Q1 2013 Earnings Call Transcript

Transcript Call Date 04/26/2013

Operator: Good morning, and thank you for holding. Welcome to Aon plc's First Quarter Earnings Conference Call. At this time all parties will be in a listen-only mode until the question and answer portion of today's call.

I would also like to remind all parties that this call is being recorded and that it is important to note that some of the comments in today's call may constitute certain statements that are forward-looking in nature as defined by the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. Information concerning risk factors that could cause such differences are described in the press release covering our first quarter results, as well as having been posted on our website.

Now, it is my pleasure to turn the call over to Greg Case, President and CEO of Aon Plc.

Gregory C. Case - President and CEO: Thank you very much and good morning everyone. Welcome to our first quarter 2013 conference call. Joining me here today is our CFO, Christa Davies. Consistent with previous quarters, I'd like to cover three areas before turning the call over to Christa for further financial review and would note that there are slides available on our website if you want to follow along with our commentary today.

First is our performance against key metrics we communicate to shareholders; second, is overall organic growth performance; and third, is continued areas of strategic investment across Aon. On the first topic, our performance versus key metrics. Each quarter we measure our performance against the four metrics we focus on achieving over the course of the year; grow organically, expand margins and increase earnings per share and deliver free cash flow growth.

Turning to Slide 3, in the first quarter, organic revenue growth was 2% overall driven by strong growth in retail brokerage. Operating margin was essentially flat as a significant increase in Risk Solutions margin was offset by a decline in HR Solutions and unallocated section. EPS increased 13% to $1.11, reflecting both solid operating performance and effective capital management. And finally, free cash flow increased $80 million in our seasonally weakest quarter, driven by strong working capital performance. Overall, a solid start to the year as we strengthen our industry leading platform for long-term growth, a strong free cash flow generation and increased financial flexibility.

Turning to Slide 4, on the second topic of growth. I want to spend the next few minutes discussing the quarter for both of our segments.

In Risk Solutions, overall organic revenue growth was 3% compared to 4% in the prior year quarter, with growth across every major business. As we've discussed previously, we're driving a set of initiatives that are strengthening underlying performance and positioning our Risk Solutions segment for long-term growth and improved operating leverage, with management of our renewal book for Client Promise and retention rates more than 90% on average, are record level of performance, highlighting strong client satisfaction in retail brokerage.

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