Good morning, and thank you for holding. Welcome to Aon plc's third quarter 2026 conference call. At this time, all participants will be in a listen-only mode until the question- and- answer portion of today's call. To join the question queue, please press star one on your touch tone keypad. A confirmation tone will indicate your line is in the question queue. I would also like to remind all parties that this call is being recorded. If anyone has an objection, you may disconnect your line at this time. 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.
For information concerning these risk factors, please refer to our earnings release for this quarter and to our most recent quarterly or annually SEC filings, all of which are available on our website. Now it is my pleasure to turn the call over to Greg Case, President and CEO of Aon plc. Please go ahead.
Good morning, and thank you for attending our third quarter earnings call. I am joined today by Nadin Virani, Interim CFO, Andy Marcell, Deputy CEO with responsibility for risk capital and human capital, and Anne Corona, CEO of North America. The presentation, which Nadin will reference during his remarks, is available on our website. Our outstanding third quarter results reflect continued momentum across the firm and reinforce high confidence in our Aon United strategy. We delivered 6% overall organic growth with 7% in risk capital and 5% in human capital, demonstrating broad-based strength across our solution lines. As we progress through the final year of our 3x3 Plan, our execution and ongoing investments in talent and technology are delivering differentiated value for clients, expanding our opportunity set, and creating long-term value for our shareholders.
Today, we want to emphasize three important drivers of our performance this past quarter and as we look to the future. First, the forces shaping client demand. Second, our Aon United operating structure with integrated risk capital and human capital capabilities. Third, our recently announced pending acquisition of USI, which together with NFP and Aon, establishes the premier U.S. middle market platform for clients. Let's start with the landscape for business decision-makers and what we are hearing from clients. Today's macroeconomic environment continues to be defined by volatility and complexity. Geopolitical uncertainty remains elevated. Economic conditions are uneven, and cyber threats continue to evolve. All while rapid technology innovation is creating new opportunities, reshaping business models and workforce strategies. These forces do not exist in isolation. They are deeply interconnected, making it more complicated than ever for businesses to understand their risks, build resilience, and grow.
In uncertain and challenging times, clients turn to Aon as a trusted partner to help them diagnose risk and people issues, design bespoke programs, and access capital solutions. With rapid technology change, the catalyst to deliver sustained client impact and greater value over the long term will be at the intersection of human expertise, proprietary data, and technology. Context will not accrue solely to AI models or to individuals, but rather to organizations with the technology and talent to build trusted, lasting client relationships. This is exactly where Aon is positioned, and it links directly to my second topic, how Aon continues to strengthen our capabilities to help clients make better decisions for their businesses and employees. Our Aon United strategy remains the foundation upon which we capture these opportunities.
By bringing together risk capital and human capital, supported by Aon Business Services, we connect data, analytics, expertise, and access to capital across our firm. This integrated approach is a key differentiator, allowing us to address client needs more comprehensively and deliver better advice and superior solutions. Our strategy is further accelerated by AI, as our analyzers and diagnostics lead to better insights that help us win more business, retain more clients, and create new revenue opportunities. We're also capturing productivity gains as we leverage our shared services platform and domain expertise to deliver faster, more relevant, and more actionable insights for clients. Importantly, this work continues to reinforce our Aon United advantage, which translates into stronger client results. A few examples highlight how this advantage is powering our momentum.
During the quarter, we were appointed as the lead broker for the reinsurance program of a new natural catastrophe program introduced by the Thai government to reduce the protection gap for natural disasters, particularly flood, a significant peril in Thailand. The program is executed by a consortium of local insurers through the Thai General Insurance Association and provides broad risk coverage, including flood, earthquake, and windstorm, to 30 million households in Thailand, the vast majority of which currently have no insurance. This work and impact demonstrates the relevance and strength of risk capital, connecting insurance and reinsurance, along with the national government to reduce the protection gap in a region where natural perils have profound impact for millions of people. Another example highlights our ability to broaden capital access and attract new capital pools.
Our partnership with a leading alternative asset manager shows how Aon combines proprietary data, analytics, and structuring expertise to deliver innovative capital solutions. Traditional insurance capital remains critically important, but the scale of emerging client needs increasingly requires us to connect risk with capital beyond the traditional insurance market. We have spoken previously about the $250 trillion of capital globally, and this is a clear, tangible example of our work to selectively bring these sources of capital to bear on behalf of clients. Our ability to quantify risk exposure and provide investors with the insight required to deploy capital with confidence will create additional capacity for clients and expand the universe of insurable risks. Which brings me to the third driver of our performance, especially as we look to the future, USI and the U.S. middle market opportunity.
