AON

Good morning, and thank you for holding. Welcome to Aon plc's First Quarter 2026 Conference Call. [Operator Instructions] I would 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 or those anticipated. 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. Now it is my pleasure to turn the call over to Greg Case, President and CEO of Aon plc. Please go ahead.

Thank you, and good morning, and I appreciate you attending our first quarter earnings call. I'm joined today by Edmund Reese, our CFO. The presentation, which Edmund will reference during his remarks is available on our website. We started 2026, the final year of our 3x3 Plan, with strong momentum. Our first quarter results reflect continued strong performance, consistent execution and progress against the strategic priorities we defined more than 2 years ago. We're operating with discipline, investing deliberately and delivering differentiated value for clients, reinforcing confidence in our ability to produce sustained organic growth, margin expansion and long-term value creation. Today, I will focus on three areas. First, I will describe the external landscape and the forces shaping client demand. Second, I will highlight how our execution of the 3x3 Plan is translating into performance, including how advanced analytics and AI are increasing value and opportunity. Finally, I will highlight our results and share some perspectives on our outlook and how we see the year unfolding as we continue to build momentum. Let's start with the external landscape. Now more than ever, our clients are operating in an environment defined by volatility, complexity and rising stakes. Geopolitical uncertainty, economic pressures and cyber risk are converging with rapid technological change. These dynamics are increasing interconnection across risk, capital and workforce planning. With the ongoing conflict in the Middle East, we're working closely with clients, both in region and globally to help them build resilience and continue to operate and grow in a highly uncertain market. In this environment, the value of making better decisions has never been more evident or urgent. Capital is more selective. Boards and regulators are demanding stronger governance, transparency and resilience, and management teams are focused on protecting against downside risk while enabling growth, improving capital efficiency and supporting workforce sustainability. As a result, clients demand outcome-based advice in addition to transactional solutions, and they're looking for partners who can help them understand the risk and people challenges, design bespoke programs and execute consistently across geographies. This environment increasingly rewards firms that can integrate data, analytics and deep expertise to help clients make decisions with clarity and confidence. These trends align directly with Aon's strategic investments, client mix and innovative capabilities. On the topic of strategic execution and the 3x3 Plan. Execution against our strategy remains strong and disciplined. The 3x3 Plan continues to sharpen focus, align investment and drive accountability across the firm. It accelerates progress behind Aon United, integrating capabilities across Risk Capital and Human Capital and scaling them through Aon Business Services, or ABS. Through ABS, technology and advanced analytics are embedded enablers of our strategy, combining proprietary data, advanced analytics and expertise to design, place and govern bespoke risk and capital solutions. This combination creates a strong competitive advantage that technology alone cannot replicate. We established ABS nearly a decade ago and deliberately stepped up our investment beginning in 2024 to embed AI and advanced analytics across the firm. These investments are delivering results, materially improving productivity and execution for clients. By year-end, we expect to have invested approximately $1.3 billion in talent and technology, enhancing productivity and strengthening our ability to better diagnose risk, design integrated solutions, access capital efficiently and execute consistently for our clients. There are several proof points and performance milestones worth highlighting. First, on client segmentation and revenue quality. We compete on client outcomes, resilience, capital efficiency and workforce effectiveness, not transactions. The vast majority of our business serves global, large and middle-market clients with complex risk, capital and workforce needs. In these segments, value is created through expertise, proprietary insight and seamless execution. Meanwhile, less than 2% of our revenue is derived from SME and Personal Lines segments. This client mix translates into strong revenue quality, with the majority of our revenues recurring and embedded in ongoing client needs. Our Health and Wealth businesses together account for approximately 34% of firm revenue. Within those businesses, roughly 80% is highly recurring and anchored in regulatory and mission-critical activities, including annual valuations, pension administration and asset-linked revenue in wealth and annual benefits, broking and advisory and health. Project-based consulting, where our advice is differentiated by proprietary data and technology is less than 10% of firm-wide revenues. Our continued investment to enhance these capabilities, including in our Radford McLagan Compensation Database, instrumental in supporting workforce transformation, reinforces how deep expertise and proprietary data translate into higher value outcomes for clients. Second, on expanding the addressable market. We previously highlighted insured risk as a percent of GDP declining over the last 3 decades. Embedding AI into advanced analytics and modeling are making insurance more relevant by accessing new capital. This narrows the gap between economic loss and insured loss and increases the importance of firms that can design, place and govern complex programs. A clear example of this dynamic is digital infrastructure, where AI computing is driving unprecedented global investment in data centers. These assets introduce complex construction, operational, catastrophe and cyber risk that exceed traditional insurance solutions. Our data center life cycle insurance program, which we recently increased capacity by another $1 billion to $3.5 billion, allows our firm to lead as a market maker, bringing together the sort of coverage, large-scale capacity and capital solutions across the full life cycle of these assets. This is a growing source of demand directly linked to AI adoption, where our integration, data and expertise create a meaningful advantage, positioning Aon as a strategic partner of the clients, leading to opportunities to win new business and deepen relationships. Here, again, our investment and progress in AI-embedded analytics is allowing us to expand beyond the $4.6 trillion of traditional reinsurance capital to access the $250 trillion capital pool that includes private equity, sovereign wealth and pension funds. Third, on innovation embedded within our core brokerage model, Aon Broker Copilot illustrates how, through large language models and predictive capabilities, we can more efficiently embed advanced analytics directly into revenue-generating workflows and transform the manual placement process. The platform draws on decades of proprietary quoting, pricing and trading data to provide real-time insights to brokers as they negotiate complex placements. Further, we're extending these capabilities across the value chain. Aon Claims Copilot improves claims advocacy by consolidating data across geographies and lines of business, enabling better preparation, monitoring and negotiation. As a result of our advocacy over the last decade, we've been able to overturn and partially recover nearly $10 billion of financial value for claims that were initially denied. Claims Copilot strengthens our advocacy efforts and leads to even better outcomes for clients. This represents outcome-driven application of data analytics and expertise, not automation for its own sake. In addition to supporting revenue growth, our investments are improving how the firm operates. For example, we're seeing substantial productivity gains across invoicing, certificates of insurance and policy administration. And these gains are increasingly measurable. For example, a 50% reduction in cycle time from 22 to 11 days for invoicing and 70% reduction in invoicing work, a 95% reduction in handle time and certificates of insurance from hours to less than 5 minutes and a 95% reduction in time in policy checks from 48 hours to 30 minutes. As a result of these improvements, colleague capacity is being redeployed toward higher-value advisory and client-facing activities, fully reflecting our belief that winners in the application of AI will lead with a world-class people strategy to grow today and into the future. Critically, AI-driven productivity creates operating leverage. By lowering unit costs and reinvesting those gains into differentiation and growth, we're expanding margins while increasing the value we deliver to clients. Consistent with our long-term philosophy, productivity gains are intentionally reinvested to strengthen differentiation, accelerate innovation and deepen client relationships while still supporting margin expansion. This flywheel of higher value growth, operating leverage and disciplined reinvestment underpins our confidence in durable value creation for shareholders. Turning briefly to results. Our first quarter performance reflects strong execution across the firm. We delivered 5% organic revenue growth, continued to expand adjusted operating margin, realized strong growth in adjusted earnings per share and generated significant free cash flow. In particular, Q1 highlights the fourth consecutive quarter at or above 6% organic growth in Commercial Risk, reinforcing the impact of deliberate investments we've made and the value delivered through our innovative solutions. Additionally, our balance sheet remains strong and flexible. As Edmund will discuss in more detail, we continue to execute a balanced capital allocation strategy in the first quarter with programmatic M&A and substantial capital return to shareholders through stepped-up share repurchases and our dividend. Finally, we recently announced a double-digit dividend increase for the sixth consecutive year. Looking ahead, we are reaffirming our guidance for 2026 and remain confident in our long-term outlook. The external environment continues to reinforce demand for our solutions. Our strategic priorities are clear and our execution remains constant. We believe the net effect of technology adoption is an expansion of our addressable market. Insurance and risk management becomes more relevant as analytics improve decision-making, alternative and private capital expand available capacity and clients seek integrated outcome-based solutions. Because Aon is uniquely positioned to source capital, integrate capabilities and govern in complex risk and human capital issues for clients across the globe, we expect to grow faster than the market and increase share over time. In closing, Aon is well positioned strategically, operationally and financially. We're delivering differentiated value for clients in an increasingly complex world and translating that value into strong performance and long-term shareholder returns. To our 60,000 colleagues around the world, thank you. Thank you for your continued commitment to our clients, each other and our Aon United strategy. Now I'm pleased to turn the call over to Edmund for his comments and perspective. Edmund?

