Good morning. It's Meyer Shields of KBW. Our next session is with Aon. We've got CEO Greg Case and CFO Christa Davies on the line, or on a screen, I should say. I'm going to ask Greg to start with a few introductory comments, and then I'll jump into Q&A. As always, we would love to have questions from people that are listening. We want to make sure that you're getting the information that you're looking for. Please submit them through the chat. I will be monitoring that over the course of the next 40 minutes just to make sure that we're asking the questions that are most relevant. With that, I'm going to turn it over to Greg.
Meyer, thanks very much. Really appreciate it. Just want to say thank you to you for hosting us today. We truly appreciate it and KBW being part of the session. Thanks very much. On Aon, offer a couple of thoughts, Christa chime in as well. Meyer, we know a number of folks on the line know the Aon story. Some do not. For those who don't, just a little bit of an overview. If you do, indulge us for a little bit. The Aon story is, in many respects, not a complicated story. We think a pretty compelling story. If you go back in time, 10 years ago, Chris and I together have been working on building the firm. We've had good progress, good success. 10 years ago, we understood a reality.
When you think about, although we are performing well, think about sort of what we were doing, we collectively as an industry and Aon to address the needs of clients. The needs of clients were changing faster, evolving faster. The industry wasn't keeping up, and still isn't keeping up. If you think about it, Meyer, just think about risk as a % of GDP. You look at that over the course of the last 30 years, it's gone down every year, which means we're not keeping up with the demands of clients in the way we should. Our view was we've got to change that. We've got to make a difference against that. First and foremost against that was how do we make sure Aon's supporting-
Greg? Greg, you're cutting in and out. We're hearing some and not all. I just wonder, maybe you can lean forward, perhaps. I'm not exactly sure.
Okay. No, I'm not either. Is this any better? Is this any better, Christa?
It's perfect sometimes, and then other times it just cuts out. I'm not quite sure. Meyer, is that happening for you?
Yeah, that's the way it's coming through here as well.
Okay. My apologies for that. Sincere apologies. I'm going to try something here and see if I can make a difference. Does that volume make a difference at all? Does that help at all? Still cutting in and out?
Not as steady. It's still going up and down, basically.
Okay. I'm going to work on my piece. Maybe you do the overview. Why not that? I'll follow up. How about that?
Sounds perfect. Look, I think what Greg was talking about was the opportunity in terms of unmet needs for clients and the substantial upside we see with the combination with Willis Towers Watson in revenue upside. That's why we gave the guidance on March 9th for the combined firm of mid-single digit or greater revenue growth from year one, which encompasses a question, I think, on many people's minds of revenue dyssynergy. We think that the revenue upside is so great that we originally guided mid-single digit or greater for the combination, which I would note is substantially higher than what Willis Towers Watson's previously reported. We've obviously withdrawn that revenue guidance now due to COVID, but it gives you a sense of the opportunity we see with unmet needs for clients.
In addition to that revenue upside, which is frankly the most exciting part of the combination and really the strategic rationale for the combination, we did announce $800 million in synergies, expense synergies. I would note that's 5.5% of the combined cost base, which compares to 11% of the combined cost base in Aon Hewitt and 18% of the combined cost base in Aon Benfield. We feel extremely confident about achieving that $800 million in expense synergies. In addition to those expense synergies, we see real opportunity for upside in tax beyond the expense synergies and the revenue synergies I've outlined, in capital expenditure, in working capital, in tax, and in pensions.
We see real opportunity in a number of areas to actually deliver substantial upside in free cash flow, well beyond the numbers we gave, which were just based on the expense synergies. Just based on those alone, we're slightly dilutive in free cash flow in year one, break-even in year two, and substantially accretive in year three, and double-digit each year thereafter. That's on top of a track record for Aon by itself, where we've delivered 21% CAGR in free cash flow for 10 straight years. We believe this combination has substantial value creation for shareholders. We're really excited about the combination, but particularly the growth opportunity and delivering on unmet needs for clients and the free cash flow generation, which we think will be substantial.
