Executive Summary / Key Takeaways

• Integrated Strategy Driving Growth: Aon's "Aon United" strategy, accelerated by its "3x3 Plan," is delivering consistent mid-single-digit or greater organic revenue growth by integrating Risk Capital and Human Capital solutions, deepening client relationships, and expanding into high-growth areas like the North American middle market via the NFP acquisition.
• Technological Edge and Operational Efficiency: Aon Business Services (ABS) and its suite of AI-powered "Risk Analyzer" tools and "Aon Broker Copilot" are foundational to Aon's competitive advantage, enhancing client outcomes, improving retention, and driving significant margin expansion through operational efficiencies and restructuring savings.
• Robust Financial Performance & Outlook: The company reported strong Q2 2025 results, including 6% organic revenue growth and 19% adjusted EPS growth, reaffirming its 2025 guidance for continued margin expansion and double-digit free cash flow growth, supported by disciplined capital allocation and deleveraging.
• Resilience Amidst Volatility: Despite a complex macroeconomic and geopolitical environment marked by megatrends like trade, technology, weather, and workforce shifts, Aon's mission-critical solutions are seeing increased client demand, positioning the firm as a trusted advisor.
• Strategic Talent Investment: Aon's focus on attracting and developing client-facing talent in priority areas, amplified by its differentiated platform and advanced analytics, is a key driver of sustainable new business generation and long-term value creation.

The Architect of Resilience: Aon's Enduring Strategy in a Volatile World

Aon plc, a global professional services powerhouse founded in 1919, has consistently evolved its core mission: to help clients navigate an increasingly complex world by providing a broad spectrum of Risk Capital and Human Capital solutions. At its heart, Aon's strategy is about shaping decisions for the better, enabling clients to protect and grow their businesses amidst profound transitions driven by megatrends such as trade, technology, weather, and workforce dynamics. This enduring commitment to client value, underpinned by strategic investments and operational excellence, forms the bedrock of its investment thesis.

The company's journey has been marked by strategic portfolio adjustments, including the 2017 divestiture of its benefits administration and business process outsourcing business to focus on core brokerage and consulting. More recently, Aon embarked on its ambitious "3x3 Plan" in 2024, a three-year initiative designed to accelerate its "Aon United" strategy. This plan is built on three pillars: leveraging its distinctive Risk Capital and Human Capital structure, embedding the Aon Client Leadership model, and accelerating Aon Business Services (ABS) to set new standards for service delivery and innovation. A pivotal move within this plan was the $9.1 billion acquisition of NFP Intermediate Holdings A Corp. in April 2024, significantly expanding Aon's footprint in the fast-growing North American middle market under an "independent and connected" operating model.

The Technological Edge: Aon Business Services and AI-Powered Solutions

Aon's competitive advantage is increasingly rooted in its technological differentiation, primarily through Aon Business Services (ABS). Described as the "industrial strength foundation powering Aon United," ABS is central to driving sustainable top-line growth and margin expansion. It achieves this by standardizing operations, integrating platforms, and creating capacity for strategic investments. In 2024 alone, ABS retired nearly 300 applications, demonstrating its commitment to streamlining and efficiency.

Aon's core technology manifests in a suite of advanced analytical tools, collectively known as Risk Analyzers. These include the Property Risk Analyzer, Cyber Risk Analyzer, and Health Risk Analyzer, all designed to provide clients with specific, tangible benefits. For instance, the Property Risk Analyzer stimulates the impact of insurance policy options to determine optimal risk retention versus transfer. The Cyber Risk Analyzer empowers risk managers and brokers to evaluate cyber risk and maximize insurance value, a critical need given that cyber events causing reputation risks can lead to an average 27% drop in shareholder value. The Health Risk Analyzer leverages predictive modeling and risk optimization to help clients identify and manage costs, crucial as healthcare inflation is projected to rise by 9-10% in 2025. These tools "open doors, broad discussions with our clients and increase win rates," directly contributing to Aon's new business generation and client retention.

Further innovation is exemplified by the Aon Broker Copilot, launched in Q2 2025. This proprietary, patent-pending platform utilizes artificial intelligence (AI), large-language models (LLMs), and predictive analytics to revolutionize commercial insurance placement. It provides brokers and advisors with an "enhanced view into how the global insurance market is pricing risk," augmenting predictive broking and enabling Aon brokers to "match capital to risk in an unparalleled manner." This technological leap streamlines complex workflows and elevates placement strategy, directly translating into better outcomes for clients and a stronger competitive moat for Aon.