Post-close, we could not be more excited about the opportunity to bring together USI team members and our colleagues at NFP and Aon to set a new standard of capability, expertise, and client service for the middle market. This important growing segment includes more than 200,000 companies and 48 million employees, representing an addressable market of more than $40 billion across commercial risk, health, and wealth. These businesses face the same interconnected forces as our largest clients, and they need full access to analytics, insights, and capital solutions required to protect and build their companies. Against this backdrop, our acquisition of USI, which we expect to close in the fourth quarter of 2026, represents an important step in the development of our global middle market strategy that builds directly on the successful foundation we established with NFP.
USI also gives us direct access to the fast-growing E&S market, expanding our ability to match capital with client need and provide greater capital access across all markets. With the addition of approximately $11 billion of P&C premium flow, we continue to enhance our middle market data footprint, further improving our Aon United advantage. Together, Aon, NFP, and USI will create the premier $6.5 billion U.S. middle market platform, combining deep local relationships and distribution with the full capabilities of USI, NFP, and Aon. Fundamentally, this strategy is all about being better and giving our colleagues greater content, capability, and market access to serve clients with increasing levels of distinction. In addition, we also outlined key initiatives that will capture $395 million of expected synergies, including connecting producers and client leaders to broader content and capability, optimizing premium placement for clients, expanding market access, and simplifying technology and operations.
Since the acquisition announcement, planning is well underway for the implementation of these initiatives with integration planning teams in place and clear work streams to bring USI, NFP, and Aon together at closing as one connected middle market platform. We look forward to welcoming Mike Sicard and the incredible team at USI to Aon as we build out this terrific growth opportunity. Overall, we have emphasized a few points. Taken together, our Q3 results and the progress we continue to make across our firm reinforce our confidence in the trajectory of our business and our ability to deliver on our strategic and financial commitments and prior standalone guidance. As the environment continues to evolve and the underlying drivers of client demand remain strong, organizations need better insights into their interconnected risk and people challenges.
They need broader and more innovative access to capital, and they need trusted partners who can combine data, analytics capabilities, and frontline expertise across markets and geographies. Aon United positions us to meet these needs. Our alignment across risk capital and human capital enabled by ABS is creating greater value for clients and accelerating momentum across the firm. Our investments in technology and AI are amplifying our expertise and strengthening how we serve clients. The announced acquisition of USI advances important growth pillars across the middle market and E&S. As we progress through the final year of the 3x3 Plan, we remain focused on disciplined execution and our overall growth agenda. To our more than 60,000 colleagues around the world, thank you.
Thank you for your continued commitment to our clients, each other, and our Aon United strategy. Your dedication drives our momentum and gives us confidence to continue to deliver for our clients, colleagues, and shareholders. Now let me turn the call over to Nadin. Nadin?
Thank you, Greg, and good morning, everyone. Our third quarter results once again demonstrate the strength and durability of a business built to deliver through the cycle. We achieved our highest organic revenue growth of the year so far, continued strong adjusted margin expansion, and drove double-digit adjusted EPS growth. Clear evidence of broad-based momentum across our solution lines and disciplined execution of our long-term strategy. Our client-centric organizational structure, Aon United, combined with continued investments in talent, data, analytics, and AI, position us well to create more value, innovate for our clients, and deliver strong growth despite what might be described as a challenging pricing environment. That consistency is most evident in new business, which have contributed 9 to 11 points of growth now for 10 consecutive quarters.
As we've announced, we plan to extend the Aon United advantage to the premier middle market platform that we're establishing with the pending acquisition of USI and building on the success of NFP. This acquisition leverages the operating model behind our strong performance and enhances our ability to serve the growing middle market segment with broader capabilities, deeper client relationships, and greater distribution reach. With that framing, let's turn to the financials. Starting with our third quarter results on slide five, organic revenue growth was 6%. Total revenue increased 3% to $4.1 billion. Adjusted operating income increased 5% to $1.1 billion. Adjusted operating margin expanded by 70 basis points to 27%, and adjusted EPS grew 10% to $3.36. Finally, we generated $1.1 billion in free cash flow. Let's get into the details of these results, starting with organic revenue growth on slide six.
Organic revenue growth was 6% in the quarter. Growth was broad based with all four solution lines delivering mid-single digits or greater organic revenue growth, reflecting the strength of our diversified business mix. In commercial risk, organic revenue growth accelerated to 7%, driven by meaningful contributions across North America and EMEA, and reflects continued strength in our core P&C business. M&A activity accelerated during the quarter, demonstrating double-digit growth and provided an incremental lift to our results. Strong client demand for specialized underwriting solutions also continued to support growth across our MGA and MGU platforms. Finally, growth in construction was fueled by our record pipeline of data center projects. Reinsurance delivered 7% organic revenue growth on top of 8% in Q3 last year.