Lastly, on cash, given we're going to generate so much cash, becomes the obvious question of how will we utilize that cash. As many of you know, we run the firm on free cash flow. We have a discounted cash flow view of Aon. It values us substantially above where we're trading today, and frankly, substantially above our all-time high. Therefore, buyback remains our highest return on capital usage across Aon, and we will continue buyback in the second half of the year, but we'll continue that disciplined approach to return on capital going forward. With that, Meyer, we'd be delighted to open up and answer your questions and everyone else's questions on the combination or anything else that's on people's minds.
Okay, fantastic. I'm unsurprisingly going to start on the combination. That was a tremendously thorough overview, and obviously, I think there's no contradicting the track record that you've generated over the past decade plus. That, I think, instills and inspires a lot of confidence. One comment that, again, both Greg and Christa, you've made since announcing the deal is that the focus is on enhancing innovation. I was hoping that you could, without maybe giving away all of the secret sauce, concretize for us how this combination, which I think inherently involves some distractions, how does it enhance the innovative capabilities where, frankly, Aon has already been excelling?
Meyer, I just want to see, am I unmuted or am I still muted?
Hey, Greg, you're really faint.
Okay.
Perfect.
Am I back on now? Is that okay?
Keeps going in and out. Hey, Meyer, I might take this one while Greg fixes-
Yeah, of course.
volume.
Of course.
Serious apologies.
It's okay.
We've certainly practiced this, but sometimes these things are just a little beyond your control. Meyer, look, one of the things we would say in terms of innovation is, as you know, we've been growing the market because one of the things that Greg highlighted in his opening was that the industry collectively has not kept up with growth in GDP and that insurance as a percentage of GDP has declined for the last 30 years. One of the things we observe talking to clients, because we survey clients every two years in a really comprehensive survey, over 2,000 clients, really trying to identify their top risks is that of those top risks, five are completely uninsured, four have partial solutions, and only one's completely fully insured. There are a lot of needs for clients that are just completely unmet today.
We would say some of the biggest growth opportunities we see ahead, Meyer, are really around intellectual property, where if you look at the S&P 500 or just the stock market overall, 85% of the value is intangibles. There's really no insurance solution today. Whether that's IP liability, IP theft, collateral against your portfolio valuation. IP, we would say, is the single biggest growth opportunity across Aon. We'd say cyber, where frankly our solutions for clients are just really not good enough in the sense that $6 billion in premium against $434 billion of reported economic loss per year is we're not delivering to clients the needed and a broad enough range of solutions to actually help. There is climate change.
One of the things the pandemic's shown for us is that long tail risks are really on people's minds and most clients are now asking us what kinds of long tail risks could hit them that they otherwise hadn't been thinking about. Certainly pandemic's at the top of the list, but climate change is next. Greg, what would you add?
I think I'm back on and my apologies. Is this any better? All right.
Perfect.
My most sincere apologies reflecting my technology capability, I guess. Listen, I think Christa captured it very well as always, Meyer. But if you think about the innovation opportunities, they really come in three big categories. Christa described them well. Think about category one. There's a whole series of things we're doing now, like Aon Client Treaty, we're going to be able to do more of. For those who don't know this, Aon Client Treaty at the time, the single biggest transaction in the history of Lloyd's allowed us to use data and analytics to really understand placements into the Lloyd's marketplace. In essence, looked at 5,000 clients and $6 billion in premium and actually modeled it out there. When doing that, we actually eliminated the placement risk the clients had when they put business into Lloyd's. This was really a huge breakthrough.
It means that we could do things in property and other categories casualty across our entire book others couldn't do. Now we're going to be able to do more of that. Call that level 1. Level 2 are these net new risks out there that we've talked about. Things as Christa described around cyber and around intangible assets, she described very well. Think about these categories and things like climate change, which is going to be massively on the horizon post COVID-19. All of these things are net new categories. Think about it. What has Aon done historically in these categories? Things like mortgage and others are things we've done before. $10 billion market we created with data and analytics. We get more of those. This combination means we get more of those.
