And now we see a massive opportunity going forward. They’re all consistent with the 3×3 plan. And we’ve communicated previously the negative impact on transaction and IPO activity, which is yet to rebound, but we are very confident it will. So, from our standpoint, look, we feel very good about the trajectory and what we’re going to be able to do over time and deliver on the 3×3 plan in a very clear way. And it’s going to be great outcome for clients, great outcome for our colleagues who would deliver that value and ultimately for our shareholders. And I just want to reiterate as what Christa described, we’re at mid-single digit organic growth or greater and that commitment holds across ’24 and over the long term. And we fully expect to translate that into frankly strong top-line and bottom-line performance.
Jimmy Bhullar: Okay, thanks. And then just following up on buybacks, I’m assuming this year is going to be lower than last year partly because of the drag because of NFP then also the drag because of the restructuring program. But if we think about 1Q, was it also depressed because of the seasonality of cash flows or is this sort of a normal quarter in terms of buyback?
Christa Davies: Yeah. So, Jimmy, thank you for the question. And I did actually give specific guidance in my opening remarks about buyback because I recognize that there’s a lot of puts and takes around free cash flow as we’ve communicated. And while buyback will be lower than last year, we expect it will be — still be substantial for the full year 2024 at $1 billion or more based on our current M&A expectations for the rest of the year. And as we mentioned, Q1 is our seasonally smallest free cash flow quarter.
Jimmy Bhullar: Okay. Thank you.
Operator: Thank you. Our next question is from Mike Zaremski with BMO Capital Markets. Please proceed with your question.
Mike Zaremski: Hey, good morning. Congrats, Christa. On the NFP deal closing, is there anything we should be aware of in terms of the shares Aon will be issuing to the owners of NFP and whether there’s like a lockup or expected sale of those shares over time given how a large amount it is?
Christa Davies: Thanks so much for the question. And we did issue the 19 million shares yesterday, so that occurred. And we haven’t disclosed anything related to the MDP lockup. What we can say is, the NFP management team did receive a meaningful amount of Aon shares, and the purchase agreement refers to their lockup period. And we have spent time with our new investors, and they’re really excited about the Aon story and appreciate how the acquisition furthers our Aon United strategy, and I’m particularly excited about the 3×3 plan, too.
Mike Zaremski: Okay. Got it. My follow-up is also on the NFP deal. Now that it’s closed, the math you gave when the deal was announced on the interest expense appeared to bake in a slightly higher interest rate level in our — it looks like than current interest rates. And just given cost of capital, it’s actually even a bit higher today. Would this also kind of incentivize Aon to pay down the debt faster as well than you had thought maybe a few months ago when the deal was announced? Thanks.
Christa Davies: Thanks so much for the question, Mike. And so, if you look at the financials we’ve outlined, the synergies and deal financials, what you’ll observe with the interest expense is, when we originally announced this in December, we had $230 million of interest expense in the stub period, which at the time was a six-month stub period, and we now have $285 million in that period, and it’s really a result of the two extra months. Interest is actually at a lower average interest rate. We had originally forecast the average interest rate on the $7 billion of debt to be 6.5%. It’s now 5.7%, so a whole 80 basis points less. So, the interest rate is less, but you’ve got two more months. And then, you can see that the interest expense in the future years, 2025 and 2026, is coming down from our original estimate.
So, the $310 million we now have in 2025 compares to the $410 million we had before, and the $275 million compares to the $340 million. So, you can see how the lower interest rates are impacted those future years.
Mike Zaremski: Okay. Got it. I’ll look at that. Thank you.
Operator: Our next question is from Elyse Greenspan with Wells Fargo. Please proceed with your question.
Elyse Greenspan: Hi. Thanks. Good morning. My first question, I was hoping to get more color just on why the new business was down year-over-year in the U.S. specifically versus other regions. And, Greg, I know you called out some business lines, but can you just help us think about how that might rebound from here?
Greg Case: I appreciate the question, Elyse. Start, overall globally, very strong profile across the board as we said before both on retention, exceptionally high, and on new business overall. All we just did is highlight a couple areas in the U.S. where we’re seeing some pressure, and that’s really what we’re showing up. That that will rebound over time, as we continue to talk to clients about the opportunities they’ve got to read as they think about their overall programs in terms of where they are. But, Eric, anything you’d add to that perspective?
Eric Andersen: Yeah. Greg, I mean, you talked about D&O in particular, but I would also say we’ve had some really solid growth in areas like energy and construction and other places where we’re investing in talent to grow our capabilities there. That’s the sector piece. But we’re also investing in geographic areas called Continental Europe, Asia Pacific, where we’re also seeing good growth. So, I think we will see great opportunity for us as we go forward through the year.
Elyse Greenspan: And then, in terms of the transactional, the M&A and the SPAC and the IPO business, I guess, how would the Q1 compare, right? That’s been a business that’s been a headwind for you guys right over the last six, seven quarters. How would — have you started to see any of that business come back, or would you still say we’re close to trough levels there?
Eric Andersen: So, Elyse, I don’t think there’s anybody on the planet that looks at it closer than us as we’ve been watching it. We hear people talk of green shoots, but the reality is, and I think we’ve said it on the past, that our opportunity happens when the deals close. And so, at this point, you hear things in the market about dry powder and people wanting to do transactions, but at this point, it’s still fairly depressed.
