her successor in place to begin the handoff. I'm grateful that she'll continue to serve as a senior adviser into 2025 and to ensure great continuity. Now to begin our report today, it's important to start by highlighting an incredibly exciting milestone for our firm. The completion of our work to bring NFP into the Aon family as we closed the transaction yesterday. Through the 7,700 NFP colleagues who now join our firm, welcome to Aon. NFP's client relationships, capabilities, focused sales force, and market knowledge provide a significantly expanded position in the fast-growing $31 billion North American middle market. Since our announcement in late December, we've gotten to know the team even better, and our appreciation and excitement for what we can do together has continued to grow, and the opportunity is even more clear. In commercial risk, complementary specialist resources and expertise from both organizations will enhance what we bring to clients, delivering Aon analytics and decision support tools to the NFP sales force, allowing for real differentiation on top of their highly integrated sales approach. Further, we can reintroduce and introduce, reinforce NFP's offerings with access to our programs and facilities like Aon Client Treaty, and also in commercial risk, we can leverage our global Aon network for clients who require seamless global service to enhance an already strong NFP value proposition. In Wealth Solutions, we see a great opportunity to bring our capabilities around pension risk transfer to NFP clients as well as to continue to build on our investment offerings together, ensuring all clients have access to retirement options that best support their people. In Health Solutions, our businesses are highly complementary with new opportunities in the health value chain where we don't operate today or for clients that we only serve in one solution line. For example, NFP brings an outstanding health value proposition for clients with under 100 employees, an attractive option for our smaller clients in commercial risk. Conversely, we see a great opportunity to provide NFP's clients with our data and analytics solutions, including benchmarking and tools on health equity, network strategies, and high-cost claimants. Further, we can support current NFP clients with specialized capabilities in areas such as global benefits, pharmacy consulting, and consumer benefits. Another great strength of NFP is their exceptional M&A engine and very strong acquisition pipeline as we look to the future. On deal financials, we're delighted to close much earlier than originally modeled with fewer shares issued and realization of benefits that now occur a year earlier. Noting we now expect EPS accretion to '26 and thereafter, and additional free cash flow of $300 million and $600 million in 2025 and 2026, respectively. We're incredibly excited about the opportunity as we bring Aon and NFP content capabilities together, enabled by Aon Business Services. We also see great value in the operating model built around the principle of independent and connected to deliver risk capital and human capital capability to our clients. All in all, this acquisition is another strong step forward in our Aon United journey and reinforces our long-term financial guidance to deliver mid-single-digit or greater organic revenue growth, adjusted operating margin expansion, and double-digit free cash flow growth over the long term. Turning now to our results in the quarter. Overall, our team delivered a strong start to the year with 5% overall organic revenue growth, 100 basis points of adjusted margin expansion, and 9% EPS growth. Within our solution lines, Reinsurance delivered 7% organic revenue growth as our team helped clients navigate continuing market challenges, but with greater capacity and stable pricing on programs. Our team is increasingly building on traditional capabilities with enhanced data analytics and advisory capabilities. In Health Solutions, we delivered 6% organic revenue growth, with strong growth in core health across all major geographies, driven by strong ongoing new business generation and retention and strength in specialist capabilities like consumer and pharmacy benefits. In Wealth Solutions, organic growth of 4% reflected strength in retirement as our teams continue to help clients reduce risk through pension risk transfer and manage the ongoing impact of regulatory changes as we continue to bring leading capabilities to help clients match risk and capital. In commercial risk, we saw 3% organic revenue growth highlighted by strength in Asia and the Pacific, Continental Europe, and areas of our portfolio like construction. As we look at these results, especially in the U.S., we've seen the impact of our business mix play out. We have strength and strong weighting in larger clients, especially in lines like D&O, these are significant areas within our U.S. business, where we're strong, and we see substantial long-term top and bottom line growth potential despite some current pressure reflected in net new business. Going forward, we'll continue to be strong in these categories and continue hiring and investment in priority areas like energy and construction. We also observed, as we've mentioned previously, we're not seeing a real rebound yet in M&A and IPO activity, though we know there's demand and dry powder building. Until yesterday, we were relatively smaller in a $31 billion North American middle market, although now with the close of NFP, we've added 7,700 colleagues and established a much more meaningful position in this fast-growing market. Overall, across the firm, we continue to focus on our most critical asset, our talent. Our engagement remains at historically high levels, and our voluntary attrition in Q1 is at the lowest level in many years. On talent acquisition, we continue to increase hiring in selected client-facing areas as well as in analytics capabilities to support our efforts in risk capital and human capital. In summary, we're making great progress to start the year. Our first quarter results and the close of NFP put us in a strong position to continue delivering results through 2024 and over the long term. This progress fully reinforces our 3x3 plan focused on three fundamental commitments over the next three years, including capitalizing on our work in risk capital and human capital, delivering Aon client leadership, and amplifying these efforts through Aon Business Services. The strength and importance and momentum of this plan are being strongly reinforced by ongoing client and colleague feedback, and this plan defines a powerful path forward, one that drives ongoing top and bottom line growth and greater levels of long-term free cash flow growth exactly consistent with our ongoing financial guidance. Finally, as I turn the call over to Christa, I want to return to my opening comments and thank you again for her partnership, leadership, and friendship. Ultimately, Christa will have left a permanent imprint on our Aon United strategy. For 16 years, our shared mission has been to connect our colleagues to a one-firm mindset so they can deliver more value to clients. That mission is universally focused on accelerating Aon United and now, in arguably our most exciting period, is fully reflected in our 3x3 plan. Christa has been a critical partner in all this work. Our Aon colleagues will miss Christa in the CFO role. Personally, the journey with Christa is a highlight of my professional career. Our 52,000 colleagues, and as of today, 60,000 and their families are in a better position because of Christa. We're all grateful that Christa will be staying with us as a senior adviser to continue to drive momentum as she moves on to her next mission. Most importantly, we fully appreciate that there are other missions in life of higher priority, and we embrace Christa's decision to shift our focus at this time. Christa, my friend, over to you.

