Aon plc (NYSE:AON) Q2 2023 Earnings Call Transcript

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Operator: Our next question comes from the line of Weston Bloomer with UBS. Please proceed with your question.

Weston Bloomer: My first question is on comp and benefits. It looks like that picked up pretty meaningfully over the last 5 quarter trend and you highlighted investments in colleagues and there’s a pretty high competition for talent. Can you maybe comment on the pace of hiring you’re seeing more broadly? And was there maybe a pickup in retention based comp in the quarter? Would be curious on maybe attrition rates and commercial risk and reinsurance as well.

Christa Davies: And so maybe I’ll start with sort of the math of just — if you think about this, and again, we look at the sort of over a full year. But if you just did year-to-date, you’d see organic revenue growth of 7% year-to-date. Comp and ben is up 4% year-to-date. And so there’s lumpiness in every quarter. And so what we would say is we feel good about that. And in terms of attrition, we would note that attrition in 2023 is below 2019 or below pre-pandemic levels. And so we feel really good about where attrition is across the board. And we also would note that engagement levels are at the highest they’ve ever been in the firm’s history. And so we feel really good about the talent we’re attracting. But Eric, you may want to jump in here just in terms of the talent side.

Eric Andersen: Yes, sure, Christa. And I always think that the industry spends a lot of time reading the headlines on some of the industry rags about people move here and there. And I think it gets over rotated as Christa, you shared some of the great steps. I will say we are making some pretty significant talent investments in our core health and benefit business, in our strategy and technology group inside of reinsurance. Some of our key geographies where we’re seeing great growth opportunities. So a lot of great things happening there, Christa, and you shared the metrics of engagement and attrition and things like that. But I would — one last comment I would make on it, is on our risk capital and human capital platforms it actually allows us to increase the flexibility of where we deploy talent to opportunities.

So being able to take reinsurance analytics and help a commercial client think about analytics like an insurance company does, I think, gives us a real competitive advantage. But other than that, we continue to invest pretty heavily in our talent, and we would expect to do so to come in the future.

Weston Bloomer: And then my second question is on wealth solutions organic. I know you had highlighted difficult comp on performance fees in the quarter. I was wondering if you could maybe quantify that impact? And then is wealth solutions a business where you could see mid-single-digit organic growth over the next year, maybe more in line with the rest of Aon. That growth had been lower single digits over the past few years. So curious if we’re seeing maybe momentum there.

Eric Andersen: Maybe I’ll take that one, Greg. Look, I think the wealth solutions business is a great business for us, and we do see growth opportunities over the mid and long term. If you think about the pieces of it, the retirement piece, which is the pension actuarial work, continues to be a solid business for us. There’s a whether it’s in the pension derisking that Christa mentioned or whether it’s just regulatory changes that drive activity. The U.K., EMEA, very solid this quarter. And then there’s the investment management business. The advisory business continued to be pretty strong. The delegated part of it continues to have some impact from the AUM movement from — in U.K. and North America that we talked about last time. But overall, really bullish on the business and expect that it will hit mid-single digits for us as we go down the road.

Operator: Our next questions are from the line of Bob Huang with Morgan Stanley. Please proceed with your question.

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