The strength of the reinsurance business, despite soft market conditions, reflects the differentiated value we deliver through risk capital and our ability to innovate and broaden access to capital. Strength in the quarter was driven by treaty growth, reflecting continued strong new business activity and client retention, which together more than offset lower rates. Looking ahead to Q4, we continue to expect strong organic growth, driven by strong demand for our strategy and technology group solutions and momentum in international facultative placements. Health solutions grew 6% in the quarter, driven by continued strength in our core health and benefits business internationally as we help employers navigate rising healthcare costs and benefits complexity. Growth also benefited from data analytics-driven sales in our talent business as we continue to leverage analytics and advisory to address evolving workforce needs.
Finally, wealth generated 4% organic revenue growth, reflecting sustained demand for regulatory and valuation related work across the U.K. and EMEA. Growth also came from our core retirement business as well as NFP's asset-based revenues. Turning to the components of our Q3 organic revenue growth on slide seven. In Q3, new business contributed 11 points to organic revenue growth, supported by a balanced mix of new client wins and the expansion of our wallet share with existing clients. Our investments in revenue generating talent continues to be a meaningful driver of growth. The 2024 and 2025 cohorts contributed approximately 115 basis points to organic revenue growth in the quarter, and we expect their impact to continue to increase as productivity ramps. Revenue generating headcount is up 4% year- to- date, and we remain on track to expand the population of priority growth hires by 4%- 8% this year.
Retention remains strong in the mid-90s, supported by increased engagement from our enterprise client group, as well as enhanced delivery of analytics and advisory powered by ABS. Net market impact, which captures both rates and exposure, was slightly positive and within our expected zero to two point range despite a softer pricing environment in P&C and reinsurance. Importantly, these results reflect the durability and differentiation of our business model across market cycles, with organic growth continuing to be driven by business investment and client demand. As a final point on revenue, third quarter fiduciary investment income was $69 million, down 8% from prior year as higher average balances were more than offset by lower interest rates. On slide eight, Q3 adjusted operating income increased 5% to $1.1 billion, and adjusted operating margin expanded 70 basis points to 27%.
Adjusted margins expanded despite the impact of lower rates on investment income from fiduciary balances. This was offset by the benefit from the AAU restructuring program and most importantly, continued operating leverage enabled by our scalable ABS platform. ABS continues to generate scale benefits through disciplined expense management and AI enabled productivity gains, thereby lowering unit costs and creating operating leverage that funds growth investments and enables margin expansion. Restructuring savings were $20 million in the quarter, contributing approximately 50 basis points to adjusted operating margin, and we remain on track to deliver $100 million of savings in 2026, advancing towards our goal of $450 million program savings, with 2026 representing the final year of our restructuring investment. Moving to interest other income and taxes on slide nine.
Interest income was $24 million in the third quarter, driven by interest earned on the proceeds from debt raised to fund the pending USI acquisition. Interest expense of $206 million was flat versus prior year and $27 million higher than Q2, primarily due to a partial quarter of interest expense on debt raised to fund the pending USI acquisition. We expect Q4 interest expense to be approximately $410 million, driven by higher USI related debt. Adjusted other expense was $2 million higher than last year's, driven by remeasurements of balance sheet currency exposures. We estimate Q4 other expense to range between $12 million and $15 million. Our Q3 adjusted effective tax rate was 20.2%, and we continue to expect the full year adjusted effective tax rate between 19.5%-20.5%. Finally, adjusted EPS grew 10% year-over-year to $3.36.
Turning now to free cash flow and our capital allocation on slide 10. We generated $1.1 billion of free cash flow in the third quarter, up 2% year-over-year, with growth partially offset by working capital movements and USI related transaction costs. Q4 is historically a seasonally higher quarter of free cash flow growth and excluding the impact of USI related cash expenses, we continue to expect double-digit free cash flow growth on a standalone basis for 2026. As a reminder, the pending USI acquisition is expected to result in approximately $160 million of transaction costs, largely recognized in the third and fourth quarters of 2026.
Turning to capital allocation on the right-hand side of the page, the principles of our balanced capital allocation model remain the same, de-leveraging our balance sheet, funding a stable and growing dividend, followed by balancing investment for growth with the return of excess capital to our shareholders. I'll conclude my prepared remarks with a few thoughts on our full year 2026 financial objectives. The underlying drivers of our growth are evident in another quarter of differentiated results. We are generating sustainable organic revenue growth through consistent new business generation and high retention, translating that growth into strong earnings through operating leverage and converting those earnings into free cash flow.