Thank you, Greg, and good morning, everyone. Before getting into the details of our first quarter results, I want to clearly anchor today's discussion on the fundamentals that define our performance and momentum as we advance through the final year of the 3x3 Plan. Over the past several quarters, we've been very intentional. First, establishing strategic clarity through our communication, then demonstrating disciplined execution, reflecting in consistently strong financial performance. As we move through 2026, our message remains consistent. The fundamentals of our business are strong, resilient and evident in our results. First, we have high confidence in the structural advantages of our business, exceptionally deep client and industry relationships, proprietary data and analytics and integrated service and global capabilities, all of which are difficult to replicate and, importantly, position us to deliver increasing value over time, particularly as AI accelerates the shift from transaction-based models towards insight-led decision-making. These advantages support sustained economics tied to value delivered, high retention and recurring revenue streams, existing and new, and they underpin our ability to sustain mid-single-digit or greater organic growth and generate returns through the cycle. Second, our confidence is substantiated by our consistent execution. Quarter after quarter, we continue to deliver sustainable organic revenue growth, expand margins through operating leverage and convert earnings into strong free cash flow. The choices we've made, investing in revenue-generating talent, scaling Aon Business Services, expanding Aon client leadership and building a leading middle-market platform, are collectively working together to generate higher-quality growth that is capital-light, margin accretive and resilient across market conditions. Third, our strong execution positions us with significant financial capacity and flexibility. During the quarter, we recognized the unique market conditions and opportunistically deployed $500 million to repurchase shares at prices we believe represent a compelling discount to intrinsic value. With consistent free cash flow generation, a disciplined balance sheet and leverage within our target range, we also remain well positioned to supplement organic growth with high return inorganic investments, ensuring that capital allocation continues to enhance long-term shareholder value. And finally, when you step back and collectively connect these attributes, durable competitive advantages, consistent execution, differentiated performance and disciplined capital allocation with significant financial flexibility, the implication is clear. These are the characteristics that, over time, result in value creation. Our focus remains on the inputs we control: strategy, including growth investment in AI-embedded tools, execution and disciplined capital allocation. As we deliver, we look forward to the outputs, including market recognition of the quality and durability of our financial model. With that context, let's turn to our first quarter results. On Slide 5, you see the first quarter results. Organic revenue growth was 5% for the quarter and total revenue increased 6% year-over-year to $5 billion. Adjusted operating margin expanded by 70 basis points and reached 39.1%. Adjusted EPS was up 14% to $6.48. And finally, we generated $363 million in free cash flow, up 332%. Let's get into the details of these results, starting with organic revenue growth on Slide 6. Organic revenue growth was 5% in the quarter, in line with our mid-single-digit or better guidance. This performance reflects the impact of our strategic investments in hiring across priority growth areas, combined with the increasing contribution from our analytical and advisory capabilities. In Commercial Risk, organic revenue growth of 7% marked the fourth consecutive quarter of growth at 6% or higher. Results reflected meaningful contributions from both North America, where growth was double digit, and EMEA as well as strong performance in our core P&C business. M&A closed deal activity accelerated during the quarter, and M&A services provided an incremental lift to organic revenue growth. In addition, our MGA businesses across both large and middle-market clients contributed positively, supported by continued client demand for specialized underwriting solutions. Finally, construction grew at a double-digit rate and remains a contributor to growth as our data center revenue pipeline is on pace to be 3x higher than last year, reinforcing our confidence in sustained mid-single-digit or greater growth in 2026. In Reinsurance, 4% organic revenue growth was driven by growth in treaty placements and double-digit growth in facultative placements. Treaty growth reflected 10% to 15% rate pressure that was more than offset by continued strong new business activity, including the addition of new logos. Insurance-linked securities were a smaller contributor in the quarter but continued to grow at a double-digit rate with outstanding volumes reaching $61 billion. Looking ahead to the second quarter, our data points to further rate pressure at April 1 renewals with rates down 15% to 20% in both the U.S. and Japan, partially offset by roughly 10% higher demand. Importantly, we continue to expect full year organic revenue growth in line with our mid-single-digit or greater growth objective, supported by a strong second half, driven by continued growth in international facultative placements and growing demand in our Strategy and Technology Group Solutions. Health Solutions grew 4% in the quarter. Our core Health and Benefits business, representing approximately 75% of the Health revenue delivered strong mid-single-digit growth across both EMEA and APAC, partially offset by slower discretionary spend in Talent Solutions, reflecting ongoing pressure that extended through the first quarter of 2026. Looking ahead, the demand for our analytics and advisory capabilities is increasing as employers navigate rising health care costs, manage transitioning workforces and focus on delivering better outcomes for their employees. With that demand building and the core business performing well, we continue to expect full year organic growth in Health to be within our mid-single-digit or greater objective. And finally, Wealth generated 1% growth driven by regulatory and valuation-related work in EMEA and market performance impact on NFP asset-based revenue, partially offset by softer advisory demand in the U.S. We expect mid-single-digit growth in Wealth for Q2 as the pension risk transfer market in the U.K. remains strong with Aon as the market leader. Turning to the key components of our Q1 organic revenue growth on Slide 7. Aon has a consistent track record of generating new business that contributes 9 to 11 points to organic revenue growth, and that continued in Q1. In the quarter, new business contributed 9 points to organic revenue growth, supported by both new client acquisitions and expanding mandates with existing clients. Our investment in revenue-generating talent in high-growth areas like construction and energy continue to deliver measurable impact. Our 2024 and 2025 cohorts contributed 75 basis points to Q1 organic revenue growth, and we expect momentum to build as these cohorts season. We've noted in the past that our data analytics and capabilities make us a destination of choice. And despite ongoing competitive pressures for talent, we