In essence, you start with category 1, call it the things we're doing now. You start with these new categories of risk. That's the second piece. The third piece is really how we're thinking about putting together really overall platforms. The work we're doing in intangible assets is not only just the understanding how to value patent portfolios in ways no one else can do at this point and creating risk profiles and risk mitigation strategies against these intangible assets. Again, 85% of the value of all the companies your investors are investing in. We've been able to do that, but also how we deliver that which is much more of a platform service than it is just a single risk per risk service. If you think about protecting the entire supply chain for a technology company, this is something that's never been done before.
The innovation agenda is really a three-part innovation agenda, each of which we're pretty excited about.
Fantastic. That was very helpful. Thank you. Another deal related question. I know recently you've been consistent since the deal was announced that you don't anticipate divestitures of the current Willis Towers Watson business or portfolio of businesses to get the deal done. When we look at just the Aon piece, the part that's currently Aon now, part of your strategy has been to review the businesses and say, "Okay, this one makes sense in terms of organic growth potential and margin expansion potential." Once the deal is done, how should we think about that strategy in the context of what now constitutes Willis Towers Watson?
Thanks for the question, Meyer. What we would say is we love the portfolio of Willis Towers Watson. It's one of the most attractive parts of the business. Obviously, the talent and the leadership team in particular are stunningly impressive, Meyer, we're really excited about that as part of the combination. We would say the portfolio is extremely attractive. They've gone through a very similar exercise in managing the portfolio, and we would expect that to continue. We love all of their portfolio today.
Great. Thank you. One related question, just hearkening back to Aon Benfield, it's been certainly long-term successful. In the initial stages, and some of this was the timing of the deal and the timing of the reinsurance market, relative organic growth, organic growth relative to Guy Carpenter, relative to what was then Willis Re, still Willis Re, I guess. Aon was underperforming because of the distractions. Can you take us through what you learned over that exercise to prevent it from happening at all, to prevent it from happening to the same degree as we deal with some level of broker leakage, clients looking for multiple choices and all of these other factors?
Happy to, Meyer. Step back for a second, though. I think you touched on it in your question, which is we think about the combination we had with Aon and Benfield and how that's played out over time. We've been so fortunate. That's been a home run. It's been so wonderful. We brought that set of colleagues into the firm. They made us better. We made them better. That combination means, we did things that no one else could do, both from a client leadership standpoint, analytic standpoint. Net, it worked out exceptionally well. The context was different at the time, as you might recall. We were in what was called a soft market. In fact, it was an epically soft market. By the way, it was most soft in the area we were strongest. It was called property cat.
In essence, big part of our book was property cat. Market was most soft there. That actually created implications on the top line. That was more of the challenge than anything else. Net, in terms of value creation, it's been exceptional. We would contrast that pretty sharply with today. In essence, we're 10 years sort of into the program and development. The content capability analytic platform we have, fundamentally different than we had before. The market obviously is different. We'll probably come to that in a little bit in terms of sort of what's going on in the overall marketplace. We have this idea of what we're doing in addition to what we currently have going on in the portfolio, and we've alluded to that, and the innovation opportunities and some of the ways to bring additional value and capability.
Our view is that combination puts us in a very unique position to grow all of our businesses, including our reinsurance solutions business as part of this overall effort. We have no doubt there are going to be trade-offs as we bring the firms together. Listen, our view is that's a transition period that leads to, frankly, a period of exceptional strength that we've seen not only in Benfield but also in Hewitt and also in the hundreds of other combinations that we've been able to bring into the overall Aon family.