Thank you so much, Greg. I want to start by thanking you for the opportunity over the last 16 years to contribute to the incredible success we've had at Aon. This will be the defining role of my career, and that's really what's at the heart of this decision. As you described, this decision isn't about other professional pursuits. My decision is to focus my time differently at this point in my life. I'm grateful that our work together has created the ability for me to make this choice. I must say as our 3x3 plan delivers on its full potential in the months ahead, including with the great addition of NFP, I'm going to truly miss working so closely with this team to realize the tremendous value creation that is ahead for Aon. We're also very pleased to announce the completion of the NFP acquisition. I'm delighted to welcome NFP to Aon. We're excited to work together to capture the growth opportunities we see for clients, colleagues, and shareholders. As we announced yesterday, we closed the transaction for a total enterprise value of $13 billion. The faster-than-expected close date means we now expect to achieve a similar benefit a year earlier with improvements in certain metrics, noting we maintained guidance for revenue and cost synergies of $235 million, which now occur a year earlier given the close date. We achieved a lower interest rate on deal-related debt of 5.7%, and we issued fewer shares, at 19 million. Collectively, this results in similar deal-related natural benefits of accretion and free cash flow that are realized a year earlier than initially modeled. We now expect the deal to add $300 million to free cash flow in 2025 and $600 million in 2026 and be accretive in 2026 and over the long term. We've also provided detailed financial information for NFP in our materials. NFP built on our long-term proven track record of strategically allocating capital at scale to high return opportunities to create long-term value for clients, colleagues, and shareholders. As Greg mentioned, it reinforces and accelerates our Aon United strategy and our 3x3 plan and adds to our strong momentum as we drive results in 2024 and over the long term. Now turning to the quarter. We delivered strong operational performance to start the year, highlighted by 5% organic revenue growth, which translated into 100 basis points of adjusted operating margin expansion, 8% adjusted operating income growth, and 9% adjusted EPS growth. As Greg noted, organic revenue growth was 5%, driven by ongoing strong retention and net new business generation. I'd note that fiduciary investment income, which is not included in organic revenue growth, was $79 million. If you were to include fiduciary investment income, organic revenue growth would have been 70 basis points higher. We continue to expect mid-single-digit or greater organic revenue growth for the full year 2024 and over the long term. As we look forward, we continue to expect that NFP will contribute to the firm's overall revenue growth through organic revenue growth, including $175 million of net revenue synergies by 2026 and inorganic growth from ongoing M&A. Moving to operating performance. We delivered strong operational improvement in Q1 with adjusted operating margins of 39.7%, an increase of 100 basis points driven by revenue growth, portfolio mix shift efficiencies from Aon Business Services, and restructuring savings, overcoming expense growth, including investments in colleagues and technology to drive long-term growth. Restructuring savings in Q1 were $20 million and contributed 50 basis points to adjusted operating margin expansion. Restructuring actions completed so far are expected to generate $90 million of savings in 2024, and we expect restructuring savings will fall to the bottom line. At this time, we continue to expect $100 million of realized savings in 2024 as we continue to execute against our plans for Aon Business Services and our business. Regarding the program, we are seeing real progress in our acceleration of Aon Business Services. This includes streamlining and improving operational processes around working capital, moving work to the best locations, and enhancing clients' and colleagues' experiences with great new tools such as our property, casualty, D&O, and cyber analyzers. As we've said previously, we know delivering our Aon Business Services strategy will result in long-term top and bottom line growth as we drive more value for clients, colleagues, and shareholders. As we think about adjusted operating margins going forward, we continue to expect to drive margin expansion over the long term through ongoing revenue growth and a portfolio mix shift to higher growth, higher margin areas of the portfolio driven by efficiencies from Aon Business Services. Now that we've closed NFP, margins will be initially lower. Considering the close timing, we think the right baseline from which to measure 2024 adjusted operating margin growth is 30.6%, calculated as our 31.6% in 2023 and less 100 basis points drag from NFP for the period from April 25 close