AON - NYSE

Good morning, and thank you for holding. Welcome to Aon plc's Fourth Quarter 2025 Conference Call. At this time, all parties will be in a listen-only mode. I'd also like to remind all parties that this call is being recorded. If anyone has an objection, you may disconnect your line at this time. It is important to note that some of the comments in today's call may constitute certain statements that are forward-looking in nature, as defined by the Private Securities Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results. For information concerning these risk factors, please refer to our earnings release for this quarter and to our most recent quarterly or annual SEC filings, all of which are available on our website. It's my pleasure to turn the call over to Greg Case, President and CEO of Aon plc.

Good morning, and welcome to our fourth quarter and full-year earnings call. I'm joined by Edmund Reese, our CFO. The financial presentation, which Edmund will reference in his remarks, is posted on our website. 2025 was a year of great strategic progress and performance milestones for Aon. Among the highlights, we advanced the disciplined execution of our three-by-three plan, which continues to accelerate our Aon United strategy by further integrating risk capital and human capital, expanding Aon client leadership, and leveraging Aon business services to drive greater capability, innovation, and efficiency. This work is enhancing our relevance and delivery capability to meet rising client demand amid increasing complexity. We outlined this momentum at our first investor day in two decades, where we demonstrated the strength of Aon United and the central role of the three-by-three plan, including the power of ABS. We believe our performance this year is proof that our strategy is working, producing tangible, sustainable results today, and positioning us for long-term success. We continue to innovate; ABS provides the foundation to deliver innovative solutions and deploy AI where it drives real value across our business. We expanded our risk analyzers, launched Aon Broker Copilot, and more recently, launched Claims Copilot. In addition, we help clients access alternative forms of capital through cap bonds, which may include parametric triggers, where market issuance rose more than 40% in 2025 and Aon's issuance increased more than 50%. Under a single integrated facility, this solution continues to gain traction. We recently announced a billion-dollar expansion, increasing total capacity to $2.5 billion. We substantially advanced our middle market strategy, including great progress in building upon our independent and connected strategy with NFP. The business is performing well with strong producer retention as we build upon NFP's strong client relationships with the full breadth of Aon's capabilities. We're also accelerating the connection of NFP onto our ABS platform, which we believe will further enhance performance over time, highlighting our even greater conviction in the power of ABS to onboard middle market companies. And we continued our very effective tuck-in M&A strategy, further accessing the large $31 billion North American addressable market. As we close 2025, we ended the final year of our three-by-three plan with strong momentum, fueled by our client-centric strategy and integrated capabilities that enable us to win more opportunities, deepen client relationships, and deliver more value in an increasingly complex macro environment. Turning to our results, we finished the year strong, with continued momentum in the fourth quarter and delivered on our full-year objectives, including 6% organic revenue growth for the second straight year, 90 basis points of adjusted operating margin expansion, strong adjusted EPS growth, and double-digit free cash flow growth. These results demonstrate the consistency and durability of our business model and the impact of our Aon United strategy. They also reflect investments in revenue-generating talent and the impact of our strategy. To set the context for our results, I will highlight four representative examples that are driving results and fueling momentum into 2026. First, a client story, which shows how our teams are trusted strategic advisers to clients and how we bring the best of Aon to the market. After partnering with a large international construction client for several years, the company needed a dedicated broker to support the full life cycle of a new data center project. We combined our role as a trusted adviser with a united global team, bringing together account leadership with construction, data center, energy, and cyber specialists to deliver an integrated proposal. Our winning response showed the full capabilities of AI, including DCLP, advanced climate analytics, and proprietary risk analyzers, all aligned to the client's long-term growth strategy. We demonstrated a distinctive ability to support both construction and operations, leveraging data and insights to improve capital efficiency and resilience. The client credited our team's expertise and our global connectivity and capabilities as central to the win, reinforcing our strength in leveraging trusted relationships and leading analytics to create high-quality growth opportunities. Second, we continue to innovate and lead in the data center opportunity. In addition to our DCLP capacity increase and the client story I just referenced, our reinsurance team recently designed and placed the first-ever data center-specific treaty, delivering a solution that aligns up to $5 billion of capital through the insurance value chain behind a single leading insurer. And we're actively engaged with several others to help them expand and strengthen their capabilities to provide capacity for clients. Our advisory capabilities around site selection, design, and engineering, as well as tremendous data and advanced analytics, are critical to inform effective capital protection decisions in the face of extreme weather, supply chain, and cyber risk. And while we're still in the very early days of this generational opportunity with data centers, we have some exciting wins under our belt, and our leadership in this space is another factor that supports sustainable organic revenue growth. It's also another impressive example of Aon innovating to solve client problems. Third, talent continues to be a critical driver of our success and ability to achieve sustainable growth. Our client-centric strategy remains focused on attracting, developing, and retaining top performers who see the value they can bring to clients and grow their business with our best-in-class analytics and capabilities. We continue to hire in high-growth priority areas, and revenue-generating talent increased a net 6% this past year. We're also expanding with existing clients through Aon client leadership and seeing higher new business and better retention with ACL-covered clients. Finally, our capital position, which Edmund will detail further, puts us in a position of strength and flexibility. This year, we continue to generate strong free cash flow and further strengthened our capital position through disciplined portfolio management, including the sale of NFP Wealth. Our enhanced capital position is well-positioned to continue our strong execution. The four megatrends we've highlighted—trade, technology, weather, and workforce—are as relevant as ever. We're building momentum with clients as our globally connected team is equipped to deliver data-driven insights and better outcomes for our clients. At the same time, we're committed to delivering strong performance, including sustainable organic revenue growth supported by our investments in ABS and talent. It's inspiring to see all that colleagues have accomplished on behalf of our clients to achieve greater resilience and growth over the last year. Our conviction and level of excitement as we execute our strategic vision have never been greater. Aon United is more than just delivering on objectives in any given year. It's about delivering for our clients, colleagues, and shareholders over the long term. And in an increasingly complex world, Aon is better positioned than ever strategically, operationally, and financially to achieve this mission. Finally, to our over 60,000 colleagues around the world, thank you. Thank you for your relentless commitment to our clients, each other, and our Aon United strategy. Now let me turn the call over to Edmund for his comments and insight. Edmund?