Maybe I would add, Greg, one of the other things, Meyer, which I know you know well about us, is we've invested in data analytics, as Greg said, $400 million plus a year for 12 years now, almost $5 billion. That level of investment in data analytics is unprecedented across our industry. What it's allowed us to do is develop whole new markets using reinsurance analytics at the core of it. A portion of our reinsurance growth today comes from reinsurance analytics applied to the mortgage area, single-family home, multi-family home, reinsurance analytics applied to our healthcare exchange, reinsurance analytics applied to life. So actually there are big areas of growth that are actually outside of the core reinsurance business today, Meyer, which is obviously an exceptionally competitive industry.
What we would say is generating these whole new areas of growth, whether that's cyber or whether that's climate change or whether that's intellectual property over time, we see big areas of new market development at the core of reinsurance growth, frankly, Aon growth over time.
Thank you. Is it fair to say that, I'm connecting all the points you've made so far, that by applying a lot of these tools and a lot of these innovations to the legacy Willis Towers Watson client and customer base, that itself is a new revenue driver?
Yes.
It's a new revenue driver, yes. Willis Towers Watson also has capability we're going to benefit from tremendously for the Aon client base. That really is the combination in our mind that it's going to be both firms will be better as part of the outcome and better meaning we can sit across the table from clients and add greater capability than we had before. That's going to benefit the existing Aon book. It'll benefit the existing Willis Towers Watson book. It also puts in a very unique position to add net new to that, net new clients and net new capabilities for our existing clients.
Okay. Understood. Let's touch on the point that you raised because it's of enormous interest. We're in a different market right now. I think people are processing the fact that we're in a very different market than we've seen for more than a decade. Maybe the rarity of this over the insurance timeline is something that's being perceived sort of incrementally. Can you comment on both what you're seeing in terms of market conditions, and here I mean pricing on the P&C side, GDP and all the other economic factors that apply across the enterprise or across the enterprises?
Well, it is, as you're already highlighting, it's a very complicated mix of items there. If you start more at a macro level, GDP and the challenges and the strains of it, and you sort of ask yourself, "When are we going to be back to a place that was pre-COVID?" You get varied levels of response, 2021, 2022. It's going to take time to sort of create the right adjustment and the right momentum. In the context of that, demand that clients have continues to go up. That's true on the commercial side, that's true on the reinsurance side. The capabilities they need to manage volatility in our business is going up, and that's also put some of the pressure sort of in the overall marketplace. We still see, and we are seeing pressure we haven't seen before, no doubt about it.
Part of what we do is help clients and help insurers adjust to that pressure, and change programs, use analytics to think about how they understand and mitigate volatility. Also remember, there continues to be a lot of capital out there. In terms of where it is, by the way, coming through insurers and in different ways. We're optimistic about our ability to help clients match capital with risk and reduce volatility, whether those are insurers or whether those are primary clients. Yes, there is pressure, but we think ultimately, we will mitigate that on behalf of our clients.
Is there more effort that needs to be done now to place risk than there was a year ago, two years ago? Are there expenses associated with that? I know we focus a lot on the upside to the intermediaries pricing prices. I was hoping you could round out the picture for us in terms of the market conditions we're seeing.
There's definitely challenges. Because things have changed and unique and you really do have to look at this client by client. Meyer, different than some, this is what we do anyway. Part of it is the assets and the capability and the data analytics to look at a client's portfolio, and how they think about risk every year. In a very bespoke way, think about how we can improve that. We're doing more and more of that, and you're seeing more change than ever before because of the conditions. A lot of the time and energy and effort that our team has put in globally, we've always done, and we're continuing to do it. It's just that it's resulting in changes that are more dramatic in this time period, given the circumstance you highlighted.
Great. I'm getting some questions that want to focus on short term. I guess that's an area of some interest. Can you walk us through, how is project work developing? Here, I guess we get insights on a weekly, monthly, it's Aon probably by the way, update in terms of what the pipeline looks like. Can you share with us what you're seeing, how your expectations for the back half of 2020 are crystallizing?