through the end of 2024. In our materials, we've detailed 2023 operating performance for NFP. On a full year basis, we would note that NFP would have had a full year pro forma drag of 140 basis points for 2023. So there will be some ongoing drag on 2025 margins until we lap the close in April 2025. We also expect fiduciary investment income to be relatively flat year-over-year based on current interest rate expectations. So the tailwind that we've seen in Q1 this year will be reduced although we remain committed to driving full year adjusted operating margin expansion in 2024 against this adjusted baseline of 30.6% and over the long term. Turning to EPS. Adjusted EPS grew 9% in the quarter, reflecting 8% adjusted operating income growth and ongoing share buyback, partially offset by a higher tax rate in the quarter. With respect to NFP, as we previously communicated, we expect the acquisition to be dilutive to adjusted EPS in the remainder of 2024, breakeven in 2025, and accretive to adjusted EPS in 2026 and beyond. Turning to free cash flow. I'd note Q1 has historically been our seasonally smallest quarter from a cash flow standpoint due primarily to incentive compensation payments. As we've communicated before, free cash flow can be lumpy quarter-to-quarter. We generated $261 million of free cash flow in the first quarter, reflecting strong operating income growth and lower CapEx, offset by higher receivables, payments related to E&O, restructuring, NFP transaction and integration charges, and higher cash tax payments as we've previously communicated. As we look forward, we expect ongoing negative impacts of free cash flow in the near term from restructuring, higher interest expense, and NFP deal and integration costs. The NFP acquisition strengthens our long-term free cash flow outlook with $300 million of incremental free cash flow in 2025 and $600 million in 2026. Over the long term, we would expect to return to our trajectory of double-digit free cash flow growth, driven by operating income growth and a $500 million opportunity in working capital. Now turning to capital allocation. We allocate capital based on return on capital and long-term value creation, which we've done over time through core business investment, share buyback, and M&A. Regarding M&A, as you look historically, we have a successful track record of balancing acquisitions, divestitures, and share buybacks as we continue to optimize our portfolio against our priority investment areas on an ROIC basis. We're incredibly excited about NFP's impressive M&A engine, noting their strong history of M&A. We look forward to building on their established track record and executing against their strong pipeline to drive future growth in this space within our ROIC framework. We still expect share buyback to remain the top priority for capital allocation. As we think about capital allocation in 2024, we observed there are puts and takes around free cash flow that we've communicated. While buyback will be lower than last year, we expect it will still be substantial at $1 billion or more based on our current M&A expectations for the rest of the year. We have a very strong long-term free cash flow outlook for the firm and are confident that share repurchase will continue to remain our highest ROIC opportunity for meaningful ongoing capital allocation over time. Turning now to our balance sheet and debt capacity. We remain confident in the strength of our balance sheet. As previously communicated, we funded the cash and assumed liabilities portion of the NFP purchase with approximately $7 billion of new debt, with $5 billion raised in March 2024 and $2 billion borrowed at close. The average interest rate for the $5 billion of transaction-related senior notes and the $2 billion term loan is 5.7%, about 80 basis points better than what we modeled when we announced the deal. We expect our credit ratios to be elevated over the next 12 to 18 months as we bring our leverage ratios back in line with levels consistent with our credit profile, at 2.8x to 3x debt-to-EBITDA on a GAAP basis. This is driven by substantial free cash flow generation and incremental debt capacity from EBITDA growth, noting our track record of effectively managing leverage within current ratings. In summary, our operating performance in Q1 is a strong start to the year, and we're well positioned to build on this momentum in the rest of the year. We're delighted to have closed the NFP acquisition ahead of schedule, enabling us to achieve financial benefits of accretion and free cash flow a year earlier than initially modeled. We look forward to enhancing NFP's strong client relationships with Aon's content and capabilities and see real opportunity to learn from each other and bring better solutions to our clients together. It's another step forward in our 3x3 plan as we accelerate our Aon United strategy, capitalized by Aon Business Services and reinforced by the restructuring program. With that, I'll turn the call back to the operator, and we'd be delighted to take your questions.