continue to expect to expand our revenue-generating population by 4% to 8% in 2026. Q1 '26 retention remains strong in the mid-90s, improving 20 basis points over last year, led by Commercial Risk and Reinsurance as deeper Enterprise Client Group engagement and ABS-driven insights enhance client value and relationship depth. Net new business contributed 5 points to organic revenue growth in the quarter. Net market impact, which captures the impact of rate and exposure, contributed 1 point to organic revenue growth and was delivered in line with estimates despite a softer pricing environment in P&C and Reinsurance. Rate-driven pressure in Reinsurance following 1/1 renewals was offset with higher limit and expanded coverage in Commercial Risk, further reinforcing that growth is primarily driven by business investment and client demand and remains largely uncorrelated with pricing cycles. And one final point on revenue. First quarter fiduciary investment income was $55 million, down 18% from the prior year, as higher average balances were more than offset by the lower interest rates. On Slide 8. Q1 adjusted operating income was up 8% to $2 billion, and adjusted operating margins expanded 70 basis points to 39.1%. Through ABS, we are structurally lowering our cost base by reducing technology costs, standardizing and automating processes, including the integration of NFP and embedding AI into our development and operational workflows. These actions are not only driving margin expansion but also creating durable capacity for investments that support sustainable top line growth. Restructuring savings were $25 million in the quarter, contributing 50 basis points to adjusted operating margin. We remain on track to deliver $100 million of savings in 2026, advancing toward our goal of $450 million in total savings by 2027, with 2026 marking the final year of our restructuring investment. Moving to interest, other income and taxes on Slide 9. Interest income was $12 million in the first quarter and up $7 million over last year, driven by interest earned on proceeds from the sale of NFP Wealth. Interest expense came in at $179 million, $26 million lower than last year, primarily due to lower average debt balances. We expect Q2 '26 interest expense to be approximately $180 million. Other expense was $15 million lower than last year, driven by lower noncash pension expense and the remeasurement of balance sheet items. We estimate Q2 '26 other expense to range between $15 million and $20 million. Finally, the Q1 effective tax rate was 20.3%, 60 basis points lower than Q1 '25, reflecting the geographic mix of income growth and the favorable impact of discrete items. Our full year tax outlook remains unchanged at 19.5% to 20.5%. Turning now to free cash flow and capital allocation on Slide 10. We generated $363 million of free cash flow in the first quarter, reflecting strong operating income growth. This is a strong start to the year, and we continue to expect double-digit free cash flow growth in 2026. Turning to capital on the right-hand side of the slide. Our strong free cash flow growth enabled us to continue to execute our disciplined capital allocation model, balancing investment for growth with capital return to shareholders. As Greg mentioned, in April, we increased our quarterly dividend by 10% to $0.82 per share, marking the sixth consecutive year of double-digit dividend increases and reflecting the cash-generating strength and durability of our business and financial model. We also remained active in M&A and allocated $349 million toward high-growth tuck-in acquisitions in middle market that align with our strategic priorities and return thresholds. The largest use of capital in the quarter was shareholder return. In total, we returned $662 million to shareholders, including $500 million in share repurchases, a significant step-up from the average $250 million per quarter over the prior 8 quarters. As I noted earlier, we were proactive and leaned in the market conditions, repurchasing shares at prices well below the firm's intrinsic value. And that conviction is grounded in the fundamentals of the business, driving strong performance today and also informed by the investments we are making to drive future growth in talent, AI-embedded analytics and scalable platforms, which we believe increase the long-term earnings power and terminal value of the firm. Taken together, these actions reflect the consistent application of our balanced capital allocation model, maintaining our leverage objective, consistently growing the dividend and executing our disciplined approach to high-return M&A and returning excess capital to shareholders, ensuring capital allocation continues to enhance long-term shareholder value. I'll conclude my prepared remarks on Slide 11 with a few thoughts on our financial objectives and 2026 guidance. The first quarter 2026 performance reflects a start to the year that is right in line with our expectations and reinforces the strategic choices we have made to drive sustainable growth. Accordingly, we are reaffirming our 2026 full year guidance for mid-single-digit or greater organic revenue growth, supported by continued new business wins, the compounding contributions from our revenue-generating hires and accretive growth in middle market. We delivered 70 basis points of margin expansion in Q1, and we are seeing the benefits of efficiency gains from our scalable ABS platform and continued progress on our restructuring objectives. As a result, we are reaffirming our expectations for 70 to 80 basis points of margin expansion for the full year. The combination of organic growth and margin expansion supports our outlook for strong earnings growth in 2026, and with high conversion of those earnings into cash, positions us to deliver double-digit free cash flow growth for the year. Our strong capital position affords us the financial flexibility to actively deploy capital across multiple avenues, supplementing organic growth with strategic M&A while also executing opportunistic share repurchases. We have substantial financial capacity to pursue our high-quality M&A pipeline, and we remain firmly on track to deliver at least $1 billion in share repurchases for the year. As we move to Q&A, I want to emphasize that the performance you are seeing is the result of deliberate decisions. Our organic investments as part of the 3x3 Plan, $1.3 billion in talent and the AI-embedded capabilities that enable that talent to bring faster, deeper insight to clients as well as our inorganic actions are all intentionally aligned to deliver consistent earnings and free cash flow growth. We are already realizing productivity improvements today, and we are reinvesting those gains back into capabilities that both expand what we can deliver for clients and how efficiently we deliver it. In a world where technology increasingly enables and amplifies differentiated insight, advice and outcomes, this reinvestment cycle is critical. When executed well, it expands the addressable market by making risk transfer more relevant and increasing insured risk as a percentage of GDP, while also unlocking incremental AI-enabled opportunities to gain share with existing and prospective clients. Our investment leadership here strengthens our long-term growth profile, reinforces our conviction in the firm's growing terminal value and supports long-term value creation for shareholders. So with that, let's open up the line for questions. Kerry, back to you.