Maybe, Christa, to start with the top line growth piece we've talked about overall in terms of general direction. The overall pipeline, Meyer, as we're talking to clients, it's exceptionally strong because the need is very high. Our clients have all the traditional requests. They're also asking questions around, "Listen, I'm now talking to my C-suite daily about not just pandemic or what comes after pandemic, what happens in climate change, what if we're held accountable for that? How do we think about cyber? Are we adequately covered?" All the things that come with that. The intangible asset piece we talked about in innovation before. All these things that our clients are asking about. Our conversations are extensive. We would also say, by the way, Webex, these tools have been phenomenal in many respects because we're connected to clients more than ever before.
We hosted a conference as an example, our Aon Insights Series Asia, which we do every year. It's fantastic. Team does a great job. We usually have 200 to 300 clients who show up. It's a tour de force overview. We did this last week. There were 1,000 clients. 1,000 strong. Not 200, 1,000. The connectivity opportunity is exceptional, and that's led to a lot of pipeline opportunity in the call it new existing, new work with existing clients who know us and know our capabilities. There's a lot going on in the context of that. The translation is, we have a very resilient book of business, continues to be resilient. We've described it before. I think, Christa, maybe you can describe kind of a little bit discretionary, non-discretionary might be helpful for Meyer and the team here.
This is a very resilient book, and it served us exceptionally well.
Absolutely. Meyer, we have said previously that 80% of our revenue is core and highly recurring. Even in economic times of distress, like what we've seen in Q2, et cetera, where, for example, some of our clients are retailers who file for bankruptcy, a condition of bankruptcy is renewing their property coverage, their D&O coverage. An annual requirement every year is to do the actual valuation on your pension plan. For your employees, you need to actually provide healthcare coverage. This is a very highly recurring regulated business and required. That's held up extremely well, remarkably resilient.
The other 20% of our revenue is more discretionary in nature, and we've outlined some of the areas there that have been impacted, whether that's on the health side with discretionary projects, whether that's on the travel and events business because obviously people aren't traveling or having events as much. Our M&A business because there's less M&A going on or construction because there's less construction going on. They're really driven by activity. Meyer, what we would say is we continue to monitor three things in the macroeconomic environment. The first is GDP and employment levels, the second is government stimulus because that's obviously a huge driver of what's happening in terms of resulting GDP and employment, and the third is the virus.
We see continued macroeconomic uncertainty in the second half of the year, less bad than what we saw at the beginning of the crisis in early March, but still macroeconomic uncertainty. We continue to navigate through this, and as Greg said, the demand from clients has never been higher.
Is there a framework we can look at in terms of as these issues inflect, hopefully, and I think this is consistent with your overall commentary, the risk of the worst case scenario is fading. At some point in time, we get to recovery, whether it's a V-shape, a U-shape or any of the other letters people are using. Again, for the associated statistics again with regard to the virus, with regard to government support, the timing of how that translates into revenues recovering demand on the project side.
Yeah. Meyer, I guess what I would say is, we're not economic forecasters, so what we can say is it remains uncertain and here are the variables we track. As it flows through to our business, what we would say is our business has traditionally had a lag effect post GDP. In 2008, 2009 as an example, we had a four-quarter lag, which really matches up to an annual renewal cycle. We expect that lag to be two to four quarters now, Meyer, because it did drop so quickly, and then you have an annual renewal cycle, which is mainly Q4, Q1. It's how our business peaks. We would think about that, Meyer, but again, we continue to track GDP and employment levels and government stimulus as being the biggest input variables as to the recovery of the economy.
What we would say, though, is on top of underlying GDP and employment levels, we continue to invest substantially, as you know, to drive brand-new areas of growth. Whether that's the work we've talked about in intellectual property and cyber, or whether it's the health-wealth gap that Greg's talked about or voluntary benefits, an area of health we've invested in substantially and see substantial growth going forward. We do look at the underlying drivers of the economic activity, but on top of that, we see huge areas where we can grow the market.