Congratulations, Christa. Greg, you mentioned in the opening remarks the lowest attrition that Aon has seen in a while. Could you put any details around that? Any color? It sounds very interesting.

Well, I appreciate the question. Listen, if you step back and think about talent overall and what we're about and what we're up to, this is really about how we built on Aon United and the strategy around the culture, and it's been foundational, how we connect our colleagues support each other and deliver the best we can for our clients. That's just continued to build, and it really gives them an opportunity to sit across the table to do some unique things with clients, which is why they're here and why they're excited about being part of our firm. On top of that now, we've got the 3x3 plan, which is going to continue to enhance this substantially with greater content and capability in risk capital and human capital as well as the analytics that underpin all that, driven by ABS. For all those reasons, this is a unique place to be at a time when clients have high need. But Eric, what else would you add to that?

Yes, Greg, I'll take that. If you're an account leader or someone working with a client, referring to your example, cultural capabilities and team support are crucial factors in deciding whether to join or remain with our firm. Historically, when you were part of a client team, you focused on product discussions with the client. Nowadays, particularly in risk management scenarios, those discussions extend to risk capital. You're collaborating with colleagues from various areas like commercial risk or risk consulting, utilizing new tools such as risk analyzers that Christa mentioned, which are developed alongside our ABS team. This fosters professional growth and promotes a team-oriented environment, ultimately delivering significant new value to clients. All these elements contribute to why people choose to join us and why they choose to stay.