On a standalone basis, excluding cash and other transaction expenses from the impact of the USI acquisition, we remain confident in our ability to deliver our previously communicated full year 2026 guidance across organic revenue, margin expansion, EPS, and free cash flow growth. We continue to make progress towards the close of the USI acquisition in the fourth quarter and will provide more details on the combined financials after closing. As Greg mentioned, integration planning is well underway with the establishment of the integration management office with myself as executive sponsor and alongside leaders from Aon, NFP, and USI. We are focused on planning for the next generation client experience, building on a unified culture, maintaining clear accountability, and driving value creation objectives. Before we move to Q&A, let me underscore the Aon United Advantage, brought to life through risk capital, human capital, Aon client leadership, and ABS.
This strategy is delivering strong results today and positions us well for sustainable growth in the future, creating differentiated value for our clients, colleagues, and shareholders. With that, let's open the line for questions.
Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line in the question queue. You may press star two if you'd like to remove your question from the queue. We ask that you each keep to one question and invite you to rejoin the queue for any additional questions. Thank you. Our first question comes from the line of Andrew Kligerman with TD Cowen. Please proceed with your question.
Thanks, and good morning. As I think about Aon's exceptional organic growth for another consecutive quarter, broker facilities come to mind. I hear about Aon doing a $10 billion data center facility, a $2.5 billion energy facility, something with Blackstone and reinsurance. It just continues on. My question is, what's the runway for not just data center, but facilities in general? Do you see that having a long runway at Aon and industry-wide for brokers? The second part of it is with Aon's history of innovation, more broadly, I know you touched on a few specifics in your opening remarks, Greg, but more broadly, are there other innovations that are having the kind of impact at Aon like broker facilities?
Well, first of all, Andrew, thanks for the question. Appreciate it, and listen, a lot to unpack there in terms of sort of the overall line. First, this whole area around the data centers and the evolution and bringing capital in the industry, all these innovations are here and before us, Andrew, because of client need. We've spent a huge amount of time understanding client need and how it's evolved and essentially structured the firm so we could respond to that, and you're seeing that. I do want to emphasize, though, b efore we get into the detail, I want to also say it's awesome to have Andy and Anne on the call with Nadin and I. You're going to get a chance to get even more frontline color. I'm going to go to both of them in a second to get their response.
I would start with foundationally, Andrew, this is another strong quarter of growth, as you highlighted, across really, you think about the comps from Q3 2025 on top of a strong period. This is growth on growth. Our team's excited about it, not because of the performance really. It's really about what you're describing, it's client momentum. It really is client momentum that continues to build. It's beyond a single area. These innovation pieces are just steps. They're components. They're not the overall answer. They're important, but the fundamentals of our progress and the momentum has really been much more broad-based. It reflects really this response to client need I described.
At a foundational level, it comes back to the work of the 3x3 Plan. Again, we listen to clients and years, now for three years, broke down our firm and rebuilt it around alignment. We changed the organizational structure, Risk Capital and Human Capital, and Aon Business Services, connected it in an aligned way, and then frankly, have amplified it with AI. This has really brought us to a place where we can respond. Think about being able to sit across the table from a financial sponsor about raising capital, and you've got Risk Capital. That means you've got commercial risk and reinsurance at the table or a data center at the table, at cyber Risk Capital at the table.
All these things sort of contribute to these pieces. Our view, fundamentally, Andrew, is demand is going up. More volatility, more complexity, and our ability to respond and meet client need is the opportunity. That's why we did Aon Business Services. That's why we did Risk Capital and Human Capital. That's why we invested behind it in 3x3 Plan. I was thinking, Andy, provide some thoughts and views as you think about sort of the specifics on a couple of these areas. We'll cover them some more in detail. Then Anne, the frontline field response has also been exciting to see because our colleagues are excited about this level of innovation. Andy, maybe over to you.
Yeah. Thanks, Greg. Our performance in commercial risk and reinsurance has been pretty broad-based, particularly our core P&C business has exceptional results. In part, that's driven by the further development and utilization of our analyzers globally and our risk diagnostics. In fact, in the third quarter, 5,600 clients used our risk analytics. The utilization was up year-on-year 30%. We're excited about that. That's driving new business and retention in positive ways. When we think about facilities and data centers as an example, we've created new capacity to meet the client needs, whether it's operational programs, whether it's what we did with our power lifecycle program, and even leaning into surety for U.S.-based power contracts to meet the collateral requirements there. We're responding to client needs in that regard. The pipeline and development in the digital infrastructure is improving all the time.
We are excited about that. M&A services was another double-digit growth for us in the quarter. The pipeline remains strong, and that was broad-based too, both geography and reps and warranties in tax and across corporates and PE. Anne, what are you seeing in the geographies there?
Yeah. Thanks, Andy. As you mentioned, the commercial risk organic growth has been broad-based on top of a very strong comp from the prior year period. The full year delivered 7% organic growth on top of 7% last year. In North America, the 7% organic growth, over 10% last year. The fact is we are doing more, we are winning more, and we are keeping our clients for longer around the world. Our clients are sharing how our talent and technology are driving better outcomes for them. Just last month, we held our North American Client Council. This is a gathering of 50 of the largest global companies that are headquartered in the U.S. The clients shared direct feedback, exceptionally positive direct feedback, that our analyzers and diagnostic tools are enabling them to make different and more effective risk transfer decisions.
