Margin Outlook and Fiduciary Income Impact
Q: Will margin expansion continue given fiduciary income headwinds?
A: Management expects continued margin expansion despite anticipated headwinds from declining fiduciary investment income, which contributes less than 20 basis points to margin expansion. They highlighted a history of achieving 100 basis points of margin expansion annually over the last decade, driven by restructuring, Aon Business Services efficiencies, active portfolio management, and expense discipline. They are confident in continuing this trend, emphasizing their focus on creating investment capacity to invest in the business while improving margins.

Organic Growth Drivers
Q: What's driving the 7% organic growth: new business or pricing?
A: The 7% organic growth is primarily driven by new business from existing clients purchasing more solutions and adding new logos, with retention rates above 90%. Market impact, including rate and pricing, contributed only 2 points to growth. Management emphasizes that this growth formula is consistent across solution lines and in line with their historical performance.

NFP Acquisition Synergies
Q: Are revenue synergies from the NFP acquisition materializing?
A: The NFP acquisition is performing well, with results in line with or better than the business case, contributing mid-single-digit growth and being accretive to Commercial Risk and Wealth segments. Management is confident in achieving $175 million in revenue synergies and $60 million in OpEx synergies by 2026. They are also tracking to be better than expected on EPS accretion in 2025. The integration is fostering cross-selling opportunities and bringing in new talent.

Free Cash Flow and Capital Return
Q: Is free cash flow growth on track despite extraordinary items?
A: Free cash flow is in line with expectations, aiming to reach a double-digit level from $3.2 billion in 2023 to the end of 2026. This year's free cash flow is impacted by extraordinary items such as NFP integration costs, legal settlement costs, and restructuring charges. Management remains confident in their ability to pay down debt and continue capital return through dividends and share repurchases.

Reinsurance Market Outlook
Q: How does management view the reinsurance brokerage environment into 2025?
A: Management believes the reinsurance market is well-positioned to handle recent events like hurricanes Helene and Milton. While there is client pressure for pricing decreases and attachment point relief, substantial capital remains in the marketplace. They anticipate that negotiations over the next 8 to 10 weeks will shape the market, with clients pushing for rate decreases depending on their geographic location.

Health Solutions Growth Opportunities
Q: Can Health Solutions sustain its double-digit growth internationally?
A: Management sees significant opportunity in Health Solutions globally, driven by high client demand due to nationalized health systems under financial pressure and the need for global benefits management. They are winning new logos and investing in analytics and tools to deliver value to clients. The diversity of their business across markets gives them confidence in sustaining mid-single-digit or greater long-term growth.

M&A Activity and Commercial Risk
Q: How is the M&A activity impacting Commercial Risk Solutions?
A: M&A activity is improving but still 13% below the 10-year average year-to-date. Management anticipates growth in Commercial Risk Solutions as M&A volumes recover, highlighting the significant demand and opportunity in the middle market.

Tax Rate Considerations
Q: What factors are affecting the company's tax rate outlook?
A: The tax rate has quarterly variability due to factors such as growth in higher-tax geographies and policy changes across the globe. A positive discrete item last year impacted the rate in the current quarter. Management plans to provide more insight into the baseline tax rate and any discrete items for 2025 during the Q4 call.

Interest Rate Impact on Fiduciary Income
Q: How will lower interest rates affect fiduciary investment income?
A: A 100 basis point change in interest rates has approximately a $70 million impact on fiduciary investment income. While lower rates may reduce this income, management expects to meet their objectives across all solution lines despite the interest rate environment.

Net New Business and Retention Rates
Q: Is net new business growth strong across the company?
A: Net new business is strong, contributing 10 points of growth, with retention rates above 90%. Growth is driven by new business from existing clients and new logos, consistent with their historical performance. Management sees this as a key driver of growth across all solution lines.

Pricing and Market Conditions
Q: Are there differences in pricing trends across segments?
A: Pricing varies by segment, line, and geography. Property rates are decreasing for clients with favorable risk exposure, while casualty lines continue to see price increases due to higher loss costs and social inflation. Specialty casualty lines like D&O and cyber have surplus capital, offering opportunities for premium relief.

Cat Bonds Economics
Q: How does Aon view the economics of cat bond placements?
A: Aon is agnostic to the use of cat bonds versus traditional reinsurance, focusing on delivering value to clients. The company engages in transparent discussions about their value proposition, regardless of the tool used to transfer risk.