Aon plc (AON) is a leading global professional services firm that provides advice and solutions to clients focused on risk, retirement, and health. The company has clients in over 120 countries and sovereignties with a portfolio focused on higher margin, capital light professional services businesses with high recurring revenue streams and strong cash flow.
The company generated 42% of its revenue from Commercial Risk Solutions, 16% from Reinsurance Solutions, 16% from Retirement Solutions, 15% from Health Solutions and 11% from Data & Analytics Services in 2020. These revenues came from the U.S. (45%), Europe, Middle East and Africa (20%), the U.K. (14%), Asia-Pacific (11%) and the remaining from other markets.
Strong Financial Results
Aon reported fourth quarter revenue that rose 3.8% to $3 billion, beating consensus estimates by $160 million, with non-GAAP earnings of $2.62 per share, beating consensus estimates by 16 cents. Free cash flow provided by continuing operations rose 64% to $2.64 billion.
The company expects to complete its combination with Willis Towers Watson during the first half of the year, which is expected to generate $800 million in long-term cost synergies. However, we need to see if the company’s proposed E.U. concessions may be enough to address anti-competitive concerns.
The company raised its quarterly dividend by 10.9% to $0.51 per share, which represents a 0.86% forward yield. The dividend is payable on May 14, 2021, to shareholders on record as of May 3, 2021. The company also authorized a new $5 billion share repurchase program in November.
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