In fact, one client explained how they moved their cyber program to Aon because of our team and capabilities, and then had the confidence to restructure their program. Our AI-enabled tools are differentiated because they are built by Aon Business Services, along with our colleagues in the business. Then we can continue to iterate them based on that direct client feedback. Bottom line is it is working.
Got it. My follow-up question is around potential for divestitures. Just to confirm, Greg, you said USI was going to close in the fourth quarter. It sounds like everything is on track. I think about NFP Wealth, and you raised $2.7 billion from that divestiture. I wonder, are there places inside of Aon where, and obviously you are not going to point to anything specific on this question on the call, but are there areas where Aon could divest or would want to divest? What do you think about on that front?
Well, Andrew, appreciate the question. As you step back and think about how we orient ourselves, again, we're looking across our company around the deployment of capital. This is sacred for us. The approach we take is a pooled approach. We're looking for return on invested capital, and we're looking across our firm at all aspects of the firm. We'll always be doing this. We've made many acquisitions, many divestitures to optimize return on capital overall. Anticipate we're doing that. You're exactly right on USI. Everything's proceeding exactly as planned. Fully anticipate closing in Q4 as we described, and fully anticipate deploying capital in the most optimal way over time as we pay down the debt that is out there and move forward, and we'll continue to look for these opportunities. Nadin, anything else you'd add on that on the capital allocation side?
Yeah. I would say that, just as you mentioned, we're always looking at opportunities to optimize the portfolio. When it comes back to capital allocation, our objectives and our methodology stays the same. We're focused on deleveraging our balance sheet, funding a stable and growing dividend, investing in growth opportunities, and then returning excess capital to shareholders. That's how we thought about it in the past, and we continue to do so. We have to exercise discipline, enable for us to be able to get to the leverage ratios that we've talked about, and we did that just with NFP, and we expect to do so again in this transaction.
Thank you. Ladies and gentlemen, just as a reminder, could you please keep to one question each? Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question.
Hi, thanks. Good morning. My question is on the USI transaction. I just was hoping, now that it's been a little bit since you announced the deal, could you just provide us hopefully more color on just the drivers of the revenue synergies? I know we previously touched on just the USI and the wholesale component there and how that could help drive the revenue synergies that you outlined. Can you just update us, since you announced the deal, the work that you've done, the confidence that you potentially have in the revenue synergies and the wholesale piece, as well as anything else that you want to highlight that's going to drive the revenue synergies you're expecting with the transaction?
Absolutely, Elyse. Really appreciate it. I have to start with the foundation, though. We are here around with USI and the middle market opportunity, Elise, because the foundation has been set by the 3x3, by Risk Capital, Human Capital, ABS, and now acceleration with AI. That success and momentum has been tremendous, and you see it in the results today. In addition to that, we saw the opportunity in the middle market to literally deliver a premier U.S. middle market platform. This is building on the USI capability, NFP capability, Aon capability, and it is frankly about greater value for clients through our frontline leaders, through our producers, through our client leaders. We saw it. We could see it. We proved it with NFP. It was so clear.
Now with USI and that combination, by the way, it was 59 days ago, for those who are keeping track. We had high expectations then when we announced. Candidly, Elyse, they are stronger now. We brought the team together. We have got the planning in place, fully in place for action on day one once we close. I want to get Nadin to talk about the synergy capture overall, but specifically around revenue. This opportunity for us builds on this foundational platform with another area of incremental, substantial growth in the middle market and in E&S, and with the data footprint we have got now sort of in the middle market. The expectation we have is high, and you should have high expectations on us as well.
Let us talk the synergy capture, Nadin, and then we will get some reactions from Anne and Andy as we see it out in the field.
Right. Yes. Let us take a step back, and let me just explain. We have identified $395 million in EBITDA run rate synergies, and these come from 33 specific work streams that we have identified, 23 revenue work streams and 10 cost work streams. If I start with the cost, that represents $280 million, 71% of the total synergies. We have really high confidence in being able to achieve these because 90% of these are expected to be completed by 2028. These are through our global capability centers, technology savings, and other efficiency actions that we plan to take as well. This is a proven playbook for us. This is part of what we have been doing with the 3x3 strategy and the ABS platform that we have developed over the years.
