Climate Risk and Insurance - AON is focused on four mega trends, including weather and climate risk, highlighting the devastating impact of storms like Hurricane Melissa in the Caribbean [3] - Catastrophe bonds (CAT bonds) are used to provide immediate financial support to countries affected by severe weather events, with a parametric CAT bond in place for Jamaica that will pay out over $150 million [5] - The CAT bond industry is approximately $55-60 billion, with insurance-linked securities reaching roughly $120 billion; AON is a leader in structuring CAT bonds, having placed around $18 billion [7] - Globally, nearly $370 billion in catastrophe losses occurred, with only about 40% (approximately $160 billion) being insured [12] AON's Financial Performance and Growth Drivers - AON reported a strong quarter with 7% organic growth and a 12% increase in adjusted EPS, driven by its commercial risk business [14] - Growth in the commercial risk business is fueled by the boom in AI and technology, specifically the construction of data center infrastructure [15][16] - The reinsurance business, which includes CAT bonds, also contributed to growth [17][18] - Workforce solutions, including healthcare and benefits, are another growth area, driven by companies seeking to attract and retain employees [18][19] Data Centers and AI - Hyperscalers spent nearly $70 billion in the last quarter on data center infrastructure build [16] - Data centers are a significant opportunity for the insurance industry, with companies expected to spend $500 billion over the next 5 years on infrastructure [20] - Traditional insurance is a $46 trillion industry, while data center companies are projected to spend $2 trillion in capital expenditures over the next five years, necessitating other capital sources [24] - AON has established a data center lifecycle program to provide end-to-end coverage and insight, from construction to cyber security, positioning the company to benefit from the AI trade [27][28]

Investment Strategy - Norway's sovereign wealth fund is leveraging AI to safeguard its portfolio against climate risk [1]

Investment Strategy & Risk Management - Norway's sovereign wealth fund, managing $2 trillion, is integrating AI to mitigate climate risk [1]

Climate Risk Management - South African actuaries introduced the country's first climate index [1] - The index aims to manage risks and losses from more frequent extreme weather events [1]

Investment Trends - Climate risk management is increasingly important for European institutional investors when assigning mandates [1] - Amundi executive highlights the growing importance of climate risk [1]

Core Insights - The research by Marsh highlights a significant gap between climate risk assessments and the adaptation strategies organizations are implementing [1] - Despite recognizing climate risks, organizations are not performing comprehensive cost-benefit analyses to support further investments in adaptation [1] Summary by Categories - **Climate Risk Awareness** - Organizations acknowledge the existence of climate risks [1] - **Adaptation Investment** - There is a lack of comprehensive cost-benefit analyses to justify adaptation investments [1] - This lack of analysis leads to significant gaps in the effectiveness of adaptation strategies [1]

Climate Risk Assessment - Many businesses are overlooking the full extent of their climate risk [1] - Even after experiencing the impacts of more extreme weather first-hand, businesses still overlook climate risk [1]

Companies will soon be expected to reflect climate risk in their profit and loss accounts, revealing to investors how floods, storms and droughts affect bottom lines https://t.co/I3QDaFNMwE ...

Financial Data and Key Metrics Changes - MSCI reported organic revenue growth of 10%, adjusted EBITDA growth of 11%, and adjusted earnings per share growth of almost 14% in Q1 2025 [5][6] - The company repurchased $275 million worth of shares during Q1 and through April 21, reflecting confidence in the stock's value [6][24] - The retention rate was over 95%, with organic subscription run rate growth of 8% and asset-based fee revenue growth of 18% [6][20] Business Line Data and Key Metrics Changes - Among client segments, hedge funds achieved a 14% subscription run rate growth, while banks and broker dealers saw over 9% growth [11][12] - Wealth managers experienced a 15% subscription run rate growth, driven by index solutions and sustainability initiatives [13] - Asset owners delivered a 12% subscription run rate growth, with notable strength in analytics and private capital solutions [15] - The subscription run rate for analytics grew by 7%, while sustainability and climate solutions saw almost 10% growth [22] Market Data and Key Metrics Changes - Non-ETF AUM linked to MSCI indexes grew by 20% year-over-year, reaching nearly $3.9 trillion [20][70] - MSCI linked equity ETFs had an ending balance of $1.78 trillion, attracting nearly $42 billion of inflows [20] - The company captured approximately 45% of all inflows into products linked to MSCI DM ex US, EM, and all country exposures [21] Company Strategy and Development Direction - MSCI is focusing on enhancing its product offerings, particularly in custom indices and private capital solutions, to meet evolving client needs [8][16] - The company is integrating the Foxbury F9 platform to support custom indices, which is expected to drive further growth [7] - A partnership with Moody's was announced to develop independent credit risk assessments for private credit, enhancing MSCI's capabilities in this area [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver consistent financial results amid current market turmoil [10][24] - There is a noted shift in client sentiment towards international markets, which may benefit MSCI's asset-based fees [46][47] - The company is preparing for a range of possible market outcomes and has various levers to manage expenses based on market conditions [36][39] Other Important Information - The effective tax rate for Q1 was 12.8%, with expectations for the remainder of the year to be in the range of 19% to 21% [25][26] - The company continues to face headwinds in the Real Assets segment due to client consolidation [23] Q&A Session Summary Question: Selling environment and new sales - Management noted that there is currently no evidence of a change in purchasing habits or pipeline despite market volatility, with some deals expected to close in Q2 [29][30] Question: Downturn playbook and expense management - Management discussed their ability to adjust expenses based on market performance, with various levers available to manage costs effectively [36][39] Question: International investing trends - Management confirmed a marked change in client sentiment towards international markets, which could positively impact subscription sales [44][46] Question: Pricing trends for renewals and new sales - Pricing increases for new recurring sales were in line with previous years, with enhancements to existing solutions factored into pricing strategies [55][56] Question: Retention rates and future expectations - Retention rates remained strong, with a healthy rebound noted among hedge funds and banks, though caution was advised for the remainder of the year due to potential market volatility [78][80] Question: Growth expectations for analytics - Management indicated that while Q1 was not a period of significant turmoil, the need for analytics is expected to grow as clients seek more data and transparency [84][88] Question: Sustainability and climate segment growth - Management acknowledged a cyclical headwind in sustainability but remains optimistic about long-term growth driven by changing client demands and regulatory burdens [91][92]