Thank you, Greg, and good morning, everyone. I'm energized to be here discussing Q4 2025, a quarter that delivered results within our guidance expectations and capped off strong full-year performance that continues to reflect our disciplined execution of the three-by-three plan, the power of our financial model, and the momentum we have built across the firm even in this macro environment. Throughout the year, we've been focused on communicating our strategy and the consistency of our delivery. Our team is executing, and it is reflected in our results. Before diving into the quarter's results and our outlook for 2026, I want to take a moment, consistent with how we frame this section each year, to underscore the core growth drivers that are underpinning our momentum. These drivers reflect the intentional choices we've made over the first two years of the three-by-three plan and are not only delivering in the current period but also fortifying our ability to sustain performance through 2026 and beyond. First, with two consecutive years of 6% organic revenue growth, we have more conviction than ever in our ability to deliver sustainable top-line growth. This conviction is grounded in the strength of our three-by-three plan, now in its maturity phase, and in the deliberate investments we've made to support long-term growth. We continue to add revenue-generating talent, strengthen Aon client leadership, and accelerate our presence in the middle market, where demand signals remain robust and clients continue to benefit from our broad capabilities. These investments are contributing to top-line growth today, and they have a cumulative and compounding impact that benefits the years ahead. Second, we achieved critical milestones by integrating NFP and delivering double-digit free cash flow growth in 2025. These results are the product of disciplined prioritization and execution. Third, our strong operating cash generation, coupled with our disciplined portfolio management, including the sale of the NFP wealth business, brings our total capital available in 2026 to $7 billion. This means that in addition to our organic revenue growth, we are in an even stronger position from which to execute our balanced capital allocation model, including the pursuit of high-return inorganic investments that amplify our organic growth momentum. Overall, our performance this quarter and for the year demonstrates the power of our disciplined execution and the strength of the strategic choices we've made to drive the durable growth reflected in our results. With that context, let's turn to the detailed results. Our full-year performance is right in line with our guidance for mid-single-digit or greater organic revenue growth, adjusted operating margin expansion, strong earnings, and double-digit free cash flow growth. Organic revenue growth was 6%, and total revenue increased 9% year-over-year to $17 billion. Adjusted operating margin expanded by 90 basis points over last year and reached 32.4%. Adjusted EPS was $17.07, up 9% year-over-year. And finally, free cash flow increased 14% over 2024. For the fourth quarter, organic revenue growth was 5%, and total revenue, impacted by the wealth and straw dispositions, increased 4% year-over-year to $4.3 billion. Adjusted operating margin expanded by 220 basis points over last year and reached 35.5%. Adjusted EPS was up 10% to $4.85. And finally, free cash flow increased 16%. Let's get into the details of these results, starting with organic revenue growth on slide six. Organic revenue growth was 5% in the quarter, with both commercial risk and reinsurance delivering 6% or better growth on the back of new business and continued strong retention. This performance reflects the importance of hiring in priority growth areas and the strength of our analytical and advisory capabilities, which are helping clients capitalize on favorable pricing conditions. In commercial risk, 6% growth reflected continued strength in our core P&C business globally, including strong growth in the US, EMEA, and Latin America. Additionally, construction delivered another quarter of double-digit growth driven by ongoing demand for large global infrastructure projects, including data center construction for major technology clients. I'll also note that while the lift from M&A services was modest, we remain well-positioned in this space and expect M&A activities to support our mid-single-digit or greater growth as we enter 2026. Reinsurance delivered 8% growth driven by double-digit growth in both insurance-linked securities and our strategy and technology group, as well as continued strength in facultative placements. Insurance-linked securities benefited from record cap bond issuances, which reached $59 billion outstanding as investors increasingly seek uncorrelated asset classes. STG also saw elevated demand for our analytics, which help clients access alternative forms of capital. Looking ahead, our data indicates softer January 1 property renewals with rate declines of 15 to 20%. Even with this market headwind, we continue to expect full-year 2026 organic revenue growth in line with our mid-single-digit or greater objective, supported by higher limits, ongoing strength in international facultative placements, record activity in insurance-linked securities, and growing demand for STG analytics. We are uniquely positioned at the intersection of insurance and capital markets, helping clients access alternative capital at scale. This positioning becomes even more valuable in a softer rate environment where innovation matters as much as price. Health solutions grew 2% this quarter, and this growth reflects mid-single-digit growth in