Okay. I have one final question, I think, depending on what comes in. Focus, again, on short-term issues, I don't want to exaggerate the importance of that relative to the long-term planning that's worked out so well. One would be with regard to share repurchase, because it appears that your comments on the second quarter call have been followed up by action. I was hoping you could talk a little bit about the prospects for that. Second, I think there's some investors that want to confirm that your comments with regard to maybe pressure on the non-recurring revenues and the resumption of or the regression towards normal expenses implies a little bit of margin pressure in the second half of the year. I was hoping you could talk us through those two issues.
Sure. On the buyback question, Meyer, what we would say is, as we think about generating cash and the allocation of cash, as I said in our opening, return on capital is the metric we use, cash on cash return, to allocate all cash across Aon. Because we have a discounted cash flow valuation of Aon, which values us substantially above where we're trading today, or in fact substantially above our all-time high, our primary use of cash is buyback. We said that we would resume buyback post the shareholder vote on August 26th and commensurate with obviously the highest return on capital usage across Aon. We also said, given the macroeconomic uncertainty, that we would continue to have elevated cash levels in the second half of the year so that we can navigate through any level of macroeconomic uncertainty.
Meyer, as you know, we made a commitment to protect all 50,000 Aon employees through COVID-19, and we're extremely proud of that commitment and very focused on making sure we can deliver on that commitment through any macroeconomic uncertainty. That's sort of the first thing I'd say. Then your second question, sorry, Meyer, I've totally forgotten.
Second question was with regard to the trajectory, the timing associated with project-related revenues or the non-recurring revenues-
A resumption of normal expenditures.
Yeah. What we did say in the second half of the year, Meyer, is that second half expenses for 2020 will be similar to second half expenses for 2019, excluding restructuring. We did not give guidance on revenue, Meyer, given the macroeconomic uncertainty, therefore, we've not given guidance on margin. What we really have, because I think it's very uncertain, obviously, depending on what happens on the macro side, revenue will do what it does. What we can say is we can be much more precision estimate on expenses, and that's where we are, which is what we didn't want people to do, Meyer, was to take Q2 expenses and project forward. What happened in Q2 was extraordinary in terms of negative GDP, and the actions we took were extraordinary.
What you're going to see in the second half of the year is a resumption of normal expenses like investments in cyber, like investments in IT to run the company, and some small areas of investment in future growth opportunities, which we think are just terrific return on capital.
Let me jump off that for another related question, both Aon as a company and Aon as a consultant. Can you talk about the expense saving opportunities that maybe COVID forced upon you that have more sticking power than or represent savings that you wouldn't have previously anticipated? How do the various consulting units propagate that among your client base to generate value for them?
This is really an opportunity that we're pretty excited about given the capabilities we've built over time. Aon Business Services and all that has come with that, Meyer, has put us in a very unique position. As I described before, the ability to kind of connect with clients has really been astounding. In many respects, demonstrating Aon United on a screen, we can put 16 faces on it. That means all of them don't have to go to the meeting. You don't have to travel around the world. Clients are watching us interact in ways that they've never seen before and seeing the benefit of the work over the last decade in Aon United. That's been incredibly powerful. It means we're actually having conversations with clients around their businesses as an outcome of COVID-19.
Not just what are the new risks on the horizon and how you deal with those. Also, how do you think about work from home? How do you think about remote working overall? How do you think about the health challenges and changes that come with that? Retirement changes and challenges that come with that. How do you think about training? How do you think about engagement? All these things are sort of playing out. We're seeing opportunities as a result of sort of the change over the last six to seven months in almost every aspect of our solution lines. It turns out the benefit of Aon United, the strength of Aon United, is fully reinforced sort of in this net new environment.
If you think about what we did with the coalitions, we created, you can see the press releases around the world, we created a set of coalitions by city in which the leading companies by city around the world, in Chicago, in New York, in London, in Singapore, in Madrid, all have come together to say, "How do we actually think about comparing notes with each other?" Comparing notes with each other on how to not just react to what was called the new normal. We reject that. We call it the new better. How do you actually do better? By the way, new better doesn't mean easy. It means more effective. More effective in how you connect with employees, how you connect with clients, how you do what you do. It turns out that's a relevant conversation for virtually all of our clients.
