There was a lot from the investor day that was pure, perfectly distilled Classic Aon.
The obsessive focus on clients (485 mentions). The insistence on the centrality of a single connected enterprise. The commitment to increased margins every single year. The emphasis on free cashflow as the barometer of success. And the skilfully crafted messaging that tied together interconnected secular trends, organizational architecture, and the industry’s mission.
And, of course, the central role of Greg Case who has now been Aon CEO for 20 years and who sources suggest will remain until at least 2028.
But there were also important elements of New Aon. The storytelling was shot through with growth language, with Aon referred to as “a growth company”. The infusion of additional production talent was another important thread running through the event. Aon stressed that earnings were being generated to reinvest in the firm to support future growth. And it was made clear that Aon is an M&A company as well as a capital return company, with designs on a larger share of the US middle market.
Plus there was a new team for investors to get to know, with long-term number 2 Eric Andersen going in search of a CEO role elsewhere and long-serving CFO Christa Davies also riding off into the sunset. CFO Edmund Reese impressed, but the depth of the broader team was showcased including recently promoted CEO of global solutions Andy Marcell, COO Mindy Simon, Aon’s chief administrative officer Lisa Stevens and CEO of global regions and North America Lori Goltermann.
Time will tell how this team measures up against the highly respected Davies and Andersen. But the other new elements are all clear positives, with Aon flexing in ways that look positive for franchise building and long-term success.
Centrally, the firm is pegging its future success to delivering value creation via the performance of its operating engine, not by pulling financial levers.
To do that it will need to post above-market organic growth, delivered via a differentiated analytics-led offering to clients, an unusually interconnected firm and a single access point for clients, while deploying capital effectively into its M&A strategy in the US mid-market and beyond.
Of course, how new does this have to be to be dubbed New? A number of these changes in approach and messaging started to emerge as long ago as H1 2023, as Aon started to answer long-term questions after the dust settled on the Willis deal breakdown. But the investor day felt like a fuller elaboration of these new threads.
On the day, Aon also tied itself to the mast on some exacting financial targets, not just restating its challenging 2025 guidance, but indicating that it thinks it can deliver mid-single-digit organic growth (i.e. 5% or more) across the medium term, while driving margins up 70-100 bps per year.
The company chose not to try and pull any rabbits from the hat for the investor day, with the focus instead on articulating the strategy, setting out the way it was seeking to accelerate execution, and seeking to strengthen investor conviction around forward financial performance.
But it still put on a show, and it was hard not to walk away more confident that Aon had the right priorities and was laser-focused on executing on them.
The pitch
The story presented here was tight, a perfectly tessellating pitch for a business – why it plays where it does, how secular trends are transforming the landscape, how it has engineered its business to capitalize on the opportunity, its long track record of delivery for investors etc etc.
You can take the man out of McKinsey, but you can’t take McKinsey out of the man.
Case argued that the industry needs to respond to increasing client need, driven by increased volatility, reflecting the interconnectivity of megatrends like trade, technology and weather.
Mounting client need and the falling share of GDP taken by the global risk industry represents what Case dubbed “a call to action”.
Aon United – the firm’s decade-plus strategy based around creating a single connected enterprise – remains the company’s answer. Right now, Aon is 18 months into its 3x3 plan – a 3-year plan to accelerate its strategy.
The 3x3 plan is three conjoined pieces that slot together, backed by a close to $1bn investment.
First, the connected capabilities of the firm, which includes the walls between its insurance and reinsurance broking units being broken down, heavily geared towards offering new cross-wall solutions to clients.
Second, the bridge to the clients, which Aon is trying to reconstruct via a single point of access for its largest customers.
Third, Aon Business Services, its 15,000-staff shared platform that supports the group’s P&C and human capital capabilities.
This is all Classic Aon – an always evolving answer to how you engineer the firm to maximize value for clients and colleagues.
But some of the newer elements demonstrate Aon synthesizing some of the critiques it has faced, and generating answers.