our core health and benefits offerings across the US and EMEA, partially offset by delayed closed sales moving into Q1 2026 and slower discretionary spend in Talent Solutions. While consulting services in areas like talent may experience short-term deferrals, these needs are structural, and demand typically rebounds as conditions normalize. We continue to expect health to remain an area of strength and well within our mid-single-digit or greater objective. Wealth generated 2% growth, in line with the 1 to 2% we guided to last quarter. Performance for the quarter and the full year was led by strong advisory demand in the UK and EMEA related to ongoing regulatory change. Importantly, for the full year, all four of our solution lines were in line with our mid-single-digit or greater objective. Growth was broad-based, with commercial and reinsurance at 6%, and each of our human capital solutions delivering 5%. Let me walk through the components of our Q4 organic revenue growth on slide seven. We extended our consistent track record of new business, contributing nine points to organic revenue growth. Strong new business generation in Q4 was supported by steady new client acquisition and expanded mandates with existing clients. Our investment in revenue-generating talent, particularly in high-growth sectors like construction and energy, has supported the 10 points new business contribution to organic revenue growth for the year. In 2025, despite intense competitive pressure for talent, revenue-generating hires were up 6%, firmly within our 4 to 8% objective. The 2024 and 2025 cohorts are tracking to similar seasoning curves for both incremental revenue and timing and together contributed approximately 50 basis points to 2025 organic revenue growth. We expect continued momentum and compounding benefit from the seasoning of the 2024 and 2025 cohorts. We plan to continue investing in growth and to expand this population by an additional 4 to 8% in 2026. And, again, this is because we see specific opportunities in high-growth priority areas. Q4 2025 retention remains strong at a mid-nineties rate, supported by continued improvement in commercial risk and reinsurance. Increased engagement through our enterprise client group and enhanced service delivery from our ABS capabilities are playing a meaningful role in sustaining and strengthening client relationships. Net new business contributed three points to organic revenue growth in the quarter. Net market impact, which captures the impact of rate and exposure, contributed one point to organic revenue growth, consistent with each quarter this year and within our zero to two-point estimated range. Reinsurance was down primarily from rate declines on January 1 renewals, and that impact was offset by limit and coverage increases across cyber and commercial risk, supporting clients managing rising healthcare costs in health, as well as rate benefits in wealth. And one final point on revenue. Fourth-quarter fiduciary investment income was $63 million, down 17% versus the prior year, as higher average balances were more than offset by lower interest rates. Our full-year 2025 results underscore why we have high conviction in our durable, mid-single-digit or greater organic revenue growth model. We are executing on each component of the model. First, delivering nine to 11 points of growth from new business. We delivered 10 points with significant contribution from our investment hires and NFP revenue synergies. Second, maintaining a mid-nineties high retention rate, we improved 50 basis points over last year. Finally, achieving a zero to two-point net market contribution in this macro environment. We consistently delivered one point in each quarter this year. Turning now to margins on slide eight. Q4 adjusted operating income increased 11% to $1.5 billion, and adjusted operating margin expanded 220 basis points to 35.5%. For the full year, adjusted operating margin was 32.4%, and we delivered 90 basis points of margin expansion. We continue to expand margins primarily due to ABS-enabled scale improvements, ongoing disciplined expense management, including the NFP OpEx synergies, and the benefits from the restructuring initiative to accelerate our three-by-three plan. We ended the year with $160 million in restructuring savings, $10 million ahead of our plan, supported by $50 million of savings in Q4. Restructuring savings contributed 115 basis points to adjusted operating margin in Q4 and approximately 90 basis points to full-year margin expansion. As we enter the final year of the accelerating Aon United (AAU) restructuring program, we have identified additional opportunities to accelerate the NFP integration into ABS, leveraging our global capability centers, and deepening integration across our technology platforms. We now expect to complete the AAU investment at $1.3 billion, and we are firmly on pace to deliver $450 million in total savings. We have used the AAU program to strengthen our foundation for ongoing margin expansion within our core business operations. And we have clear visibility to growth at higher profit margins, driven by continued operating leverage through ABS. Moving to interest, other income, and taxes on slide nine. Interest income was $14 million in the fourth quarter, up $10 million over last year, driven by interest earned on proceeds from the sale of NFP Wealth. Interest expense came in at $191 million, $16 million lower than last year, primarily due to lower average debt balances. We expect Q1 2026 interest expense to be approximately $185 million. Other expense was $21 million compared to a $2 million benefit last year, driven by gains from balance sheet currency