The NFP integration provides the muscle memory and the recency effect for our confidence in being able to achieve these. If I move to the revenue synergies, those actually represent $115 million or 29% of the total, and that comes from placement optimization of wholesale flow, E&S segment opportunity, direct placement opportunity of USI premium volume, all with the client in mind and producing the best service. Another area is the high retention and producer productivity, and this is enabled by additional tools and capabilities that we've been developing. The third area is risk capital and the human capital cross-sell, which builds on a 3x3 strategy that we've had in place for many years now. These work streams, many of them are tried and true strategies that we've been working on and have good experiencing over the years.
What we will be doing, because we have such high confidence, is that we'll provide quarterly updates on an annual net EBITDA synergies and the total program synergies as well. We have the integration management office in place now. Again, a lot of the planning is taking place, and we're excited to get started. I'm going to hand you to Anne for some additional thoughts.
Thanks, Nadin. The business is highly confident that we will deliver to the synergies that Nadin described, and we see potential for more. We've proven our ability to deliver on targeted synergies with the NFP combination, and we're excited to build on the success of the NFP foundation and to learn from the USI team members. We are truly thrilled to deliver better outcomes for our clients and our colleagues. It's about creating the premier middle-market platform and bringing new content and capabilities to companies in the growing middle market.
Andy, you want to comment on some of the broking pieces?
Sure. Actually, we were at CIAB with the team and all the carriers, and the revenue opportunities that we identified are actually magnified from the feedback that we got from the carriers. We have real clear line of sight on what we're going to do and how it's benefiting the USI clients first and foremost, and how we can avail ourselves of a global broking network, which we're excited about. Our degree of confidence, whether it's around Totalis Specialty, our MGA platform, our sort of broking infrastructure is much stronger than it was when we went into it. We're highly confident.
Is that helpful, Elyse?
That is. My second question, I wanted to pivot to reinsurance. You guys have seen strong growth there, and we've seen a little bit of a dispersion across the industry in just the organic growth trends. I know there was perhaps some one-time-ish revenue in the quarter, but even excluding that, there is still positive, in excess of the mid-single digit target. Can you just give us a sense of what's been driving the reinsurance organic and how we should think about that trending into 2027, when it seems like we'll probably see another round of double-digit price declines on the property cat side at 1/1 ?
Absolutely, Elyse, and I appreciate the question. We have an incredible team with a long record of performance really over time. What I admire about the team, these guys, this absolutely relentless pursuit of client impact, but they also are constantly looking around on innovation and new ideas and new solutions to bring to market. I want to get Andy just to talk a little bit about this history, but this idea around diversification and all the ways we can support and help clients really has sort of played a significant role. Also, I just want to highlight the commercial risk result and the reinsurance result. Both really are a testament to risk capital. We're literally putting content in the room that was different than it was before. Analytics that are different and people that are different, reinforcing and supporting each other, fully aligned.
That means a different set of solutions for clients, better set of solutions. That shows up, the reinsurance capability shows up in reinsurance, and you're seeing it also shows up in commercial risk. When you see it in some of the bigger, more complex items that our clients are facing, think data centers, et cetera. So, it really is a unique combination that's come out of this alignment that we've worked so hard to create with risk capital. You're, again, seeing it in reinsurance with a great group of leaders. This is 7% on top of, I think, 8% in the prior year period, Andy. So this is pretty unique. Good momentum as we talked about before. But your thoughts on what's happening under there?
Yeah. Thanks, Greg. I think the reinsurance story is, it's a risk capital story, and it's a diversification story, Elyse, which we spoke about at Investor Day. From a risk capital standpoint, I'd highlight two things. One would be our global FAC platform in partnership with commercial risk driving double-digit growth internationally, which has been a superb success, a long-lasting, and we see a great future in that. Then I think about digital infrastructure, partnering with the carriers, alternative capital, to bring solutions to clients on the commercial risk side. That's been tremendously exciting. But in terms of diversification, reinsurance at Aon Re has always been leaning into innovation. Sure, we have great success and great teams with our treaty business, a lot of new wins, particularly in the MGA space. But it's a story about diversification.
We've been leading with capital advisory and ILS securities. The capital formations at Lloyd's with the ReShare deals or the sidecars that we've been involved in, that's accelerating. Our cat bond business remains the leading cat bond business globally, and we're having tremendous success there. But we also knew that we had to diversify away from straight-up transactional business, and we sort of leant into the formation of the strategy and technology group, and we're leading there with sort of advice to P&C insurance around strategy and analytics and actuarial services. Also broadening out with our proprietary PathWise tool, leaning into the life space, which is a growing part of our business. That's really differentiating us amongst competitors in the life advisory space, what we do with the faculty or what we do with actuarial advisory. So that's exciting for us.
So overall, it is a diversification thing that is driving, and it sets us up through the cycle. Yeah, the market is soft, but I think it sets us up for single mid-digit growth or greater through the cycle.
Thank you. Our next question comes from the line of Rob Cox with Goldman Sachs. Please proceed with your question.
