Aon plc (AON) Bundle
A Brief History of Aon plc
Aon plc, a global professional services firm providing a broad range of risk, retirement, and health solutions, has undergone significant transformations in its operational and financial landscape, particularly in 2024.
Acquisition of NFP
On April 25, 2024, Aon completed its acquisition of NFP Intermediate Holdings A Corp., a middle-market provider of property and casualty brokerage, benefits consulting, wealth management, and retirement plan consulting. The total purchase price was approximately $9.1 billion, comprising roughly $3.2 billion to settle NFP’s indebtedness and about $5.9 billion in Aon’s class A ordinary shares.
Financial Performance
For the third quarter of 2024, Aon reported total revenue of $3.721 billion, up from $2.953 billion in the same quarter of 2023. For the nine months ended September 30, 2024, total revenue reached $11.551 billion, compared to $10.001 billion for the same period in 2023.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $3.721 billion | $2.953 billion | $11.551 billion | $10.001 billion |
| Net Income | $355 million | $691 million | $1.071 billion | $1.050 billion |
| Adjusted Diluted Earnings per Share | $2.72 | $2.32 | $11.16 | $10.26 |
Share Repurchase Program
Aon has an ongoing share repurchase program that was initially established in April 2012. As of September 30, 2024, approximately $2.5 billion remained authorized for repurchase. To date, Aon has repurchased a total of 171.6 million shares at an aggregate cost of about $25.0 billion.
Debt and Liabilities
As of September 30, 2024, Aon's total debt was $17.1 billion, a significant increase from $9.995 billion at the end of 2023. The company incurred $1 million in debt extinguishment charges during the third quarter of 2024 related to its delayed draw term loan.
| Debt Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Debt | $17.1 billion | $9.995 billion |
| Total Liabilities | $43.332 billion | $34.701 billion |
Cash Flow and Capital Expenditures
For the nine months ended September 30, 2024, Aon reported free cash flow of $1.7 billion, a decline of $299 million from the previous year. Capital expenditures during the same period amounted to $163 million, compared to $203 million in 2023.
Pension Contributions
Aon expects to make total cash contributions of approximately $2 million, $53 million, and $13 million to its significant U.K., U.S., and other major pension plans, respectively, during 2024.
| Pension Contributions | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| U.K. Pension Plans | $1 million | $1 million | $3 million | $3 million |
| U.S. Pension Plans | $13 million | $6 million | $31 million | $27 million |
| Other Major Pension Plans | $2 million | $2 million | $9 million | $10 million |
Market Position and Future Outlook
Aon continues to leverage its data analytics capabilities and global reach to enhance its service offerings, particularly following the acquisition of NFP. The integration of NFP is expected to drive further growth and operational efficiencies in the coming years.
A Who Owns Aon plc (AON)
Major Shareholders
As of early 2024, Aon plc's ownership is characterized by a mix of institutional and retail investors. The largest shareholders include:
| Shareholder | Type | Ownership Percentage |
|---|---|---|
| The Vanguard Group, Inc. | Institutional | 8.1% |
| BlackRock, Inc. | Institutional | 7.9% |
| State Street Corporation | Institutional | 4.5% |
| Fidelity Investments | Institutional | 4.2% |
| Wellington Management Co. LLP | Institutional | 3.7% |
| Other Institutional Investors | Institutional | 30.0% |
| Retail Investors | Individual | 37.6% |
Recent Acquisitions and Impact on Ownership
Aon completed the acquisition of NFP on April 25, 2024, for a total preliminary purchase price of $9.1 billion, including cash and stock considerations. This acquisition significantly influences the composition of Aon’s shareholder base and its market valuation.
Share Repurchase Program
Aon has an active share repurchase program with a total authorization of $27.5 billion. As of September 30, 2024, Aon had repurchased approximately 171.6 million shares for an aggregate cost of approximately $25.0 billion. The remaining authorized amount for share repurchases was approximately $2.5 billion.
Financial Overview
In the third quarter of 2024, Aon reported total revenue of $3.7 billion, a 26% increase from the prior year, driven by the acquisition of NFP and organic revenue growth of 7%. The net income attributable to Aon shareholders was $343 million, or $1.57 per diluted share.
Market Capitalization
As of the end of September 2024, Aon’s market capitalization was approximately $73 billion. This reflects the company’s robust financial performance and strategic acquisitions.