Awesome. And then just shifting over to the tax rate around 23% this quarter. It was a bit surprising just given that over the last several years, it's kind of hovered around 18.5%. I know Christa doesn't give guidance on this, but maybe given the big move in the tax rate, and your points in the write-up of that changing geography, you could give us a little color on a, the change in geography of the tax; and b, maybe an exception and an indication of where we might expect the tax rate to be going forward, especially with NFP there.

Thanks so much for the question, Andrew. We did see a higher tax rate this quarter driven by changes in the geographic distribution of income and unfavorable discrete. I will note, Andrew, that discrete has historically been positive for us, and in this quarter, they really lined up to be net negative. What I would say is, look, it's just lumpy quarter to quarter. As you said, we don't give guidance going forward. However, looking back historically, exclusive of the impact of discrete, which can be positive or negative, our historic underlying rate for the last five years has been 18%.

So first, I just had a question on organic growth in commercial risk. If we look over the past year, 1.5 years or so, it seems to have lagged what we've seen at some of your peers. Initially, I think a lot of people were concerned that this was because of the fallout from Willis. You've highlighted the capital markets activity pressuring your results more than peers as well. I'm wondering if you could talk about why you feel your growth has lagged some of your large peers, even though historically, you've been fairly consistent with growth with most of the other competitors.

So Jimmy, I appreciate the question. I'll step back and just orient overall for Global Aon, how we think about the firm and progress over time. First of all, this is not about one quarter. It really is about looking across the year, how we're performing across Global Aon over the course of time. Our mission right now is to continue to push and amplify the 3x3 plan over the next three years, capitalizing on risk capital and human capital, amplifying through Aon Business Services, and delivering Aon Client leadership. Jimmy, we know that this will deliver both top and bottom line performance, as well as double-digit annual free cash flow growth compared to our '23 baseline that Christa described. In the quarter, our goals were to accelerate the 3x3 plan. We think about ABS, the introduction of our analyzers, and client experience improvements; client response has been exceptional and we made real progress in the quarter. The announcement of NFP gives us game-changing access into the North American middle market. If we step back, we feel very good about the trajectory and what we're going to be able to do over time and deliver on the 3x3 plan clearly for great outcomes for clients, colleagues, and ultimately for our shareholders. I just want to reiterate, as Christa described, we're at mid-single-digit organic growth or greater, and that commitment holds across '24 and over the long term, and we fully expect to translate that into strong top line and bottom line performance.

Okay. And then just following up on buybacks. I'm assuming this year is going to be lower than last year, partly because of the drag from NFP and also the drag due to the restructuring program. But if we think about Q1, was it also depressed because of just the seasonality of cash flows? Or is this sort of a normal quarter in terms of buybacks?

Yes. So Jimmy, thank you for the question. I did actually give specific guidance in my opening remarks about buyback because I recognize that there are a lot of puts and takes around free cash flow. While buyback will be lower than last year, we expect it will still be substantial for the full year 2024 at $1 billion or more based on our current M&A expectations for the rest of the year. Additionally, Q1 is our seasonally smallest free cash flow quarter.

Congrats, Christa. On the NFP deal closing, is there anything we should be aware of regarding the shares issued to the owners of NFP and whether there's a lockup or expected sale of those shares over time, given how large an amount it is?

Thanks very much for the question. We did issue the 19 million shares yesterday, and we haven't disclosed anything related to the lockup. What we can say is the NFP management team did receive a meaningful amount of Aon shares, and the purchase agreement refers to their lockup period. We have spent time with our new investors, who are really excited about the Aon story and appreciate how the acquisition furthers our Aon United strategy and are particularly excited about the 3x3 plan too.

My first question, I was hoping to get more color just on why the new business was down year-over-year in the U.S. specifically versus other regions? Greg, I know you called out some business lines, but can you just help us think about how that might rebound from here?