[Operator Instructions] And our first question will come from Elyse Greenspan with Wells Fargo.

My first question, I was hoping if you could just provide a little bit more color on just the contributions from data centers to organic growth in the quarter. I know Edmund said, I think it was 3x the level this year than last year. But hoping just to size it a little bit to get a sense of the contribution to organic in Q1 and expectations for the next few quarters of the year.

Elyse, thanks for joining. Great question. I will hit data center in particular, but the important point in this question is our Commercial Risk business and how broad-based the growth was. Data center, just real pointedly, was a part of the double-digit construction in our business. But again, the growth in Commercial Risk was broad-based. So I just have to highlight that in a lower rate environment, Commercial Risk has been 6% or better for the last 4 quarters. And we're not surprised with the strength in Commercial Risk because the results reflect what I just said in the script there, our intentional strategic decisions. So it was broad-based with strength in the U.S. double digit, with EMEA achieving strong growth in the core P&C business. New business itself in Commercial Risk was over 12 points of contribution. That's very much supported by the priority growth hires in construction, where data center shows up as a component of that. Retention was 50 basis points higher in Commercial Risk for the quarter. That's our analyzers helping with RFPs. We have a whole suite of them now rolled out in the U.S. and EMEA. And again, the net market contribution in Commercial Risk was still positive despite pricing pressure in property. And I'll also emphasize just again, to your point, the priority growth areas. Double-digit growth in construction, that's wins and pipeline in data centers. So we had wins that were higher this year and a pipeline that is giving us confidence in the outlook for the year, but it wasn't the key driver of growth. I also mentioned M&A in that. Again, the growth was strong there as well, but we still would have been at these fourth consecutive quarters of 6% growth with or without that, just again, emphasizing how broad-based the growth was. And I'll just point out one other item, Elyse, that the synergies that we are getting from NFP, particularly as we utilize our facilities like Aon Client Treaty in London, is just another contributor to the growth here. So we're going to continue to focus and invest in these drivers of growth, our talent and our technology. We believe those investments, including in construction and data center hires, hires who are focused on that, those are the things that will sustain new business growth and continue the strong retention that we have.

And I think really, Elyse, what Edmund, I think summarized there very, very well is the broad-based piece. And we remain incredibly excited about the data centers. But it's really very much we're at the beginning of the beginning with tremendous promise ahead, and we're very well positioned.

And then my follow-up question is on capital. I recognize you guys leaned into a buybacks in the Q1, but you left the target for the year at $1 billion plus. You obviously could have raised it. Is it just -- are you waiting to see how the M&A pipeline develops? Is it a function of what happens to your stock price? Obviously, there's been more volatility, right, within the brokers subsequent to the end of the Q1. So just trying to understand the desire to lean into buyback and also continue to pursue your M&A strategy.

Yes. Another important topic, Elyse, so thank you for raising it again. And even on this one, I have to step back as well because I have to begin with just reiterating how pleased we are with the free cash flow generation in the quarter and the continued execution of the capital allocation model, right? I mentioned in the script that we're right in line with our leverage objective, actually a little bit better in this quarter. I think we came out at 2.7. Our objective is at least 2.9 there. We announced a double-digit increase in the dividend. We're investing in middle market. And as you just mentioned, we're taking advantage of the market opportunity as well and returning capital to shareholders. So the question just really has me come back and anchor in our capital allocation model, which we're executing with discipline here. As we go through '26, I mean, you hit on a few things there. We are going to continue to look at the pipeline for M&A. I mentioned earlier that we have strong criteria and thresholds that have to be met strategically, financially. You know that we look at M&A that can be above 10% revenue after owning it for a year, that have IRRs that are at least 20% and allow us to continue to have our market-leading ROIC in it. That's what we evaluate, and there continue to be opportunities in middle market and select international markets like Japan and EMEA and even LatAm that we are looking at. So we have the flexibility with our strong balance sheet to pursue those M&A. If they don't meet the criteria, then we won't have a lazy balance sheet. I continue to use that terminology, and we'll return the excess capital to shareholders. So for now, I think it is prudent for us to stick with our at least $1 billion in the year. Obviously, $500 million in the first quarter is a great start that gives us confidence in that number, and we'll see how the year plays out.