In reinsurance, Aon has pioneered solutions like Aon surge stop-loss, a first-of-its-kind cyber reinsurance offering that triggers based on aggregate loss thresholds, providing enhanced protection against cumulative cyber losses. This innovation addresses the pressing concern of sourcing tailored cyber insurance. For NFP clients, Aon has introduced tools like the CyQu tool for cyber risk analysis and the Health Efficiency Analyzer to help understand health program dynamics and optimize spend. These technological advancements contribute to Aon's ability to offer "unmatched" capabilities in the industry, driving higher value for clients and reinforcing its pricing power.

Competitive Positioning: Differentiated Value in a Crowded Field

Aon operates in a highly competitive landscape, facing formidable direct rivals such as Marsh & McLennan Companies, Inc. (MMC), Willis Towers Watson Public Limited Company (WTW), and Arthur J. Gallagher & Co. (AJG). While these firms offer overlapping services in risk management, insurance brokerage, health, and retirement solutions, Aon distinguishes itself through its integrated "Aon United" strategy and technological prowess.

Compared to Marsh & McLennan, Aon's integrated Risk Capital and Human Capital structure is "unique in our industry," allowing clients to employ a holistic risk strategy across their full business. Aon's Gross Profit Margin of 47% is higher than MMC's 43%, suggesting greater efficiency in core service delivery. Aon also boasts a higher Free Cash Flow Per Share of $13.47 compared to MMC's $8.10, indicating superior cash generation from its operations. While MMC has historically shown stronger revenue growth trends due to broader diversification, Aon's strategic focus on tailored advisory services and AI-powered tools aims to capture market share through differentiated value.

Against Willis Towers Watson, Aon offers comparable strengths in health and retirement solutions, with its health care exchanges providing potentially greater customization and stronger customer loyalty. WTW's Net Profit Margin is negative (-0.99%), contrasting sharply with Aon's positive 15.54%, highlighting Aon's superior profitability. Aon's Free Cash Flow Per Share of $13.47 also surpasses WTW's $12.42. Aon's integrated advisory model, addressing both risk and health holistically, provides a unique value proposition compared to WTW's more segmented approach.

In comparison to Arthur J. Gallagher & Co. , Aon's technological integration in risk consulting, exemplified by its Risk Analyzer tools and Aon Broker Copilot, offers notably better data analytics for enhanced client decision-making. While AJG's Gross Profit Margin of 85% is significantly higher, its Operating Profit Margin (20%) and Net Profit Margin (13%) are lower than Aon's (24.08% and 15.54%, respectively), suggesting Aon's operational efficiency in converting revenue to profit. Aon's strategic consulting focus and global expansion position it strongly, even as AJG excels in acquisition-driven growth.

Indirect competitors, including insurtech firms and in-house risk management teams, pose a threat by offering digital-first or seemingly more accessible solutions. However, Aon's established global brand, extensive network effects, and proprietary technology platforms act as significant barriers to entry, fostering customer loyalty and supporting stable financial performance. The "independent and connected" strategy with NFP further enhances Aon's competitive stance by attracting new talent and acquisition targets who value operating flexibility combined with access to Aon's advanced capabilities.

Financial Performance and Operational Momentum

Aon's financial performance in the first half of 2025 demonstrates strong execution of its strategic plan. For the second quarter of 2025, total revenue increased 11% to $4.155 billion compared to the prior year period, driven by 6% organic revenue growth, the contribution from NFP, and a 1% favorable foreign currency translation. This organic growth was broad-based, with Commercial Risk, Reinsurance, and Health Solutions each delivering 6% organic growth, while Wealth Solutions grew 3%.

Profitability metrics also showed strength. Adjusted operating margin for Q2 2025 expanded by 80 basis points year-over-year to 28.2%. This expansion reflects the impact of organic revenue growth and $35 million in net restructuring savings from the Accelerating Aon United Program, partially offset by the inclusion of NFP's ongoing operating expenses and increased intangible asset amortization. Adjusted diluted earnings per share (EPS) surged 19% to $3.49 in Q2 2025, reflecting the strong operating performance.

