$AON earnings report

Aon reported third-quarter total revenue of $4,101 million, up 3%, while organic revenue growth was 6%. Net new business and ongoing strong retention drove growth across all four solution lines on an organic basis. Reported growth was reduced by a 3% unfavorable impact primarily from divestitures, largely related to the sales of the NFP Wealth business and Stroz Friedberg. Risk Capital revenue increased 6%, while Human Capital revenue decreased 4% as Wealth Solutions reported a 21% decline in reported revenue despite 4% organic growth.

Profitability showed a clear divergence between reported and adjusted measures. Operating income declined 1% to $809 million and operating margin declined 70 basis points to 19.7%. Adjusted operating income increased 5% to $1,106 million and adjusted operating margin expanded 70 basis points to 27.0%. The adjusted result reflected organic growth, scale improvements in ABS and net restructuring savings, partly offset by investments for growth. Reported expenses included $93 million of Accelerating Aon United Program expenses, up 191%, and $25 million of USI transaction costs during the quarter.

Earnings per share grew faster than revenue. Diluted EPS increased 6% to $2.23, and adjusted diluted EPS increased 10% to $3.36. Foreign currency translation contributed a $0.02 favorable impact to both diluted EPS and adjusted EPS. The effective tax rate declined to 20.6% from 21.3%, while the adjusted effective tax rate increased to 20.2% from 19.2% due to changes in the geographical distribution of income and a net unfavorable impact from discrete items. Diluted shares outstanding declined to 213.0 million from 216.7 million.

Cash generation remained positive but capital expenditure growth moderated free-cash-flow growth. Third-quarter operating cash flow increased 4% to $1,191 million, while free cash flow increased 2% to $1,097 million as capital expenditures increased 36% to $(94) million. For the first nine months, operating cash flow increased 4% to $2,177 million and free cash flow increased 3% to $1,943 million. The company did not repurchase shares in the third quarter, but reported $(1,100) million of share repurchases and $(511) million of dividends for the first nine months.

The balance sheet reflects financing activity tied to the expected USI Acquisition. Cash and cash equivalents rose to $2,017 million, short-term investments increased to $13,299 million, and long-term debt increased to $26,319 million as of September 30, 2026. Aon issued $13,404 million of debt during the first nine months. Management expects the USI Acquisition to close in the fourth quarter of 2026, expects a de minimis foreign-currency effect on fourth-quarter adjusted EPS if currency remains stable at today’s rates, and plans to prioritize debt repayment toward a 2.8x-3.0x deleveraging objective in approximately 24 months.

Aon delivered $4,246 of second-quarter revenue, up 2%, with 5% organic revenue growth. A 1% favorable foreign currency translation impact was more than offset by a 4% unfavorable impact primarily from divestitures. The company attributed organic growth to net new business and ongoing strong retention. Risk Capital revenue increased $140 million, or 5%, while Human Capital revenue decreased $47 million, or 4%.

Commercial Risk Solutions produced $ 2,295 of revenue and 5 % growth, supported by EMEA and North America, including strong U.S. core P&C and double-digit construction growth. Reinsurance Solutions generated 711 of revenue, up 3, with 5% organic growth despite unfavorable net market impact. Health Solutions revenue increased 6, while Wealth Solutions revenue declined 18% amid a 24% unfavorable impact from acquisitions, divestitures and other. Wealth Solutions nevertheless recorded 5% organic growth, led by Retirement advisory demand in the UK and EMEA.

Operating income rose 7% to $915 and operating margin expanded 80bps to 21.5%. Adjusted operating income rose 5% to $1,227 and adjusted operating margin expanded 70bps to 28.9%. The company cited organic growth, ABS scale improvements and net restructuring savings, partly offset by investments for growth. Compensation and benefits declined $89 million, but information technology expense rose $26 million and other general expense rose $121 million. Diluted EPS declined 3% to $2.58, while adjusted EPS increased 9% to $3.81. The effective tax rate increased to 22.0% from 15.5%.

Cash generation diverged between the quarter and first half. Second-quarter cash provided by operations fell 30% to $556 and free cash flow declined 34% to $483. For the first six months, cash provided by operations rose 5% to $986 and free cash flow increased 4% to $846, with the company citing adjusted operating income growth offsetting a cash tax payment related to NFP Wealth and working-capital impact. Aon returned $775 million to shareholders in the quarter through $600 million of repurchases and $175 million of dividends.

Management reaffirmed 2026 guidance for mid-single-digit or greater organic revenue growth, 70-80 basis points of adjusted operating margin expansion, strong adjusted EPS growth and double-digit free cash flow growth. If currency remains stable at today’s rates, the company expects a de minimis adjusted EPS impact in the third quarter and a favorable impact of approximately $0.42 per share for the full year 2026. Key reported items remain organic growth, margin expansion, the cash-flow trajectory and the mix effects from divestitures.