And our next question will come from Andrew Andersen with Jefferies.

On expanding mandates versus truly new logos, can you maybe just talk about what the mix was this quarter and how that has been trending versus last year? I would think expanding mandates is better for margins near term, but perhaps that's not the case, and would be particularly interested in CRS.

Yes. This is a key, key topic, new business growth. I mentioned in the script there, 9 to 11 points, as we've shown in the Investor Day and continue to produce, is what the objective is. So another quarter of 9 points. And it's a great question. If you look back over '25 or even '24, I mentioned during Investor Day that it's been split about half and half between new logos and expanding with existing clients. And you see some movement quarter-over-quarter in the different solution lines, but it's about equal. And then Commercial Risk, in particular, on your question, 12 points of contribution in the quarter from Commercial Risk. That's a strong item. That was both, again, an equal mix between the new logos and expanding with our existing clients there in the quarter. So it's typically going to be balanced across each, and we're looking to pursue each as we deploy Enterprise Client Group, right? We have a whole focus on this, and Greg can speak up on the Enterprise Client Group, really expanding with our existing clients, increasing the relationship with the senior executives, the HR leads, the CFOs of the organization. That allows us to deepen the relationships and retain those clients. So we're seeing that in both. New logos, I called out in the script also, was a strong driver for Reinsurance as it helped us offset some of the rate pressure there as well. So I think a strong quarter from that standpoint.

And there's been some broader industry discussion around broker commissions and fee levels. How are you thinking about this dynamic in the context of the value that you're delivering? And where do you see these trending?

Let me say, Andrew, just step back and think about kind of what's going on in the market overall, we see real opportunity. When you think about sort of how this plays into AI and all that we might talk about further on this call potentially as questions come up, but real opportunity. By the way, this is opportunity based on client need. It is interesting how the question gets positioned sometimes, and it takes a view of a zero-sum game between insurance markets and advisers. But really, we should be asking the question on whether the risk industry overall is going to be led greater value for clients. And if we can meet this ever-increasing, ever-higher bar, it suggests a positive movement, and that's exactly where we are. In a world where risks are increasing, volatility is getting greater, the need for better solutions is very high, we are incredibly well positioned to deliver not just insights, but access to capital, which includes the traditional markets and alternative markets. So from our standpoint, we see a meaningful opportunity ahead with AI as a catalyst, driving and enhancing our strategy. Again, AI is not a strategy. Our strategy has been unbelievably strong and well proven. AI is a catalyst for it. And we do what Edmund described in his comments. We expand addressable markets. We've got greater access to those markets. We've got the ability to add even greater value as those markets expand, and that suggests stronger performance. But really, Andrew, to be clear, the ultimate arbiter of truth here is clients. They decide. And we're really well positioned to add greater value. And in doing that, it creates greater opportunity for operational improvement.

And moving next to Rob Cox with Goldman Sachs.

First question just on the Middle East. Can you just talk about how the Middle East conflict showed up in Aon's results this quarter? And maybe if you have any ideas you could talk about the potential to see claims inflation from the conflict later on this year?

Maybe to start overall, Rob, just a general view on the Middle East. Generally, and how it's impacting kind of our clients around the world and certainly, obviously, in region. And I want Edmund to talk specifically about the results in the Middle East and sort of how that's played into the overall performance in the quarter. Listen, our first and foremost focus is on our colleagues and our clients sort of in region and supporting them and reinforcing all that they're going through. As we think about broad-based, obviously, the Middle East is not a tremendously substantial part of our business, but it's important for clients around the world. It will have overall implications. And from our standpoint, we'll see how things evolve. But right now, uncertainty is what we work toward on behalf of clients. It's how we serve and support them. And so whatever form that takes, however long this lasts, we'll be there, and it will have implications on overall operating performance. But so far, it's very much in development mode. But specifically in the quarter, Edmund, do you want to comment on that?

Yes. Greg, I actually just want to start with what you just said, like our focus is on the colleagues and clients. But if I do move to the performance there. The headline growth for us, Rob, in the region was actually double-digit growth. You got to keep in mind that our Middle East business, as Greg just said, not a substantial part of our overall business, but over 50% of it is Health. Those renewals happened actually before the conflict and that escalation -- before the conflict escalated. So it's pretty locked in. Commercial Risk in the Middle East was one of the largest growers in our portfolio. You can imagine, with increasing risk in the region, that actually creates more demand for us to be able to help clients, as Greg said in his opening remarks, move through that. And the Reinsurance business in that region, 70% of it is done on 1/1 renewals. So again, we had strong growth there as well. Greg's point is the right one. It's a small part of our portfolio. We're very diversified. And as you heard me say, our strength is broad-based. Now if we continue to see an escalation or a prolonged conflict, that could have some impact that seeps into the broader impact on economy. But again, if that happens, our clients actually need more of our services. So we'll continue to monitor development closely, but we remain focused now on our clients and colleagues.

That's super helpful. And I just wanted to follow up on the risk analyzers. Edmund, I think you attributed some of the retention gains in Commercial Risk to the risk analyzers. I'd imagine it's also contributing to new business. How are you actually measuring the benefits from the risk analyzers? And can you just give us some color on adoption usage compared to the past in the various businesses?