For the first six months of 2025, total revenue increased 13% to $8.884 billion, with 5% organic revenue growth. Adjusted operating margin for the first half was 33.6%, reflecting the strategic investments and operational efficiencies. Free cash flow generation remained robust, increasing 13% year-over-year to $816 million for the first six months of 2025, primarily due to strong adjusted operating income growth and improvements in days sales outstanding.

The Accelerating Aon United Program, a three-year restructuring initiative, is a key driver of efficiency. It is expected to incur cumulative costs of $1.0 billion ($0.9 billion cash, $0.1 billion non-cash) and generate approximately $350 million in annualized expense savings by the end of 2026. In the first half of 2025, the program incurred $204 million in costs and delivered $75 million in net restructuring savings, primarily benefiting compensation and benefits, information technology, and premises expenses.

The NFP acquisition continues to exceed expectations. Producer retention is strong, even higher than pre-acquisition levels, validating the "independent and connected" strategy. NFP's acquisition engine is actively adding high-quality middle-market EBITDA, with a target of $45 million to $60 million in 2025. This integration is expected to contribute $80 million in revenue synergies in 2025 and over $300 million to Aon's free cash flow.

Outlook and Guidance: A Confident Path Forward

Aon has reaffirmed its full-year 2025 guidance, signaling strong confidence in its strategic execution and financial model. The company expects to deliver mid-single-digit or greater organic revenue growth, driven by consistent new business generation, high client retention, and a modest 0-2 point contribution from market impact (rate and exposure). Investments in revenue-generating talent, with hires up 6% through June 30, 2025, are projected to contribute 30-35 basis points to full-year organic growth from the 2024 cohort alone.

Adjusted operating margin is projected to expand by 80 to 90 basis points, supported by $150 million in incremental restructuring savings in 2025 and 35-45 basis points of margin expansion from operating leverage through ABS. Despite potential headwinds from lower fiduciary investment income due to declining interest rates, Aon's diversified revenue streams and cost discipline are expected to ensure continued margin improvement.

The company anticipates strong adjusted EPS growth and double-digit free cash flow growth in 2025, contributing to a double-digit three-year CAGR for free cash flow from 2023 to 2026. Aon plans to return $1 billion in capital to shareholders through share repurchases in 2025 and remains on track to achieve its leverage ratio target of 2.8x to 3.0x by Q4 2025.

Risks and Challenges

Despite the positive outlook, Aon operates in a dynamic environment with inherent risks. Macroeconomic and geopolitical uncertainties, including ongoing conflicts, tariffs, capital markets volatility, and inflation, could impact financial conditions and results. Legal proceedings, such as those arising from the 2016 plane crash and the Vesttoo Ltd. allegations of fraudulent letters of credit, present potential liabilities and reputational risks. Aon maintains it has "meritorious defenses" and is "seeking recourse against responsible third parties where appropriate." Regulatory changes, particularly the uncertainty surrounding the OECD Pillar Two tax regime and climate-related disclosures, could affect Aon's global effective tax rate. The company's reliance on talent acquisition and retention in a competitive market, as well as the successful integration of acquired businesses like NFP, remain crucial operational risks.

Conclusion

Aon plc stands as a compelling investment opportunity, demonstrating consistent execution of its "Aon United" strategy and "3x3 Plan" amidst a complex global landscape. The company's ability to drive mid-single-digit or greater organic revenue growth, expand margins, and generate robust free cash flow is a testament to its differentiated business model, strategic investments in talent, and the transformative power of its AI-powered technological platforms. Aon's commitment to innovation, particularly through Aon Business Services and its suite of Risk Analyzer tools and Aon Broker Copilot, provides a significant competitive moat, enabling it to deliver unparalleled value to clients and capture new demand in critical areas like cyber and health.

While macroeconomic volatility and specific legal and regulatory challenges persist, Aon's disciplined capital allocation, proactive deleveraging, and strong track record of performance reinforce confidence in its long-term value creation. The successful integration of NFP further strengthens its market position and growth trajectory. For investors seeking exposure to a resilient professional services firm with a clear strategic roadmap and a proven ability to translate innovation into financial results, Aon's integrated solutions and technological leadership position it for continued success.