exposure, gains from the divestment of our non-core personal lines business, and our hedging program. We estimate Q1 2026 other expense to range between $20 and $25 million. Finally, the Q4 tax rate was 20%, bringing the full-year tax rate to 19.5%, 60 basis points better than last year, and in line with our estimate of 19.5 to 20.5%. Turning now to free cash flow and capital allocation on slide 10. We generated $1.3 billion of free cash flow in the fourth quarter, bringing our full-year free cash flow to $3.2 billion, an increase of 14% compared to 2024. As we expected, our double-digit free cash flow was driven by strong adjusted operating income, including contributions from NFP as integration costs wound down. Turning to capital on the right-hand side of the page, our strong free cash flow growth enabled us to continue to execute our capital allocation model. We paid down $1.9 billion of debt in 2025, and coupled with strong earnings growth, lowered our leverage ratio to 2.9 times. Both the level and the timing are consistent with the 2.8 to 3 times Q4 2025 objective established when we announced the NFP acquisition, again reflecting our disciplined execution. Additionally, we remained active in M&A, continuing our programmatic tuck-in acquisitions across high-growth priority areas, including middle market acquisitions through NFP, which acquired $42 million of EBITDA for the full year, in line with our expectations. And finally, in 2025, we returned $1 billion in capital to shareholders, including $1 billion in share repurchases. I will conclude my prepared remarks on slide 11 with our 2026 guidance and some forward-looking perspective on our growth objectives. As we enter the final year of our three-by-three plan, the drivers of growth are stable, and we are executing on both our strategy and the financial model with precision. We carry substantial momentum into 2026. And in summary, our full-year '26 guidance includes mid-single-digit or greater organic revenue growth, operating margin expansion of 70 to 80 basis points, strong adjusted EPS growth, and double-digit free cash flow growth. And let me walk through the key drivers of each guidance point, starting first with organic revenue growth. We expect mid-single-digit or greater organic revenue growth fueled by recurring new business wins with both existing and new clients, the compounding contribution from revenue-generating hires in priority areas and within the enterprise client group, and accretive growth in the middle market, including revenue synergies from NFP. We also expect continued mid-nineties retention and zero to two points from the net market impact, which assumes we continue to offset rate pressure in property and treaty. On adjusted operating margin, we expect 70 to 80 basis points of expansion driven by three key components. First, the impact of lower interest rates on investment income from fiduciary balances is expected to dilute margins by 20 basis points. Second, we expect $180 million in restructuring savings over 2026-2027, including additional savings from accelerating the NFP integration. From 2026, $100 million of savings will contribute approximately 50 basis points of margin expansion. Third and most important, we expect 40 to 50 basis points of margin expansion from the operating leverage in the scalable ABS platform. Our ABS growth engine continues to deliver scale benefits, capacity for growth investments, and margin expansion that drives earnings growth. Our expectations for mid-single-digit or greater organic revenue growth and 70 to 80 basis points of adjusted operating margin expansion support a strong adjusted EPS growth outlook for 2026. Embedded in this earnings guidance is a two-point EPS tailwind from FX based on today's FX rates remaining stable, a two-point headwind from the sale of the 19.5 to 20.5% excluding any extraordinary discrete items, and a non-cash pension expense of $80 million. Our financial model is built on sustainable top-line growth, consistent strong earnings, and reliably converting those earnings into double-digit free cash flow growth. In 2026, we expect $4.3 billion of free cash flow generation from operating income and working capital improvements. The tax impact from the over $2 billion in proceeds generated from the NFP wealth sale will be reflected in operating cash flows and will reduce free cash flow by approximately $300 million prior to any benefit from the usage of those proceeds. Of course, with over $2 billion in proceeds, we have significantly strengthened our capital position with approximately $7 billion of available capital and substantial strategic flexibility. In 2026, we will remain committed to disciplined capital allocation, balancing investment for growth with capital return to shareholders. We plan to return at least $1 billion in share repurchases while continuing to evaluate our inorganic pipeline for high-margin, high-growth areas across risk capital and human capital. In closing, our performance in 2025 demonstrates the resilience of the firm and the precision with which we are managing the business. Executing the three-by-three plan, delivering on our financial model, and allocating capital with a sharp focus on returns. Our disciplined execution is evident in our organic revenue growth, margin expansion, and enhanced earnings power. This consistency gives us confidence that what you're seeing today is not episodic. It is the result of our strategy and financial model producing durable outcomes and gives us even greater conviction in our ability to continue creating long-term value for shareholders. So with that, let's open up the line for questions. Kevin, back to you.