Hey, good morning. When I think about the outcomes of Aon's strategy and all the innovative work in recent periods, a couple of those outcomes are this, 100 basis points plus of organic contribution from talent and the really consistent 70 basis points plus of margin expansion, which goes back to the 2025 Investor Day, I believe. As we look through to 2027 and beyond, should we be thinking about those underlying drivers as sustainable underneath any impacts from USI and all the integration involved?
Yeah, Rob, thanks for the question. I will start with an overview, then go into depth on the specific mechanics here. We might even get into a field view around the credibility of all this comes back to clients and client reaction. That is the fuel. The answer is it is not only sustainable, we believe we have got greater momentum against those objectives than ever before. It is not magic, right? It literally is client demand, client needs going up. Our ability to respond has been shaped literally to their requests, what they are demanding, and we are seeing opportunity. We are attracting talent and building talent inside of Aon. But remember, it is talent with technology. It is context, the capability around it. So none of this is bigger. This is all about better. Better in the middle market, better in large corp, better in enterprise client.
Because we have got a set of solutions that we have come together and developed over time, we also can not just innovate, but innovate at scale more quickly and more effectively. All these things are literally the reason, the goal, the objective we had when we set out on Aon United over a decade ago, but really why we, over three years ago, dove in and said, "We have got to do better." We changed structure, Risk Capital, and Human Capital. That is alignment. That is reaction to the market. ABS, absolutely towering in terms of its connectivity. But as Anne said, it was not in isolation. It was with the field. All these things came together to give us capability that has enabled our current performance, and our view is the model we described at Investor Day is the model that literally you are seeing play out. Nadin, thoughts?
Yeah, let me build on that. Our full year objective in terms of priority revenue generating hires was 4%-8% for the full year. We have achieved 4% year- to- date, so we are already at the low end of the full year expectation. It is not just about the headcount, it is about the right headcount, which is why we have a range. We are really pleased with the performance that we are seeing coming through in our results today. As I mentioned in my remarks, those will continue to grow as the individuals season and mature in terms of their contribution. As we continue to bring on more cohorts, that is just going to build on top of each other.
So it is not really just about one quarter or one year. It is a program that we have put in place that will drive sustainable growth into the future. We will continue to prioritize these investments because they help fuel growth in our business. I am going to pass to Anne for a bit more color.
Thanks, Nadin, and as you stated, our ability to attract and retain talent, the best talent, has always been high. In fact, NFP producer retention is higher than the pre-acquisition numbers. The enthusiasm with which external candidates are reaching out is profound. The candidates are keen to join our winning team and to serve clients with our AI-enabled capabilities. It is the analyzers, the diagnostic tools, Certificate Center. In addition to brokers and producers, we are attracting the best client leaders, and they are serving the most complex clients, the global clients. Our enterprise client leaders are joining from within the industry, but also we are attracting client leaders from outside the industry, from technology, manufacturing, financial institutions, and they are joining because they want to solve client needs and deliver the integrated Risk Capital and Human Capital capabilities as a destination for choice, for candidates, and for clients.
Okay. Next question.
Thank you.
Next question.
Our next question comes from the line of Meyer Shields with KBW. Please proceed with your question.
Thanks so much. I was hoping to look at the USI acquisition in the context of NFP. Specifically, I was hoping you could give us a timeline for accelerating legacy NFP production and whether the timeline would be the same for USI when they have access to Aon's tools.
Love it, Meyer. Listen, we have long thought about this middle market opportunity. With ABS, we had the opportunity then to go in and really address it in a way that we felt could be powerful for clients, but also accretive for Aon and all the above that comes with it. NFP proved it. We saw it. We could see it happen. By the way, it was the front line of NFP that made it happen. It was the producers, the client leaders, as they picked up. By the way, we learned a huge amount from NFP. Hopefully, they picked up a few things from Aon together, and together we are just stronger as we work together. We proved it. We learned a lot, though, in two plus years. We learned a lot.
Not only do we see the opportunity now with USI at the table, with NFP, with Aon together, and I want to emphasize this, together, a single platform that is going to make a difference on the leadership of Mike Sicard, who has watched this for 20 years, been in this game. Our view is that opportunity is even greater than we anticipated when we came in with NFP. Even greater. We have seen it. We have proved it. Now we have got all the capability around the table to make it happen. Listen, we have high expectations on what this might be and what it will play out to be. We are highly confident on the synergies, as Nadin described. But really the place we are most excited is the impact with our colleagues sitting across the table from clients around how they can help them succeed.
So, I think, Nadin, the performance of NFP, we are not reporting it externally, is as strong as it is maybe the highest quarter it has been over since they have joined. And we see that opportunity playing out in an even a faster fashion over time together with the platform with USI.