Institutional Ownership Trends
Institutional ownership of Aon has shown a steady increase, reflecting confidence in the company's growth strategies and financial health. The following table outlines the institutional ownership trends over recent quarters:
| Quarter | Institutional Ownership Percentage |
|---|---|
| Q1 2024 | 55.0% |
| Q2 2024 | 56.3% |
| Q3 2024 | 57.2% |
Dividends
Aon has maintained a consistent dividend policy, with dividends paid to shareholders amounting to $0.675 per share in the third quarter of 2024, totaling approximately $147 million.
Summary of Key Financial Metrics
| Metric | Value |
|---|---|
| Total Revenue (Q3 2024) | $3.7 billion |
| Net Income (Q3 2024) | $343 million |
| Market Capitalization | $73 billion |
| Dividends Paid (Q3 2024) | $147 million |
| Share Repurchase Authorization Remaining | $2.5 billion |
Aon plc (AON) Mission Statement
Mission Statement Overview
Aon plc aims to empower economic and human possibility for clients and their stakeholders around the world. The mission emphasizes risk management, insurance brokerage, and consulting services that help clients achieve their objectives.
Strategic Focus Areas
- Client-Centric Solutions: Aon focuses on providing tailored solutions that address specific client needs.
- Innovative Technology: The company invests in technology to enhance service delivery and operational efficiency.
- Global Reach: Aon operates in over 120 countries, allowing it to leverage global insights and resources.
Recent Financial Performance
As of September 30, 2024, Aon's financial metrics reflect its operational efficiency and market presence:
| Financial Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Revenue | $3.721 billion | $2.953 billion | $11.551 billion | $10.001 billion |
| Net Income Attributable to Aon Shareholders | $343 million | $456 million | $1.938 billion | $2.066 billion |
| Diluted Earnings per Share | $1.57 | $2.23 | $9.20 | $10.03 |
| Operating Income | $623 million | $691 million | $2.744 billion | $3.006 billion |
| Adjusted Operating Margin | 24.6% | 24.3% | 30.8% | 30.8% |
Organic Revenue Growth
Aon's organic revenue growth was reported at 7% for the third quarter of 2024, driven by strong retention and new business acquisition. This performance indicates the effectiveness of Aon's client engagement strategies.
Acquisition Strategy
On April 25, 2024, Aon completed the acquisition of NFP, a significant player in the middle-market sector. The total purchase price was approximately $9.1 billion, with $3.2 billion allocated to settle NFP's indebtedness and the remainder in stock and cash to shareholders.
Share Repurchase Program
Aon has an ongoing share repurchase program with an authorized amount of approximately $2.5 billion remaining as of September 30, 2024. Since its inception, Aon has repurchased a total of 171.6 million shares for approximately $25.0 billion.
Debt and Financial Obligations
As of September 30, 2024, Aon reported total debt of $17.1 billion, reflecting an increase from $11.2 billion at the end of 2023. The company continues to manage its debt profile actively to support its growth initiatives and acquisitions.
Conclusion
Aon plc’s mission statement and strategic initiatives emphasize its commitment to risk management and client service, supported by robust financial performance and growth strategies.
How Aon plc (AON) Works
Business Overview
Aon plc operates as a leading global professional services firm providing a broad range of risk, retirement, and health solutions. The company utilizes its extensive experience, global reach, and comprehensive analytics to assist clients in navigating complex challenges related to risk and human capital.
Financial Performance
As of September 30, 2024, Aon reported significant financial metrics. The company achieved:
- Total revenue of $3.721 billion for the third quarter of 2024, up from $2.953 billion in the same quarter of 2023.
- For the first nine months of 2024, total revenue reached $11.551 billion, compared to $10.001 billion in the previous year.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $3.721 billion | $2.953 billion | $11.551 billion | $10.001 billion |
| Net Income | $343 million | $456 million | $1.938 billion | $2.066 billion |
| Diluted EPS | $1.57 | $2.23 | $9.20 | $10.03 |
| Operating Income | $623 million | $691 million | $2.744 billion | $3.006 billion |
Expenses and Profitability
The total operating expenses for Q3 2024 were $3.098 billion, reflecting an increase from $2.262 billion in Q3 2023. The primary contributors to this increase included:
- Compensation and benefits expenses of $2.150 billion, up from $1.685 billion.
- Amortization and impairment of intangible assets rising to $174 million from $20 million.
Cash Flow and Capital Management
For the first nine months of 2024, Aon reported:
- Net cash provided by operating activities of $1.835 billion.
- Free cash flow decreased to $1.7 billion, down by $299 million from the prior year.
