AON Q4 Earnings Surpass Estimates on New Business Growth

Core Insights - Aon plc reported fourth-quarter 2024 adjusted earnings of $4.42 per share, exceeding the Zacks Consensus Estimate by 4.3% and reflecting a 14% year-over-year improvement [1] - Total revenues increased by 23% year over year to $4.1 billion, although it fell short of the consensus mark by 1.1% [2] - Organic revenue growth was recorded at 6% [2] Financial Performance - Total operating expenses rose 18% year over year to $3.06 billion, driven by higher ongoing costs from the NFP acquisition and increased intangible asset amortization [4] - Adjusted operating income grew 21% year over year to $1.38 billion, surpassing estimates [5] - The adjusted operating margin decreased by 50 basis points year over year to 33.3% [5] Segment Performance - The company restructured its reporting framework into two segments: Risk Capital and Human Capital, effective from Q4 2024 [6] - In the Risk Capital segment, Commercial Risk Solutions saw organic revenue growth of 6% year over year, with revenues of $2.19 billion, a 15% increase [7] - Reinsurance Solutions also experienced a 6% organic revenue growth, with revenues of $351 million, beating the consensus estimate [8] - In the Human Capital segment, Health Solutions reported a 5% organic revenue growth, with revenues climbing 40% year over year to $1.07 billion [9] - Wealth Solutions achieved an 8% organic revenue growth, with revenues soaring 44% year over year to $542 million, exceeding estimates [10] Financial Position - As of December 31, 2024, Aon had cash and cash equivalents of $1.1 billion, a 39.5% increase from the previous year [12] - Total assets reached $49 billion, up 44.2% year over year, while long-term debt rose by 62.7% to $16.3 billion [12] - Cash flow from operations was $1.2 billion, down 5% year over year, and adjusted free cash flows decreased by 6% to $1.1 billion [13] Capital Deployment - Aon repurchased 0.6 million class A ordinary shares for approximately $200 million in Q4 2024, with a remaining buyback capacity of around $2.3 billion [14] - A quarterly cash dividend of 67.5 cents per share was approved, to be paid on February 14, 2025 [14] Full-Year Update - For the full year, total revenues increased by 17% year over year to $15.7 billion, with adjusted earnings rising 10% to $15.60 per share [15] - Adjusted operating income grew 17% year over year to $4.9 billion, while the adjusted margin decreased by 10 basis points to 31.5% [15] Forward Outlook - Aon anticipates mid-single-digit or higher organic revenue growth for 2025 and expects adjusted operating margin expansion [16] - Projected adjusted EPS growth is strong, with free cash flow expected to see double-digit growth in the long term [16] - The Aon United Restructuring program aims for annual run-rate savings of approximately $350 million by the end of 2026, with $40 million in net savings realized in Q4 [17]