The central critique of Aon was that too much of its EPS – and ultimately therefore share price – growth had been generated by pulling financial levers like share buybacks, or via restructures designed to squeeze out cost and work the staff base harder. Or through portfolio optimization – i.e. sell business processing, grow reinsurance.
Critics argued that Aon became over-focused on the share price and juicing its return on invested capital, ignoring the long-term firm-building that it could have pursued through deploying more cash into M&A and the addition of talent. Margins and capital return were perceived by investors as being put first by management. Aon was the king of buybacks.
One key barometer of this approach was Aon’s decision to hold headcount flat for a number of years amidst a war on talent where rivals – including Marsh McLennan – looked to aggressively add headcount to exploit the tailwinds of the brokerage supercycle.
After a long period of remarkable success with huge margin expansion and tremendous shareholder value creation, the long-term consequences of some of these decisions arguably became manifest in certain areas.
Aon relatively underperformed Marsh McLennan on organic growth in its broking operations for much of 2022-24, a period of major growth tailwinds for brokers that came after a 7,000-person hiring spurt at Marsh McLennan in 2021. (Aon closed the negative delta through 2024, narrowly outperforming in Q1 2025 as the output from its investments started to materialize.)
The second very visible barometer has been the remarkable march of Gallagher’s share price, with the smaller Illinois rival outstripping Aon on valuation multiple and market cap. Investors have clearly signalled that buybacks-first capital allocation is not their preferred approach in an industry where M&A has been such a winning strategy.
Aon decided as early as the first half of 2023 that it was going to break with its earlier approach dramatically by deploying significant amounts of cash (and issuing equity) to buy mid-market platform NFP. Even at the expense of capital return.
And you have seen it look to make big investments in talent to drive growth, with its total headcount up even if you net out the 7,700 additional NFP employees that joined through the deal.
These shifts that have been taking place – some crystal clear to everyone, others apparent to close Aon watchers, and others perhaps not visible at all above the water line – were underscored by the investor day.
Revving the organic growth engine
The messaging majored on the centrality of organic growth. CFO Reese, for example, said: “The financial model is focused on investment in the business to drive top line growth.”
In response to a question, Case still looked both ways when asked directly about growth vs margin, but it is clear that the pendulum has moved in the direction of organic growth.
Perhaps the clearest illustration of that is the way in which Aon Business Services (ABS), the shared platform for the trading businesses is discussed. ABS has been the central driver of Aon’s remarkable 1300-bps expansion in adjusted operating margin over the last decade.
Case repeatedly referenced the “dual mission” of ABS, suggesting that it had been more of a margin driver in the past – but that it was now about “winning with clients” and generating revenue. Reese described it as helping Aon create the “tools and capabilities to help win clients”.
Aon argued that ABS is now the data nexus of the organization, the laboratory of innovation where analytics tools are cooked up and cool stuff is created to allow the firm to win new business.
The broker also repeatedly stressed its emphasis on hiring producers. Case talked about investments in talent, with “more and more and more in the high priority areas”. Reese added that Aon was “investing in revenue-generating, client-facing talent.”
Aon said that it had increased the number of revenue-generating hires by 4% in 2024, and is aiming to increase this by 4-8% in 2025. The broker said that new revenue-generating hires typically bring in $300,000 to $350,000 of revenues at maturity, and said that its Q1 2024 cohort was already at 55% of that level and added 20 bps to organic growth in Q1. It expects this to rise to 40-45bps in Q4, and to have a blended impact of 30-35 bps this year.
With market organic growth slowing, Aon reaffirmed its 2025 guidance of mid-single-digit organic growth or better – but also punchily indicated that it believes it can sustain this 5%+ level into the medium term.
The economy’s strength is a big wildcard given the current political environment. But even allowing for that, it seems clear that Aon is promising investors that it will be an above-market organic growth business from here on out.
It argued that it could hit this level based upon increased new business offsetting reduced uplift from rates and inflation.
Aon is assuming a flat to slightly improved client retention rate (95-96%) and 9-11 pts of new business. Alongside this, it assumes 0-2 pts of market lift (down from 3-4 pts recently) reflecting reduced P&C rates, offset by increased coverage and limits, as well as some lift from health and wealth.
