Aon plc Class A Ordinary Shares (Ireland)

We assess multiple durable moats: 1) Switching costs 90/100, weight 30%: Mission‑critical risk placement, multi‑year programs and regulatory complexity yield mid‑90s retention rates, raising migration barriers. 2025 commentary confirmed retention improved by 50 bps to a mid‑90s rate. 2) Efficient scale 85/100, weight 25%: Global brokerage is an oligopoly where the top three brokers benefit from dense global footprints that deter new entrants. 3) Intangibles 85/100, weight 20%: Brand trust, regulatory know‑how, proprietary models like ReMetrica and PathWise, and the Aon Client Treaty facility underpin credibility with both clients and carriers. 4) Cost advantage 80/100, weight 15%: Aon Business Services centralizes operations and technology, enabling structural margin expansion and lower unit costs at scale. 5) Network effects 70/100, weight 10%: While not classic, there is a two‑sided scale dynamic between a large client base and carrier capacity that improves placement terms.

Weighted, these yield a strong composite moat. Evidence: retention and margin expansion in 2025, Client Treaty renewals, and ABS‑enabled efficiencies.

Aon’s revenues are largely commissions and advisory fees. Pricing is not unconstrained like a monopoly, but the firm can take modest fee increases and expand wallet share as complexity rises.

In 2025, organic growth mix showed continued strong new business and high retention; net market impact from rate and exposure was about 1 point on average, indicating limited reliance on broad pricing tailwinds and suggesting client stickiness and cross‑sell drive more of the uplift.

As Aon migrates more work to its ABS platform and expands facilities like Aon Client Treaty, we see incremental latent pricing power through higher value density per client, rather than across‑the‑board price hikes. Risks: insurance rate softening can dampen commission bases, though mix shift to analytics and capital markets solutions helps offset.

The model is tollbooth‑like: recurring risk and benefits advisory tied to renewal cycles across diversified industries and geographies. 2025 delivered 6% organic growth and double‑digit free cash flow growth, and management guided to mid‑single‑digit or greater organic growth with continued margin expansion and double‑digit FCF growth in 2026. Retention in the mid‑90s provides high revenue durability, and diversified solution lines help balance insurance rate cycles.

Compared with cyclical carriers, brokers like Aon typically show steadier cash conversion due to fee orientation and working‑capital discipline. Key uncertainties remain around macro exposure and rate cycles, but overall visibility is high.

Aon generated 3.218 billion dollars of free cash flow in 2025 and paid down 1.9 billion dollars of debt, meeting its leverage objective and ending the year near 2.9x on management’s framework. Ratings at April 25, 2025 were A- at S&P, Baa2 at Moody’s and BBB+ at Fitch, all investment‑grade.

Liquidity includes 2 billion dollars of committed credit facilities and commercial paper capacity. Offsetting factors include moderate leverage after NFP, sizeable intangible amortization, and regulatory or E&O exposures. Overall, robust FCF and investment‑grade access provide resilience across cycles.

Track record emphasizes organic reinvestment, disciplined M&A and opportunistic repurchases.

In 2025 Aon repurchased about 1.0 billion dollars of shares and completed the NFP acquisition to scale middle market, then monetized a majority of NFP’s wealth units in October 2025 for 2.3 billion dollars cash and a 1.2 billion dollar gain, refocusing on core and improving balance‑sheet flexibility.

The ongoing Accelerating Aon United program targets 450 million dollars of savings while ABS unlocks operating leverage. NFP revenue synergies are guided to ramp through 2027 per prior deal materials. Dilution from stock awards is modest relative to FCF, though the 2024 share issuance for NFP temporarily lifted the count.

Net, capital deployment has been accretive with a sensible balance between deleveraging, tuck‑ins and buybacks.

CEO Greg Case has led since 2005 and has overseen the Aon United strategy, ABS build‑out and substantial margin expansion. Edmund Reese became CFO on July 29, 2024, following Christa Davies’s long tenure, ensuring continuity with fresh perspective.

Eric Andersen transitioned from President to senior advisor in 2025. Governance disclosures show alignment through significant equity ownership at the CEO level, though Aon is not founder‑led.

We view execution on integration, deleveraging and the AAU program as strong to date, while acknowledging that leadership transitions add near‑term key‑person risk.