Again, nothing good maybe out of the pandemic, but if there was a silver lining, it created possibilities for the new better no one knew existed at the time. We see that possibility now and the potential now.
Great. Thank you.
Maybe, sorry, one addition from me, Meyer, which is as we think about Aon Business Services, where we've, over the last 3 years, as you know, on the IT side, moved our applications and data centers to the cloud, on the real estate side, consolidated and had an open footprint, and on the shared services side, moved shared services to centers of excellence in Poland and India. We see that Aon Business Services model accelerating as a result of COVID-19 because we've all proved that we can actually work from home and be remarkably productive over a 6-month period of time.
Frankly, the investments we made in our IT platform over the last 3 years have had stunning returns over the last 6 months because we've actually been able to access all of our corporate systems because they're all in the cloud, all of our broking systems, retirement systems, health systems because they're all in the cloud. We've been able to have all of our call center employees work from home because we have a call center platform in the cloud. It's been remarkable. So for us, being able to accelerate that move in Aon Business Services to drive obviously efficiency and productivity, but actually just much greater effectiveness for clients is certainly one of the big things we see, Meyer.
Excellent. Thank you. That was very thorough. This is a broad question, this may be unfairly broad, but I was hoping you could talk about Aon as an insurtech company. Maybe give us some examples of competitive advantages that you've built in really across the focus, the consulting, all the different units that you have, that can highlight maybe capabilities that are underappreciated by investors.
Sure. Christa, you want to start?
I mean, Meyer, this is such a good question because Yeah. Meyer, what we would say is insurtech is obviously growing substantially in terms of the dollars that go into it. We track it really carefully, and we partner with a number of institutions that actually incubate insurtech startups. One of the things we've done is we formed commercial partnerships with over 20 insurtech firms, so that we can actually really learn, because one of the things we have recognized over time, and they have too, Meyer, is that we actually bring data and distribution and access to product, and they bring amazing marketing, digital marketing capabilities, amazing technology capabilities. Actually, it's a really good match.
As we've developed these commercial partnerships over time, Meyer, what we'd say is some of them work, and they culturally work with us, and it works extremely well, and some of them don't. That sort of partnership means we're learning, and we're innovating with the community, and not all innovation has to happen at Aon. It's actually a great way to learn from around the world. CoverWallet was one of these partnerships.
We obviously acquired CoverWallet in Q1 this year, and it was a partnership where we'd partnered with them in Europe, we'd partnered with them in Australia, we partnered with them in the U.S., and they bring amazing capability to help us in that small commercial space where we are tiny today, but we see substantial opportunity for growth as a result of the digital marketing and technology capabilities they have. Greg, what would you add in this area?
I think you captured it very well. Meyer, CoverWallet is the perfect example. There are many others, but it's a perfect example. What Christa is highlighting is this isn't about insurtech. It's about actually accessing more clients more effectively in a more innovative, cost-effective way. By the way, using a digital capability technology to do that. There's a tremendous amount out there. We see huge opportunity in that connection, and that's what we're excited about. It's yet another piece of content capability that we add to the Aon family that frankly lets us scale innovation more effectively. As Christa highlighted, CoverWallet was, we did a test for over a year in Australia and the U.S., and now it really is permeating across our entire system as we're helping big companies and small, medium-sized companies, and accessing direct to consumer through this kind of capability.
This is a big opportunity for us, and we're very excited about it.
I'm going to focus in on CoverWallet just because it's an important issue. What is the trajectory of willingness to I'm focused mostly on small commercial, maybe that's an inaccurate focus, small commercial enterprises to buy digitally distributed insurance products. How is that changing? Has the pandemic impacted that at all, that willingness?