I appreciate the question, Elyse. Starting overall, we have a strong profile across the board globally, as we said before, both on retention and new business overall. We just highlighted a couple of areas in the U.S. where we're seeing some pressure. That will rebound over time as we continue to converse with clients about the opportunities they have regarding their programs. Eric, anything you'd add to that perspective?

Yes. Great. You talked about D&O in particular, but I would also say we've had solid growth in areas like energy and construction and other places where we're investing in talent to grow our capabilities. That's the sector piece, but we're also investing in geographic areas like Continental Europe and Asia Pacific, where we're seeing good growth. So I think we will see great opportunity for us as we proceed through the year.

And then in terms of the transactional M&A and the SPAC and IPO business, that’s been a headwind for you guys over the last six to seven quarters. How would Q1 compare? Have you started to see any of that business come back, or would you still say we’re close to trough levels?

So Elyse, I don't think there's anyone on the planet that looks at it closer than us; we've been watching it. You hear people talk of green shoots, but the reality is, our opportunity happens when the deals close. Right now, you hear things about demand and people wanting to do transactions, but it remains fairly depressed.

I think what we would say, Elyse, as Eric described, we see the pipeline. We love it. It looks very strong, but we don't count it anymore. We count it when it's done. We see the opportunity; we will count on when it's executed. Overall, we feel good about the progress in Q1 and the trajectory moving forward.

Christa, congratulations. One question on the first quarter margin. If we take out fiduciary investment income and the savings, it doesn't seem like there's been a lot of margin expansion despite the 5% organic growth. I was hoping you could walk us through why that would be the case.

Yes. Meyer, the way we think about margins is total margins. I know you're breaking it into different components, and I understand the math. We think about gross margins, which are substantial, and then we reinvest to deliver net margin expansion each year, which we will deliver again in 2024. That's driven by organic revenue growth, portfolio mix shift, and restructuring savings, which will drop to the bottom line and efficiencies for Aon Business Services. We continue to invest in technology in Aon Business Services to drive future innovation and growth with clients.

Just wanted to hear your guys' opinion on the potential FTC ban of noncompetes. What sort of impact might that have on your business and specifically on the acquisition economies of NFP?

I'll start overall. First, Dave, I appreciate the question. This is not something we generally engage in, particularly in the U.S. The macro point is really the talent question. Maybe Eric can offer some thoughts on that; it's our focus.

Yes. Regardless of the attrition numbers, which are historically low, and our ability to attract talent into the firm, we talked previously about the various tools we're investing in, and the culture and team environment are critical to retaining people. As Greg said, we don't typically enter into noncompetes. It's not a big issue for us, but it's all the other factors driving it. The opportunity for us to work together to add more value to their clients ultimately adds value to their colleagues through additional capabilities and opportunities; the scale we’ll achieve with ABS, whether it’s efficiency or the ability to deliver insights and tools across health and risk, is significant as we move forward. We're all excited about that.

I think in the previous presentation on NFP, the target was for similar to historical levels of total revenue growth, about 14%. Are you guys still confident in that projection considering potential slowing levels of inflation or caution around the economy moving forward?

Rob, maybe I'll just take a step back. It’s worthwhile reflecting on the NFP process, and Eric can comment specifically on the opportunities we see. We're feeling great about this combination; this market offers vast potential. We have the opportunity, thanks to ABS, to go after the market. This isn't just about being larger but also better in delivering services, a capably integrated approach that respects local strengths while leveraging global capabilities.

There are two components to this. First, the independent and connected approach respects NFP's local client service methods. The efficiency through our ABS platform allows for cost synergies and enhances revenue opportunities through content and capabilities. This strategic connection will drive organic growth while their M&A pipeline remains strong as we look to the future.

It’s not just bigger; it's about being better at delivering value to our clients, which is critical. We had high expectations entering the conversations, and they’ve been surpassed through our collaboration. While we’re not providing exact guidance on revenue growth, we see substantial opportunities in this sizable market.

Thank you, everyone. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.