The company pushed back firmly on the idea that its fate is tied to the P&C pricing cycle, showing that its own revenues were more closely correlated over the last decade with nominal GDP than rates.
Note, however, that by increasing exposure to the mid-market via acquiring NFP that it will now be more rate-sensitive than when its heavier skew to large account business meant it had a larger percentage of fee-driven revenues.
There was a fascinating data point around its “Aon Client Leadership” initiative, where its largest 500 clients (~$10bn+ revenues) have a single account leader. Aon said that growth was 3% higher for clients that had the single point of access, and that these clients saw a 20% increase in product penetration in 2024. It is going to increase the number of clients served this way to 750 in 2026, and push it progressively higher.
Big promises on margin
Aon also made some big, bold promises on margins. And these are big, bold promises. Because we have been in a period of unprecedented above-trend growth for brokers which has helped drive margins ever higher. Aon is sitting at around a 32% adjusted operating margin, up from 19.5% in 2014.
Again, Aon was extremely clear with what it intends to deliver, with line of sight on 70-100 bps of margin improvement in the coming years – even if it shrugged off questions about the 40% terminal margin that sometimes gets thrown around.
Brokers seeking further margin improvements will have to work harder from here given already high bases, the less supportive organic growth environment, and economy-wide wage inflation that is still running at 4.3. There were already signs in Q1 that brokers were finding it more difficult to deliver on margins, with margins at Aon and Marsh McLennan narrowing modestly.
To try and give investors conviction on margin expansion, Aon pointed to scope for 100-120 bps of gains as it scales ABS. Under this heading it cited moving further staff from ABS to offshore locations, retiring old software applications, and increased use of cloud applications. It also considers ABS to be the cradle of AI – and is embedding AI to support its code development work.
Other areas that will support margin expansion include further real estate rationalization, with its office space down 16% over the last 18 months, and supplier optimization. Aon also expects to continue to optimize its portfolio by divesting lower margin areas, pointing to 16 divestitures in 2024 worth $732mn.
But even as Aon made ambitious – and familiar – promises of margin expansion, the messaging was different.
Reese told investors that Aon has built a flywheel where the increased scale and efficiency driven through ABS creates the capability to invest and drive further earnings growth.
“Sustainable organic revenue growth and enhanced earnings power on an ongoing basis – that’s the objective,” the CFO said. “Margin is a means to an end, not the end itself.”
“Substantial inorganic investments”
For a company that has historically been the king of buybacks, there were clear statements that reinvestment of cashflow back into the business was central to the plan. This was New Aon.
The headline language was that Aon’s capital deployment approach would be “balanced”.
But this included the statement that “we're committed to making substantial inorganic and organic investments to capture this [mid-market] opportunity.”
Aon balanced this language with strong statements on capital return, pointing to double-digit percentage increases in dividends in eight of the last 10 years, and adding that it expected further increases.
It said it was on course for $1bn of buybacks this year, and pointed out that excluding dividends, its cash has gone roughly 50:50 to repurchases and acquisitions over the last decade.
Aon flagged that this debt deleveraging post-NFP would bring debt-to-Ebitda down to around 2.9x, its target debt level, by Q4 2025. It pointed to a potential $6bn of capital resources for 2026, leaving open the inference that it could be off the sidelines on major M&A by year-end.
With a lot of PE-backed inventory still without an obvious exit route, Aon will have opportunities to put its capital to work to supercharge NFP if it wants to.
"Industrial strength execution”
With a bold vision of a genuinely differentiated player and financial targets that don’t take a step back due to the deteriorating operating environment, Aon has set the bar high for itself.
Case said that the company was “beyond strategy” at this point, with the course already set. That instead what it was talking about with the 3x3 was “a straight up massive tour de force effort around acceleration, around scale. It is industrial strength execution.”
To deliver against these ambitions, it is going to require industrial strength execution. But looking at the firm today, you can see the digital equivalents of blast furnaces ready and pistons and pulleys poised.