Certainly. We'll be conducting a question and answer session. If you'd like to be placed in the question session, please press star one. If you'd like to remove yourself from the queue, please press star two. Once again, that's star one to enter the queue, and please ask one question, one follow-up, then return to the queue. Our first question is coming from Bob Huang from Morgan Stanley. Your line is now live.

Good morning, and congratulations on the quarter. Maybe if I can just ask a question to follow up on talent and retention in today's environment. Obviously, net hire has been a strength to your growth. But can you give us a little bit more color in terms of what competition for talent looks like today? Obviously, there are some brokers that are extremely aggressive out there. Does that significantly impact you in terms of talent retention and hires? Especially in key growth areas, like data centers, energy infrastructure, things of that nature. Just curious about attrition and retention, things of that nature.

Thanks for that question. Appreciate it. And I'll offer a couple of thoughts, and Edmund, jump on in here. First of all, for us, talent is fundamental. You know this, Bob. We've talked about this pretty much on every call. And what you see us doing is continuing to invest not just in additional talent in priority areas. We talked about construction and energy and health and mid-market and data centers, etcetera. But helping that talent be more effective. Literally, the tour de force investment around Aon Business Services is really around content capability, so not only our existing colleagues but new colleagues who come into the firm have an opportunity to do things for clients they've never done before. As such, Bob, we are uniquely positioned to bring talent into the firm. That's why, you know, in the current environment, as Edmund described, we're well up on a net basis from a talent standpoint. And we're going to continue to make investments to support our mission and our efforts here and look forward to it. And the reaction we're getting as colleagues come in is incredibly positive. But it's met and exceeded by the interaction of our existing colleagues who see the opportunity that we bring to their backdoor on behalf of clients really no one else can bring. So for us, it's always been competitive out there. We'll continue to be, and we're going to enter the fray with a lot of confidence and excitement on behalf of our colleagues and clients. But, Edmund, what else would you add to that?

I'll just emphasize the one point that you have and then talk a little bit about the contribution on that point. I mean, clearly, it's an aggressive and competitive intense environment right now. And as you just said, Greg, our talent, the attractiveness of it, we're not immune to that. But the point you made about being up 6% net in revenue-generating hires for the year means that not only were we in line with our objectives, but we're on our front foot. And this continues to your point to be a high area of focus for us right now. I mentioned in the prepared remarks that the 24 and the 25 cohorts are contributing to strong growth, 50 basis points of contribution, and that means that the 24 cohort was right in line with what we guided to earlier. We said 30 to 35 basis points for the full year. They're tracking in line with that, and so is the 25. And that's showing up to your question in the priority areas. I mentioned double-digit growth in construction, strong growth in energy, and in our core health and benefits business. Also showing up in new business where we finished the year with 10 points of contribution from new business. Those things are being impacted by our hiring in those priority areas. So we expect, again, to Greg's point, we have the capacity through ABS to continue making this investment. Our objective again going into 2026 is another 4 to 8%. We're going to stay focused on creating this capacity, building the capabilities that Greg just mentioned to attract them, and retain them. That's part of our strategy for growth moving forward.

Got it. Really appreciate that. Sounds like the talent is strong. The bench is deep in core areas. Maybe the other question is really on acquisition and inorganic growth. You're obviously very optimistic in the middle market environment. Just given the broader market volatility and pricing deceleration, do you foresee more attractive valuation for M&A, or do you, in other words, see more opportunities for inorganic growth? Or is it something that just given the current environment, how do you think about it? Is there a way to think about it? Are you stepping on the gas, so to speak, or is it something more of a time to dial back a little bit on that side?

Well, let's first just because it's an important question, and we should just take our time. Make sure that we understand this just to talk about capital allocation first and maybe Greg and I both can make a comment on your question about valuations. But I think the first part is capital allocation. I just first need to reiterate that we are just really pleased first with the free cash flow generation in '25 and then the execution of our capital allocation model over '25, paying down $2 billion of debt and meeting the leverage objective, paying a dividend that was 10% higher, over $40 million, the question that you're asking of middle market acquired EBITDA, primarily through NFP and a billion in capital return versus share repurchases, that means we continue our track record of disciplined execution on this capital allocation model. As we go into this new environment, into 2026, we're focused on continuing that strong free cash flow generation, and we're in a position of strength with $7 billion in available capital. So what does it look like? How do we allocate that? First, I think now that we've met the leverage objective, focused on paying that again, increasing dividend, but M&A is going to be a key part of the capital allocation model. As I said in the prepared remarks, it complements the organic revenue growth, and we've been a great acquirer. It is important to highlight the point we made at Investor Day that our acquisitions over the last decade have generated 12% revenue growth after we've owned them for a year, that the portfolio IRR of acquisitions over the last decade has been above 20%. And we continue to lead the industry in ROIC. So we evaluate opportunities for that strategic fit, for that type of financial profile. When we look at the environment, getting to your point now, getting to your question, the portfolio of pipeline opportunities to unlock growth, we've got a robust pipeline. But, again, we're going to be focused on the high-margin, high-growth areas across both risk capital and human capital. We're going to continue to scale in the middle market through NFP, particularly in North America commercial risk. And there are some geographic areas of priority for us where we think there are specific opportunities. So that will be a part of it. I think the market is attractive. We have a strong pipeline. But, again, they have to meet the criteria financially and strategically. And finally, I'll just say the share repurchases will continue to be a part of the balanced capital allocation model as well. We hit the commitment that we made for 2025. Sitting here in January, we feel very comfortable about at least a billion in share repurchases, and any changes to that will be dependent on the pipeline opportunities meeting the criteria that I just talked about. So we won't let any excess cash sit on the balance sheet. And all this, I would just say, is a continuation of our capital allocation model that's about balancing investment for growth and capital return to shareholders. That's a discipline that we've had that I think benefits shareholders and allows us to maintain industry-leading ROIC. On valuations, I'll make my final point. I think there's always a lag. Sellers anchor on trailing EBITDA and prior transaction comps, so you don't necessarily see sort of lower valuations in this market right now. I think debt costs drive the lag here. The quality assets, the type of assets that we're looking at remain resilient. They're high-growth, high-margin assets. So I think you see strong valuations there. The bid-ask spreads are changing in these markets. But, look, we will continue to have our criteria for assessment and evaluation, and we'll make decisions for high return that allow us to continue to be leading ROIC. That's more of a comprehensive answer than you asked, but I think this is an important topic, and I wanted to hit on all of that.