Yes. We've -- our team, led by our COO and our business partners have really been rolling out our risk analyzers. And Greg said it earlier, and I'm sure he will emphasize that. Where we started here was with Commercial Risk. And we've started to roll some of this out into Health, and we're starting to see some of that benefit in core health and benefits. But the Commercial Risk area is where we're seeing the business. And what I talked about, as I said, we've rolled it out. We're on later versions in the U.S., sort of mid-game in EMEA and rolling out in the other regions as well. But it is very clear and measurable to look at the impact of when we use the analyzers and when we don't use the analyzers. And we look at win rates, we look at renewals, and we look at new business from it. Again, it is the first place. The priority hires and the analyzers, if I had to boil it down the 12 points of contribution in Commercial Risk to two things, talent and technology, our hires in the priority growth areas and the analyzers coming through across property, across D&O, across cyber. And now Greg in his script mentioned us rolling out Broker Copilot as well, which is helping us bring insights on pricing, trading data to our clients very quickly as well. So if I had to attribute that new business to two things, it would be those two items. And we're able to measure it very well. But Greg, any comments from you on that?

No, I think you've covered it well. I do want to -- just for context, Rob, back up, and it isn't just the analyzers, right? This is a very measured approach we've taken over a number of years to answer a very straightforward question. How do we address increasing client need. And so the analyzers are a direct response to that, driven by client need. We can do the analyzers because we've got the raw data, the quantity, the quality, how we've ingested it and curated it. We've got the analytic capability, and then we have an organizational structure. When you think about Risk Capital, Human Capital, it doesn't exist anywhere else. And that allows us to take very high-quality talent, the best in the world, as Edmund described, and really make sure we're aligned to deliver this. And so it's not just the analyzers. It's also the service component, what we do on certificates and ad hoc certificates, a whole range of things, invoices. So it is revenue driven and service driven. And then, obviously, it creates -- we have efficiency then that Edmund described before, which means we can reinvest back into that capability. And the reason that's important is it highlights the versions. Don't miss that point. We're on like Version 10 or more of the property analyzer. And across the suite of analyzers, we continue to evolve them. We're about to attend the RIMS Conference. We're going to come away with 15 ideas that are go into a next iteration, and we've got the machine that can just keep innovating to do that. But the real punchline here is we're making a difference, and they're making a difference because they matter to clients on revenue, how they help build their businesses and make decisions and how they run their businesses around service.

And our next question will come from Mike Zaremski with BMO Capital Markets.

First question, focusing on the really nice commercial risk organic. Just want to make sure we shouldn't get over our skis given we know that 2Q is one of the biggest property quarters in the industry. So when you think about the net market impact, Edmund for 2Q, in the last 2Q it decelerated fairly materially from 1Q. Should we be kind of keeping that in mind as we think about the rest of the year or just the near-term 2Q is maybe a governor on how excited we should be?

Well, there's two parts to your question that are important to highlight. One is, you're right. We are running this firm on an annual basis, and not on a quarterly basis. And so we think about the guidance as full year annual guidance because there could be movement within the quarters. Setting that aside, on net market impact, the second part of your question, which I think is important, the guidance, as you know, is 0 to 2 points of contribution from that as the quarters have moved through the end of '25 and into this quarter, despite the pressure that we see, whether we're talking about Commercial Risk in P&C or even in Reinsurance. We've been at roughly 1 point or slightly higher, and that continued in this quarter. That's what we expect throughout the rest of the year, including Q2. It's just important to highlight here that it's not -- that could have an impact, 0 to 2 is still how you should be thinking about it. But more importantly is the growth in GDP, the business investment that we're having right now because that's the pricing piece that we're talking about in the net market impact. And the diversity of the products, the diversity of the geographies, I just talked about the broad-based growth in Commercial Risk. Those are the things that allow us to grow at mid-single digit or better in any pricing environment, and that's where we focus on. So even in this quarter, it's not new, right? Property was down 15% in this quarter. Casualty, like mid-single-digit growth. D&O, a little bit of an uptick in price there. Cyber at low single-digit rates. We have these micro markets on pricing, but we take actions to help our clients take advantage of these markets, help them increase their limit, increase their coverages. And those are the things that allow us to still have the mid-single-digit growth. Greg?

And Mike, I don't miss -- I hear your point on over our skis. We've taken in a very measured, methodical approach year-over-year-over-year period. But you would observe the 4 quarters that Edmund described in Commercial Risk, observe the fact that we, in our 3x3 Plan, have really laid out a series of capabilities defined by clients, driven by serious, serious industrial strength content and content behind them. And we focused initially on Commercial Risk and across the U.S. And what Edmund just described is a very broad-based 7% organic against whatever pricing environment. We didn't qualify it on that. It doesn't matter. It's helping clients succeed, winning more clients, doing more with them, keeping them longer, all those things with it. And the team was phenomenal. They delivered 7%. I think you described double-digit North America. And so this is a pretty unique progress. We don't get excited about it. We just stay focused on client need, and we've got to deliver for the year. But you ask yourself, did we increase probability of the mid-single digit or greater, you should feel good about that progress with that context.

Yes. Definitely, even seeing the net margin impact not move much over the last many quarters has been a great result. Just lastly, real quick. In your prepared remarks, you talked about driving productivity improvements. Clearly, a lot of GenAI technology adoption that's being accelerated across your firm. Do you envision a future where Aon's productivity per employee could accelerate to much higher levels than historical levels? Or too soon to know? I guess I asked because one of your broker peers did offer kind of a very long-term North Star about productivity improvements that could be fairly material.