Well, listen, this is back to the opportunity to access clients, big, medium, and small, but with different access points through digital means like this. We're seeing greater receptivity. You have to have the goods. You have to have a high-quality offering, a quality offering that's durable, that stands up in any environment. Whether you're a big client, a medium-sized client, or a small client, you want a high-quality solution. As you pull that together, we certainly can provide access to those end consumers or those end clients to do that. Yes, this has opened up possibilities and created acceleration in many respects in the digital world, the likes of which we've never seen before. In some respects, we've done more in the last year on digital than maybe we've done, Christa, in the last five or six years in terms of sort of receptivity and opportunity.
It's created a real point of acceleration.
Meyer, we would say absolutely, it's accelerated the move online for small business buying of all kinds of risk management because it's made it very clear who has the technology capabilities to deliver online, whether it's in a Zoom call like this to large complex clients or whether it's online end-to-end for small commercial clients. Having those capabilities in place at both ends of the spectrum for Aon has been incredibly valuable as we drive new business through this environment.
Great. Thank you. I've got one question in on the submission, asking about what the hurdles are to improving penetration of the intellectual property protection mechanisms that you've been devising. What makes that harder to sell? Let me stop there.
Well, this is a real point of innovation. You start back and say this is just the normal gestation period as you take a concept, develop a solution or a product to talk to clients about it. Boy, are we excited about it. You start with the fundamentals, supply and demand. You ask yourself, where is value derived from? You realize that 85% of the market value of companies in the world is now derived from intangible assets. Then you ask the question, what have we done as an industry to help clients understand that asset class and to defend that asset class, much like you defend property or defend casualty or defend your directors and officers? The answer is, Meyer, as you know, our industry hasn't done a lot. You say, "Well, why can't we do it?" Well, there is no actuarial table.
You can't look in the rear view mirror. You can't do what we've done traditionally in our industry. You have to look forward, data, analytics, content. In that sense we have taken efforts with 601West and other assets we brought into Aon to literally look at the valuation and be able to value the patent portfolios all around the world. Never been done before. Do it in a way in which we can actually have capital come in and create coverage, which we're now doing for intellectual property. That's actually just beginning. That cycle is just beginning. If you say to yourself or you ask yourself if it's 85% of the value of the world's market cap, what is the opportunity if we can help clients understand and measure and mitigate that risk? It is immense. We've already made great progress.
We're very optimistic about what the opportunity is. We are very clear about what's required in order to make this happen. We're on the journey. We think this is going to be much more substantial than virtually almost any other net new area that's out there right now.
Great. I've got one final question in the minute or so that we have left. You recently announced, I'm going to get the terminology wrong, virtual reinsurance renewal season. Can you talk about what that is? Does that imply more flexibility for reinsurance renewal dates? What does that mean for the reinsurance market?
It's been great. Listen, back to kind of the new better, in essence, by the way, for those who don't keep track of the reinsurance world, this is the world that the week that usually the reinsurance world's in Monte Carlo. Instead of that, we're actually connected with clients all around the world. For the last few days, to divide that, daily calls with our leadership team, with our reinsurance clients, point after point after point, bringing global capability to bear. We've essentially just said we're making the process virtual. We can start earlier. We can actually interact more often. It's been exceptionally great. It's been very well received, creating possibilities on the market side as well as on the client side.
For us, it was just a way to take the capability we've built over time, create more connectivity on behalf of clients and we've also kept track of areas of potential innovation that we're going to continue to drive in the next renewal cycle. We're never going back to the way it was, back to the idea of new better. We may absolutely sit across the table from time to time, but we also have a muscle we didn't have before on this virtual approach, which has gone exceptionally well.
Thanks. I'm just going to ask if you have any final comments, but this was a tremendously informative session, and thank you very much again for participating in the conference and sharing your thoughts.
Meyer, we just want to say the same thing. We truly appreciate the opportunity to be here with you today and thank you again for hosting and look forward to our next discussion.
Thanks so much, Meyer.
Thank you both very much.