Scaling Heights, Carrying Weight: AON's Growth Has a Heavy Backpack

Aon plc AON is well-positioned for sustained growth, driven by steady new business wins, strategic acquisitions, operational efficiency, organic expansion and shareholder-friendly initiatives. Headquartered in Dublin, Ireland, Aon delivers a broad suite of insurance and professional services across the globe. Its scale as one of the largest insurance brokerage and advisory firms provides significant pricing leverage and market reach. Continued momentum in Health Solutions is set to fuel the company’s long-term growth prospects.

Let’s explore the details.

Strategic Acquisitions & Broader Reach

Aon continues to strengthen its capabilities and widen its global footprint through selective acquisitions such as NFP and Griffiths & Armour, along with partnerships like Cover Whale and Binary Defense. These moves enhance its regional presence, broaden its product offerings, boost client solutions and support stronger cash flow generation. It is expected to continue generating mid-single-digit or greater organic revenue growth.

Operational Efficiency

The company has consistently delivered earnings growth, backed by disciplined cost control and effective execution. Its Aon United Restructuring program is expected to unlock $350 million in annual run-rate savings by 2026. Management projects adjusted operating margin expansion of 80–90 basis points for 2025.

Growing Health Solutions Numbers

The Health Solutions segment, part of Aon’s Human Capital platform, continues to benefit from expanding demand in international health and benefits markets. Revenues climbed 9.4% in 2023, accelerated to 37.1% in 2024, and advanced another 28.3% in the first half of 2025. Strong demand for executive benefits and pharmacy offerings should provide continued momentum.

Shareholder-Friendly Moves

Aon has returned substantial value to shareholders through consistent buybacks and dividends. It repurchased $1 billion of shares in 2024 and an additional $500 million in the first half of 2025, leaving $1.8 billion under its current authorization as of June 30, 2025. It also distributed $161 million in dividends in the second quarter alone. Robust cash generation underpins its commitment to shareholder returns, with forecasts of double-digit free cash flow growth for 2025 and a three-year CAGR through 2026.

AON’s Earnings Surprise History

Aon’s earnings have outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 3%.

Challenges to Monitor

Despite its strengths, there are challenges to monitor. At the end of the second quarter, long-term debt stood at $15.5 billion, with $1.8 billion in short-term debt and the current portion of long-term debt. Cash and equivalents dropped to just $1 billion. Its debt-to-capital ratio of 66% remains well above the industry’s 49.7% average. Rising interest expenses are pressuring results, climbing 19.2% in 2023, surging 62.8% to $788 million in 2024, and increasing another 18.6% year over year to $418 million in the first half of 2025. Even so, management’s systematic execution should support long-term expansion.

How Are AON’s Peers Performing?

Several competitors, such as Marsh & McLennan Companies, Inc. MMC and Arthur J. Gallagher & Co. AJG, are also making moves.

Marsh & McLennan benefits from broad offerings, strong geographic diversification and solid client retention. Commercial P&C rate increases are expected to lift revenues, while acquisitions have expanded both its geographic reach and segment presence. Still, MMC shares Aon’s challenge of rising interest expenses, which jumped 54.9% in the first half of 2025.

Arthur J. Gallagher’s Risk Management segment gains from strong retention, increased client activity and higher claims counts. The firm expects more than $180 million in additional cash flow in 2025, with even higher contributions beyond 2026. However, elevated costs from compensation and reimbursements, along with a return on invested capital of just 7.3% compared with the industry’s 8.7%, weigh on its performance.

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This article originally published on Zacks Investment Research (zacks.com).

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