No. I really appreciate that. Thank you very much.

Thank you. Next question today is from Elyse Greenspan from Wells Fargo. Your line is now live.

Hi. Thanks. Good morning. I guess my first question, I'm going to follow up on Bob's question on capital. Right? So Edmund, you outlined or you said you have $7 billion of total capital available in 2026. The buyback was set at $1 billion. So I guess from a timing perspective, do you guys have line of sight on a deal or potentially deals for the first half of the year that will consume a lot of that $7 billion? And is that why you're only expecting to buy back the $1 billion at least at first?

It's important to add two words before $1 billion. That's at least $1 billion. We want to have the strategic flexibility given the pipeline right now. There's not a specific deal or asset that we're looking at. We, as I just said, have a robust pipeline of opportunities in some of the spaces that we talked about. They have to meet the strategic criteria. They have to meet the financial criteria. And we want to make that decision. We think that we've been very good at balancing the investments for inorganic growth and capital return. In fact, we put up a slide during Investor Day that showed roughly a fifty-five forty-five balance. And, ultimately, and over time, we expect to have a balance like that. So we want to make sure that we have the strategic flexibility to make the right decisions on behalf of the investors here. But, Greg, let me let you comment on that.

Listen, Edmund. I think you've covered it well, Elyse. Listen, Edmund answered the prior question with really a layout of how we think about capital allocation. It's exactly consistent with what we've done historically. And the ethic around that is high. They went through all the different aspects. I would add one to that. We are so dedicated to actually generating capital that gets the maximum possible return to shareholders. We also executed a very strategic divestiture. NFP Wealth really allowed our NFP teams to come together, our Aon teams to come together. In the context of bringing NFP into the fold, we actually executed a divestiture to generate additional capital so we could prioritize. What I'm trying to do here for you, Elyse, is highlight how strongly we feel about the principles that Edmund laid out. So we're essentially applying those in the current environment. The environment's moving around. It'll be what it'll be. But watch us do what we do. And that's another proof point on how focused we are on the highest possible return on capital allocation we can get.

And then my follow-up is on the data center opportunity. Appreciate some of the comments and prepared remarks, but I guess I was hoping you could give us a little bit more color. How much of a contributor were data centers to organic growth in Q4? And how would you expect, I guess, the tailwind from that opportunity to benefit your organic growth in 2026?

Well, first of all, Elyse, the data center opportunity, let me just offer a couple of thoughts. And we can really just talk about the mechanics of how we're thinking about it for '26 and '27. But remember, the data center opportunity is unique. It is it's never been seen before. It is monumental. It also requires a level of response and complexity that's beyond what the traditional industry has ever accomplished. Just be clear about that. This requires real new, net new innovation around alternative forms of capital, how we think about risk, how we pool risk, all those pieces. All I'm trying to highlight is and while, you know, I think we probably do a third or more with the data centers that are out there now, we're incredibly well-positioned, and we're having the dialogues no one else is having. But we're at the beginning of this process. So for you know, if you think about it, there are lots of data centers out there, thousands of them. But as we think about the build that's going on now, you know, last week at Davos, this was one of the primary discussion points, and it was really this and AI and how they fit together. This race is just beginning. The opportunity is just beginning. So, you know, I would characterize Edmund, I want to get your input here as well. This is another proof point on both our ability to innovate and drive net new insight into the market. And second, it just reinforces mid-single-digit or greater organic revenue growth. That's really all we're trying to do. And so that's what I would factor in. It's another weight on the scale if you think about sort of what's going to drive that over time, and we'll see how it plays. But it's a unique opportunity, and we're very well-positioned. But, Edmund, what else would you add?

Great. You hit that so thoroughly. The only thing that I'll add is just backing it up to our commercial risk business where we see this contribution showing up. We've now had 6% for the year in commercial risk and 6% or better for the last three quarters. Again, very much in line with what we've been talking about. And I highlighted earlier global strength in core P&C, the contribution from net new business retention, but the priority growth areas construction, which is where we see our data center contribution show up, being at a double-digit growth and contributing to that. I think in addition to the innovation that you just mentioned on data centers, we also sort of have the tailwind from a potential pickup in M&A to support that growth in commercial risk as well. So to your point, Greg, we just feel very much confident in the mid-single-digit or greater growth for commercial risk that'll be supported by Aon leading in this data center space.