Yes. Listen, this is probably worth a little bit of time since it's come up so much. And I'd really like to offer a couple of thoughts, and then, Edmund, I want you to jump in here, too. This is so fundamental to our firm. Look, on this whole topic of kind of the impact of AI, is it productivity? Is it -- what is it going to be? And how is it going to play out? First, we want to be clear on our position here. We're incredibly excited about the possibilities of AI to reinforce, and we mean reinforce our strategy. It's not our strategy, reinforce our strategy, accelerate it and strengthen it. And we mean over the next 5 years, and we mean equally important over the long term. And we also want to be clear, the capability, we've been doing this for multiple years now. It's already being seen. You saw it in the quarter. And it's going to be seen more over time. And we're going to deliver for clients now and increase long-term value for Aon. And again, our view has developed over time. I mean, we restructured our firm over many years to address this Risk Capital, Human Capital, ABS, how we deliver from an integrated client standpoint. And we also were clear on, look, this comes from our -- how do we do this? How can we pull it off? People can talk about it. We can pull it off because of the data, the raw quantity, the quality, how we've ingested it, how we changed that over time, how we curate it. The analytics, Mike, that come with it and how we model and what we do with it. The analytics are interesting. But when they become a suite of analyzers with the sort of service capabilities that have been introduced and refined 10 or 15x, that's when it becomes powerful. That can only happen with Risk Capital and Human Capital, which is why we're pretty excited about this. And I will come back to look, it's all driven by a few principles. One is literally what do clients need? How is it changing over time? And these responses that we've driven are all around revenue enhancement and driving that piece first and foremost, service enhancement second, and then productivity, which is why we've said, listen, you're not going to get success here in AI without an absolutely world-class people strategy out in front driving this. And that's what we're seeing. And the analyzers from client demand have actually changed the way clients think about what their businesses -- how they evolve, their risks in their business. What we've done on the service side as well. But if that's the client piece, the other piece to your question is really around value and what are the economics of that, the operating results of that. And frankly, greater value, as I described before, is greater margin potential. But then it also has to be continuous. So that's got to be durable. So I would just say, look, from our standpoint, we have our North Star. We're driving toward it. It's really delivering. And we see greater, greater opportunity to have an impact. To go back to Elyse's first question, one of them are in areas that are on the net new, which is data centers. Just beginning. But we're positioned unbelievably well because of all the work we've done. So we're pretty excited about the potential here and see it developing over time and see real opportunity. We don't see this as a defend the house. We see this as a true build the house opportunity. But Edmund, I'd love you to talk a little bit about the value part of this and the durability part of this.

Yes, absolutely. And your question, Mike, is on the value part and the impact on the economics. Greg just talked about the demand of it. There's the economics, which I think have an impact today. And the third part is the durability of it, the ongoing benefit, how we will perform better. And that's the compelling part of it. We are operating and you're seeing it in our results, today. It's not just margin, though. It's in the new business growth. And I think our compensation there is tied to the outcomes, as Greg talked about earlier, as we help clients with capital, so we help them with workforce, as we help them improve their resilience. It shows up in retention. We had NPS up 10 points, something that I don't think I mentioned earlier here. And the analyzers I have mentioned are improving the RFP rates. And then it's showing up in your question, the margin improvement. Greg gave some stats earlier on claims, certificates of insurance, invoicing, policy management, all those things are lowering our unit costs, and we had talked earlier about 5% to 15% productivity improvements. Those things are happening right now, and we're doing it in a way that still allows us to bring value to our clients. So that's number one. The economics of it are showing up top line and bottom line and in our results today. The important point is that the performance builds over the coming years, right? Like you see multiyear tailwinds from this. Our work in data center is a great example of that. Our work on workforce solutions is a great example of that as well. So our insights and our capabilities are going to help us expand this market. Our content and the investments are going to help us gain share in this expanding market. And as we continue to lead in the investment and get these productivity improvements, we will reinvest, which creates this virtuous circle loop, which at the end of the day, just means that more durable business, a more scalable business and a more valuable business, more valuable business over the long term as we bring this value to clients.

And we'll go next to Bob Huang with Morgan Stanley.

So my question is really also related to the Middle East, but not really Middle East. As we think about the Middle East conflict, the elevated energy price should have a fairly notable impact on GDP in Asia. I understand the Middle East contribution to you is probably small, but the Asia contribution probably is not. As we think about Asia growth slowdown due to energy prices, can you maybe help us understand the impact on organic growth guidance throughout the year, think about the inflation impact and things of that nature?

I'll start overall, Bob. We want to come back and, again, governing thought, reaffirm exactly where we are on mid-single digit or greater from a growth standpoint. We're looking now across the world, see all that you're looking at as best we can. And our view has been single digit or greater. So start with that overall governing thought. And then I just want to highlight a point that Edmund alluded to earlier around ambiguity and uncertainty. Pieces that create challenges in one area create opportunities in other areas. We've seen it countlessly. I mean, I think about even now in the Middle East, which, again, as Edmund described, is not a big part of our business, has done unbelievably well, helping clients understand the situation and really protect themselves as they also think about growth. APAC, Asia, tremendously important for us, still, on a relative basis, not a massive part of the overall firm, but fairly important. And we get your point on the energy side, but frankly, it's going to create other opportunities. Clients trying to decide how to navigate that environment. And that's what we do. We're going to help them do that, which is why you kind of come back to the form might change. The form might change. What we do might change. It may evolve. But our ability to help clients succeed in an uncertain environment has never been greater and is continuing to strengthen, and it's why we come back to that affirmation. But what else could you add to that, Edmund?

Greg, I don't have much to add to that except like that shows up in the results, right? Our international markets are really leading the growth in many of our individual solution lines. And as that mix changes, we feel good that, that continues to be the opportunity where we can help the clients, which shows up in our results. So not much to add to that.

Okay. Really appreciate it. My last question is about the AI expense, right? So on your press release, you talked about, there's an $8 million increase in IT expense. As we think about AI expense, it's variable expenses, it's token-driven, prompt-driven on the input cost side. Going forward, like as you build out more AI capabilities, how should we think about that overall expense? Is that all essentially factored into the margin guidance? Is it -- as you have a higher and increased utilization of AI, can you just help us with that a little bit?

