Aon shares close down 8% on earnings miss despite reaffirming 2025 guidance

By Scott Vincent

April 25 - (The Insurer) - Aon's management remain confident of achieving its full-year guidance for mid-single-digit or greater organic growth, but investors sent the company's shares down 8% on Friday after it reported a quarterly earnings miss.

The company reported adjusted earnings per share of $5.67 for the quarter, below the consensus forecast of $6.01.

In a note following the earnings release but before the call with analysts, KBW's Meyer Shields said the miss mostly reflected lower-than-expected revenues and higher-than-expected compensation expense and depreciation, partly offset by lower-than-expected IT, premises and other general expenses.

The analyst added that he expected Aon shares to trade down on the organic growth and margin misses.

Aon shares closed at $335.85 on Friday, down 9% on Thursday's close.

The investor reaction came despite Aon chief financial officer Edmund Reese highlighting expectations for a strong second half, driven in part by demand for higher limits at the upcoming mid-year reinsurance renewals.

Reese, who succeeded Christa Davies as CFO in 2024, said on the earnings call that the 5% organic growth delivered by the group during the first quarter had met Aon's objectives.

And he predicted subsequent quarters in 2025 would also be in line with the mid-single-digit or greater guidance.

“Looking ahead to the second quarter, we expect softer market conditions with April 1 property rates in both the U.S. and Japan down by 5% to 20%,” he said.

“Importantly, we expect full-year organic revenue growth in line with our mid-single-digit or greater objective as we see a strong second half driven by higher limits at July 1 renewals, continued growth in our international facultative placements and strength in our strategy and technology group.”

During the first quarter, the group’s Commercial Risk Solutions business recorded organic growth of 5%. Reinsurance Solutions delivered organic growth of 4%, which was affected in part by the impact of a multiyear extension with a significant client at higher limits and adjusted commission.

During the call Aon also reaffirmed its guidance for adjusted operating margin expansion during 2025.

Aon reported an adjusted operating margin of 38.4% for the quarter, compared with 39.7% in the first three months of 2024.

Reese said the group would have seen 100 basis points of margin expansion adjusting for the acquisition of NFP, which completed on April 25, 2024.

And he highlighted the continued middle market acquisition opportunities the NFP deal has given Aon, with NFP having acquired $19 million in EBITDA during the first quarter.

“The pipeline remains strong, especially with opportunities in commercial risk, and we continue to expect to acquire $45 million to $60 million of EBITDA through NFP middle market acquisitions in 2025,” he said.

Group CEO Greg Case said NFP was continuing to perform in line with expectations as it reaches its one-year anniversary as part of Aon.

“Producer retention continues to be higher than pre-deal, and the NFP acquisition engine continues to add high-quality middle market EBITDA through targeted acquisitions with a strong pipeline for the remainder of 2025,” he said.

“With the acquisition now annualised, we expect NFP's contribution to become even more meaningful as we progress through 2025.”

Case also commented on the macroeconomic environment, amid volatility spurred by U.S. tariff and trade policies, as he reaffirmed 2025 full-year guidance.

"We view the current environment as an opportunity to further strengthen our client relationships and reinforce Aon as a trusted adviser. In our daily interactions with clients, we have not seen a pullback in demand, rather, we see an increase in clients looking for guidance and offerings to navigate the increasing complexity of their business challenges.

"And as a result, we are reaffirming our 2025 full-year guidance, including mid-single-digit or greater organic revenue growth, margin expansion, strong earnings growth and double-digit free cash flow growth," he said.

Case and Reese also announced that Aon will host an investor day on June 9, its first in 20 years.