Thank you.

Thank you. Next question today is coming from Matthew Harriman from Citi. Your line is now live.

Hi, good morning, everybody. I wanted to follow up on your comment to that last question, Greg. And one of the things I'm trying to understand is there's a totally different set of constituents really driving a lot of this investment. I'm curious whether or not we should think about market share in this new opportunity correlating at all with historical market share in historical data center builds.

There's an entire consistency that lays out here. And the response is, as we talk about mid-single-digit or greater in Elyse's question, is really around it isn't just commercial risk. It's reinsurance. It's why for us, Matthew, risk capital matters so much. As we described, you know, we didn't show up and say, well, we need to coordinate so we can actually meet client demand here. We didn't just coordinate. We changed structure, risk capital. It's connecting reinsurance into the commercial risk environment in a way that's never been connected before. So for us, you know, we don't take anything for granted. Our view is we need net new innovation no matter where we are in our current position, leading or not, this race is just beginning. It is not in mid-game. It's not in end-game. It's profound, but it is in it is beginning. And so for us, our obligation on behalf of clients, all categories I just described, is massively more innovation. This is why, you know, we I must say, you go back to 2023. We doubled down on an integrated AI-embedded capability, and we doubled down on risk capital and human capital. We changed organization, and we applied it through enterprise client. We did that two and a half years ago. In some respects, we're preparing for what we need now in order to deliver against this marketplace. So we're feeling good about that progress. It's one of the reasons we spent a billion dollars to accelerate it. So for us, we like our position. We love the demand profile. We see opportunity that's very, very unique. We see a level of investment players who have, you know, who have capital that no one's ever seen before with an absolute focus to drive. So for us, I think this, by the way, is an industry opportunity. So it's not any one single player. The question is, can the industry respond and make a difference and be relevant? If our industry can respond and make a difference and be relevant, this is profound for everyone. And we certainly think, you know, if we can serve a primary role in the tip of the spear here, we're thrilled to do it on behalf of our clients.

Thanks for that. I guess, you know, relationships matter too. So I'm just curious with respect to the M&A practice you have given some of the asset owners are financing parties, how big of an advantage that is? If at all?

Listen. Being able to sit down with the primary players here at the top of the house and help them understand that in the end, this isn't just brute force investment. This is very much around an integrated risk management strategy that will change the economics of how these play out over time. Beyond just the build, but also the operations. When you think about, you know, business interruption measured at a million dollars a minute now, there's a way to think about this differently, and you have to think about it differently. So you know, you're right. Being able to actually access the principles is fundamental, and we are in a very privileged position to do this. It's one of the aspects of our M&A services business and with financial sponsors that puts us in a unique position. In addition to the work we do with hyperscalers, in addition to the work we do with the asset gatherers, in addition to the work we do with the constructors, the builders. Because make no mistake about it, they're in a very unique position. They're being called on to do things they've never done before, and they're being asked to take on risk on behalf of the scalers that is also uncomfortable. So how one thinks about that risk management profile and how we deliver against it. And then remember, Matthew, this only matters if our analytics can convince capital to come in and buy down the volatility. Otherwise, we don't have a transaction. So we have to get the capital to work to do this. This is why in the end, this is tour de force analytics, the analyzers, the capability. It's tour de force reinsurance, you know, access markets, and it's tour de force commercial risk. And then to be clear, one of the pieces here I just have to throw in, and this is man, this is front and center at Davos last week. The human capital application of this is going to be massive. And everyone is going to talk about AI and job reduction. Don't we don't think about it that way. We think about it as how we amplify the talent we've got and help our clients navigate the path of the from-to as you embed this capability into their firms, not just the hyperscalers. We're talking about the users now. The human capital opportunity here, we think, is profound as well. So anyway, I know that's maybe more than you wanted, but, you know, we're pretty optimistic about this opportunity. And for Aon, certainly, but, you know, equally for our industry.

Appreciate all of it. Thank you.

Thank you. Next question today is coming from Charlie Lever from BMO. Your line is now live.

Hey, good morning. Thank you. Maybe I'll move off of data centers. You maybe put a finer point on the incremental opportunities you identified with the upsizing of the AAU savings and with NFP? I guess, what's the pacing of these savings and how much is the 50 basis points you laid out for this year and this year?