It's a great question. And the short answer is yes. It is factored into the margin guidance. Again, me and our COO, our Chief Operating Officer and I talk about this all the time. We are model agnostic. We're building our own models, Broker and Claims Copilots are great examples of that, but we're also working with all the big names you know in the space. And in fact, that comes back to our organizational readiness. Me, Greg and the leadership team just spent some time actually tiering our organization from who needs the basic tools that have less need for tokenization and who needs the tools that are experts. Zone 1, 2 and 3 is sort of how we frame it. So we're super focused on who's going to be using it. Again, our focus is top line growth and productivity. So we want to equip the organization on both of those areas to build the things that help us with top line growth and get the productivity while being conscious of the cost. When I come to the cost, clearly, we have it baked into the $1.3 billion investment that we did as part of the 3x3 Plan. And you've astutely and rightfully called out the tech development part of our income statement, where I would say probably half of what you saw, nearly $600 million in 2025, is connected to AI as well. Obviously, there's a tech infrastructure part of that, but a significant component is the tech dev completely focused on AI. But again, it's our commitment to those investments that highlight our leadership in the space. We factor that in, those costs and the reinvestment of productivity improvements from that in our overall guidance here.

And maybe one observation I'll just add to that, Bob. As you think about the mechanics of literally how we thought about the investment, the cost, as Edmund described it, maybe Simon, our COO and how they discussed it, and it is really an intricate discussion. These are all critically important. So understand sort of how we look at that. But the real breakthrough here is not just cost efficiency, right? The real breakthrough is delivering client value. Literally, it's the revenue part of this and the service part of this. So it's more revenue, better retention of that revenue, all these things factor in. And this is where we want to absolutely -- this is where we've got to get yield to get return, not just efficiency. So again, back to some of the earlier questions on the call around sort of the zero-sum game that everything boils down and gets smaller and smaller. For us, it's bigger and bigger with opportunities. That is a revenue conversation. That's a productivity conversation that's beyond efficiency. And this is where we have seen some breakthroughs. This is really what's led to a lot of our work to accelerate not just taking cost out. We've done that before and continue to do that. But we're truly helping clients do things they couldn't have done before.

And we'll go next to Cave Montazeri with Deutsche Bank.

So you started investing in ABS over 10 years ago. And I think until recently from the outside, really felt like it was primarily a margin expansion story. But now, and you've mentioned that several times on the call today, it really looks like we're seeing the tangible impact on organic as well, and we can really see the flywheel effect that you guys are talking about. Now others have noticed and everyone now wants to be a bit more like you guys, can build their own version of ABS. How important is it for you to have that first-mover advantage? Because as more of your peers implement their own version of ABS, will those efficiencies and better analytical tools become commoditized? Or is there like a real moat to being early and that others will always be playing catch-up because you keep on investing and getting better at ABS?

Listen, I really appreciate the question, and it is the question of the day in terms of sort of when you think about some of the evolution, I would really start and emphasize, again, this starts with client need, how it's evolving over time and how we respond to it. We're responding to client need. That's the strategy. Again, AI is not a strategy. Serving clients in a more effective way as their risk increase, that's the strategy. And if you think about what's required to do that, this is where we come back to -- we have been -- it's taken a long time. It's hard to pull this together. And it isn't just the analytics and the data. By the way, that's critical. You don't have the raw quantity and then turn it into quality in a way you can ingest it, curate it, you don't have anything. So that's taken a long time. By the way, ABS was doing cost and that for us, so important. We had great Reinsurance data. We had great Commercial Risk data, great Health data. But they weren't connected. Now we've got them connected in a way that we've not ever seen before. The analytics of that result in these capabilities. But also to be clear, this isn't about analytics. At one level, it's about organization. It's about alignment, Risk Capital and Human Capital. We broke our firm down organizationally and rebuilt it to connect the dots around Risk Capital. This is Reinsurance and Commercial Risk. So imagine Reinsurance contend and insight ingested into a Commercial Risk decision process. This is a massive, massive change in terms of sort of insight for clients. So for us, the organizational change, absolutely important. The analytics and ABS, absolutely important. And then the way we go to market. Edmund described it before around Enterprise Client and a connected global firm, that sounds trivial, but it's powerful. Clients should not be negotiating or trying to understand Aon. We should understand them and bring the integrated firm. If we bring the integrated firm, Aon client leadership with capabilities that never existed before, Aon Business Services, driven by a set of analytics not seen before. That's what for us is the wow. And if we can do that, that's a revenue-driven engine. And we're just going to keep investing in that engine and driving that engine. And the outcome, and don't miss this part that Edmund described. This is about not just in the next 5 years' performance. This is as you think about our terminal value, if you want to look at it that way, this is a bigger market. Data centers are a bigger market. Solving cyber is a bigger market. And then the way to serve that market requires real expertise, new expertise, which means if you've got it, you're going to win more share. And if you win more share, you're going to create more value. And value means you have the opportunity to deliver for clients and for shareholders on margin. You can do both. So that's our mission. That's our view. And we feel fortunate we made progress. But to be clear, we got to hammer down. We see the opportunity here for the clients, and we're going to keep driving it.

And then my follow-up question was on the personal lines exposure that you said was less than, I think, 2% of premium. Could you kind of remind us like how that came about? Is that something that kind of you want to keep, that's core to Aon or that your clients ask for?

Just a quick overview. Just first of all, personal lines, this is complex at some level. The piece we serve, this is higher net worth individuals, sometimes tied into businesses, really trying to think about what they're up to. We're working hard to support that. So I don't want to dismiss that as not complex, but it's a very small part of what we do. It's less than 2%. Sometimes it comes with the businesses overall. So put it in context, I understand it's not priority, but it's also important. Yes, Edmund, go ahead.

Yes. And the way that we've sort of -- the majority of our personal lines business has come as part of the acquisitions that we've been doing over the past decade, right? We've done over 150 acquisitions. And you actually see us continue to have active portfolio management where we look to focus on our core, the higher-growth core businesses. You've actually seen us have cash from dispositions. It was over $730 million in 2024. That comes from the disposition of the personal lines business as we continue to go through our portfolio hygiene here. So that's why it's at that percentage, and I would say, continuing to shrink as we move forward here because we're super focused on our core Risk Capital and Human Capital business.

And thank you. I would now like to turn the call back over to Greg Case for closing remarks.

I just wanted to say thank you to everyone for joining the call. We appreciate it, and look forward to the next quarter.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.