Debt and Equity
As of September 30, 2024, Aon had total debt of $17.1 billion, a significant increase from $11.2 billion at the end of 2023. The company also maintains a share repurchase program with a remaining authorized amount of approximately $2.5 billion.
| Debt Metric | Amount |
|---|---|
| Total Debt | $17.1 billion |
| Commercial Paper Outstanding | $0 |
| Shares Repurchased (Q3 2024) | 0.9 million |
| Average Price per Share (Q3 2024) | $339.31 |
Acquisition Activity
On April 25, 2024, Aon completed the acquisition of NFP for an aggregate purchase price of $9.1 billion, including cash and stock considerations. This acquisition significantly contributed to revenue growth and operational scale.
Market Position and Strategy
Aon's strategy emphasizes the integration of data analytics across its service offerings to enhance client solutions. The company focuses on organic growth and strategic acquisitions to broaden its capabilities in risk management and human capital.
Outlook
Given the current market trends and Aon's ongoing initiatives, the company aims to further strengthen its position in the global professional services sector while addressing client needs in a dynamically changing environment.
How Aon plc (AON) Makes Money
Revenue Streams
Aon plc generates revenue through several key segments, including Commercial Risk Solutions, Reinsurance Solutions, Health Solutions, and Wealth Solutions. In 2024, the total revenue for Aon increased to $11.6 billion, reflecting a 15% growth compared to the previous year, driven by organic growth and acquisitions.
| Segment | Q3 2024 Revenue (millions) | Q3 2023 Revenue (millions) | YTD 2024 Revenue (millions) | YTD 2023 Revenue (millions) |
|---|---|---|---|---|
| Commercial Risk Solutions | $1,852 | $1,585 | $5,675 | $5,137 |
| Reinsurance Solutions | $503 | $465 | $2,305 | $2,149 |
| Health Solutions | $870 | $552 | $2,265 | $1,670 |
| Wealth Solutions | $499 | $352 | $1,332 | $1,054 |
| Total Revenue | $3,721 | $2,953 | $11,551 | $10,001 |
Commercial Risk Solutions
This segment accounted for $5.7 billion of revenue in the first nine months of 2024, representing a 10% increase year-over-year, attributed to strong retention rates and net new business across major geographies. The growth was significantly supported by the acquisition of NFP, which contributed to overall organic growth of 6% during this period.
Reinsurance Solutions
Reinsurance Solutions reported $2.3 billion in revenue for the first nine months of 2024, an increase of 7% from the previous year. This growth was primarily driven by a double-digit increase in facultative placements and strong retention in treaty placements.
Health Solutions
Health Solutions experienced a remarkable growth of 36% year-over-year, with revenues reaching $2.3 billion in the first nine months of 2024. This was fueled by strong demand in core health and benefits brokerage services, especially in EMEA, Asia, and Latin America.
Wealth Solutions
Wealth Solutions generated $1.3 billion in revenue for the first nine months of 2024, up 26% from the previous year. The growth was driven by strong performance in advisory services related to pension de-risking and investment management, reflecting a solid increase in net asset inflows.
Operating Income and Expenses
For the third quarter of 2024, Aon reported an operating income of $623 million, down from $691 million in the same quarter of 2023. The decrease in operating income was due to increased operating expenses, which rose to $3.1 billion, a 37% increase year-over-year, primarily due to the inclusion of NFP's operating expenses and investments in long-term growth initiatives.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Operating Income (millions) | $623 | $691 | $2,744 | $3,006 |
| Total Operating Expenses (millions) | $3,098 | $2,262 | $8,807 | $6,995 |
| Net Income (millions) | $355 | $467 | $1,986 | $2,121 |
| Diluted EPS | $1.57 | $2.23 | $9.20 | $10.03 |
Acquisition Impact
The acquisition of NFP in April 2024 for approximately $9.1 billion significantly impacted Aon's revenue structure. The acquisition included $3.2 billion to settle NFP's indebtedness and approximately 19 million shares valued at $5.9 billion. This strategic move is expected to enhance Aon’s capabilities in the middle-market segment while driving further organic growth.
Debt and Financial Position
Aon’s total debt as of September 30, 2024, stood at $17.1 billion, an increase of $5.9 billion compared to the prior year. This increase is largely attributed to the financing of the NFP acquisition. The company’s effective tax rate for the third quarter of 2024 was 20.9%.
| Metric | Amount (millions) |
|---|---|
| Total Debt | $17,090 |
| Effective Tax Rate | 20.9% |
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Article updated on 8 Nov 2024
Resources:
- Aon plc (AON) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Aon plc (AON)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Aon plc (AON)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.