Well, maybe, Charlie, if I just we do want to start with just maybe a quick overview of literally the discipline of which we have undertaken this is really sort of at the helm of Edmund, and I really want him to describe exactly the discipline and the approach and the progress. But remember, let me provide, you know, the quick overview. What got us here? You know, what drove this was our initial investment and the incredible progress we've actually made so far against it. And now what we're talking about doing is taking this proven progress and applying it into the middle market. So that's in exactly the same time frame that we had before. But remember, I alluded to it in the prior discussion with Matthew. What we did in '23 is made a decision to double down on AI business services connected to the rest of the firm. By the way, embedded in AI business services is an AI platform. I mean, I kid you not. Literally, on Monday, you know, two days from now, we're literally going to show up in Orlando. There will be literally 1,600 clients and markets in the property symposium and casualty symposium of Aon. The entire world's going to shut down on property and casualty for the most part for three days. And that will be driven by a set of analyzers and content capability that's come out of the investment that we've made. That's why we're so excited about it, the power of it. And now we see that opportunity. This is probably, by the way, an AI platform at scale globally that no one else has. We've spent two and a half years working on that. And now we're going to finish in the third year. And what Edmund highlighted was in addition to what we've done in the core business and the work we began with NFP, the success of NFP for the last, you know, now coming on, you know, first full year of a two years, two and a half years in this effort together has truly proven the opportunity inside the middle market. We always had high expectations. Now we see them even greater than ever before, and that's what we're talking about, the additional spend on in the current time frame. But, Edmund, how else would you describe it?

I mean, the key I'm just excited about our opportunity here, what we've accomplished, and the opportunity, Greg. The key is that we are staying consistent with completing the AAU program this year in 2026, and the savings have moved from $350 million to $450 million. And I stepped back and looked. We started this program in 2023 when we announced it, and we've accomplished a lot. Mindy and I have both been talking about our applications going down 25%. About the application's going into the cloud, 80% of them by the end of this year here. We now, to help drive revenue, have a full suite of analyzers in EMEA and the US given the investment that we've made as part of AAU. And we are continuing to move our colleagues, but have a quarter of them today in our global capability centers, standardizing our operations and creating operating leverage. So and we knew that building this foundation was sort of a catalyst that allowed us to continue to bring on these middle market platforms. Greg, you know that me and the NFP team, we went to our global capability centers over the past months in many different countries. And the NFP team saw that they could standardize their operations, your specific question. They can integrate their technology platforms, and innovate and drive product development that was applicable to the middle market. Given that we're so focused on this $31 billion middle market opportunity, we think this is a significant opportunity for us in Aon. So as opposed to doing this over multiple years, we'll accelerate this into 2026. We'll see revenue growth and synergies from it. And it's all because ABS is the scalable foundation that enables us to do this and expand margins in the near term and over the medium and long term. So we're quite excited about this.

Thanks. For my follow-up, this is dovetailed to that question. Also sort of Elyse's capital question. On the free cash flow guide, you laid out you're committed to the $4.3 billion at Investor Day. I guess if I just look at the adjusted earnings growth, you're implicitly kind of forecasting in your guide, and factoring in these upsized costs and the tax payment you mentioned on the NFP wealth sale. Can you help us think about the moving pieces of how you're going to get to that $4.3 billion in '26?

Thanks. And to clarify, the $4.3 billion is prior to the tax impact from NFP wealth is driven by the same items that have allowed us to drive double-digit free cash flow over the last ten years to drive it in 2024 as well. The operating cash flows that we have in the continued working capital improvement. And right now, what we're experiencing is the completion of the AAU program that we just talked about in the last question. And the wind down of the original NFP integration costs that we have here. So I think about going into 2025 2026 with an outlook for double-digit free cash flow growth. In line with our history. I think that's anchored in completing the restructuring program, including the acceleration of NFP, the operating income growth, the working capital improvements offset by the tax on the NFP wealth proceeds here. So we have momentum going into '26, and confidence in the double-digit growth for 2026.

Thank you.

Our final question today is coming from David Motemaden from Evercore ISI. Your line is now live.

Hey. Thanks. Good morning. I also just wanted to clarify just on the $7 billion of available capital in 2026, do you guys expect to deploy all of that in 2026? And then relatedly, in the past, you guys have given acquired EBITDA targets. Is that something you guys can share for 2026?

On the first, so two questions there. In terms of the deployment, of course, in that is the capacity that we have maintaining our leverage objectives as well. So if there's an acquisition, of course, we would use debt capacity associated with that. But outside of that, we would either return just as we do each year any excess capital through share repurchases and not allow excess cash to be sitting on the balance sheet here just as we've done in all the other past years. As we think about the pipeline of opportunities, again, we're very pleased with the $42 million in acquired EBITDA after selling NFP Wealth. We said $35 to $40 million expectations for the year coming in at $42. We feel very pleased with that. We have a pipeline and a desire for high capital deployment in NFP, but we'll continue to balance that with the other opportunities in the pipeline as well. And think about using capital for the entire pipeline as opposed to just one component of the business given that we have strong opportunities across all of risk capital and human capital.

Great. Thank you.

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

I think we are good. Thank you for joining us today. We're very excited for our results in 2025 and the momentum that we have going into 2026. I just want to end the call with exactly what Greg said, an appreciation and a shout-out to our over 60,000 colleagues around the world. We thank you for all that you're doing each day, and we look forward to going into 2026. With that, Kevin, I think we should end the call.