That is exactly right. We are really pleased with the NFP performance, a really strong quarter for Q3, and we have confidence that performance is going to continue to grow.
Okay, Meyer.
Thank you. Our next question comes from the line of Bob Huang with Morgan Stanley. Please proceed with your question.
Good morning. I want to unpack a little bit about the sidecar initiatives you have. I know you mentioned about this a little bit earlier, but if we were to think about your proposed partnership with Blackstone on Cortina, with advancement in AI risk modeling, a higher yield environment that we are in today, and then just the amount of capital that is available to deploy, do you foresee a proliferation of sidecars going forward? Not just really gradually, but to the point where it could have private equity capital displace carrier capacity in a significant fashion going forward. If that is the case, if you were to put your consulting hat on, what is Aon's opportunity here going forward?
Well, Bob, I want to just start with a big emphasis here. This is not about the capital, it is about the clients. What we are responding to and what Andy is going to describe a little bit is around the innovation on analytics and content. If you have got analytics and content and capital can see a way to come in and make a return and be protected, you are going to attract capital. Our goal is to think about our $4.5 trillion, $5 trillion industry right now with absolutely cherished market partners to serve clients, and we are going to reinforce and support that capital pool. But that capital pool at $4.5 trillion- $5 trillion needs to grow over time, needs to be bigger over time.
Imagine if it was twice the size and it was closer to $10 billion than $5 billion. We are talking about net creation, not a zero-sum game. Net creation. Now you are talking about the ability to actually address data center issues, address cyber, address the evolving AI risk. When you think about the Thai catastrophe arrangement I described, this is a country now we are actually supporting, just like we did with Jamaica. So for us, this is really, Bob, about a much bigger industry that evolves over time and the analytics is the way to unlock that. If they have got confidence, then you can deploy new capital to do that. By the way, this has been a history of our industry, and Andy should talk a little bit about how it has evolved over time. This is just another step. By the way, not an easy one.
The content and analytics required to move money, to move capital, to move someone else's balance sheet to bet on our industry is a big deal. This is not easy to do. But when you can pull it off, we are creating more capacity, more ability to serve client need. This should not be a zero-sum game. It should be opportunity to really make a difference with clients in unique ways. But Andy, thoughts?
Yeah. Thanks, Greg. Our role as an intermediary is to bring choice to clients, durable, meaningful, quality choice to clients, and durable capital. We have done that historically at Aon Re. I think back 25 years to the beginning of the cat bond market. We are leading that category, but that now is beyond the U.S. and Japan and is more common in Europe. So, we are helping clients with their needs as it relates to cat bonds. But if you think of the sidecars, there has been 98 sidecars created since 2020 and 163 in the last 10 years, but very few new capital balance sheet formations in the reinsurance market. So this is the way that capital is entering the business. We are partnered with that capital to resolve the client needs, and as Greg pointed out, the risk is elevated around the world.
Prices may be down at this particular juncture, but risk is elevated, whether it is from climate, whether it is from social inflation, whether it is from technology, socioeconomic disruption and think of the riots in France. Over time, we anticipate the needs of our clients and the need for risk transfer is going to increase and the cost of that risk transfer over time will increase. We want to expand the total addressable market. We need capital to come in, and so we are excited about our position in that. We feel that we are leading it, whether it is with the ReShare deal with Lloyd's, whether it is the sidecars and our capital advisory team, partnered with our security team, with the account teams, is really putting us in the driving seat and solving client issues.
You saw, Bob, the opportunity to do this was with the market. Even the example you highlighted, so that is with market partners as well. Appreciate the question. Hopefully, that is good color and background for you.
Thank you. Our next question comes from the line of David Motemaden with Evercore ISI. Please proceed with your question.
Hey, thanks. Good morning. I was hoping you guys could talk a little bit about the construction growth in North America. It sounded like that may be moderated a little bit. I think last quarter you guys were talking about double-digit growth there, and this quarter I did not hear that. At the same time, you spoke about the strong pipeline. I was hoping maybe you could just unpack that a little bit and your outlook for contributions to growth from AI infrastructure just given all the focus on that.
David, appreciate the question. I would just highlight it is never about a single quarter. As you know, you have heard us talk about before, it is really trend over time. I would also highlight construction continues to be an incredibly important investment area for us, opportunity area for us. We have got a tremendous team on this broad-based topic. Not just the construction, but also the operation over time, all that comes with this. So, we just see tremendous opportunity. I would say the pipeline looks strong, but I also want to emphasize, as I did at the beginning, the story you have seen in this quarter, you have seen in previous quarters, is not just construction or data centers. It really is the broad-based story we are talking about. These are amplifiers of that.
But maybe to give the specifics on the quarter because David asked, but then more broadly, Andy, how you are seeing this evolve over time.
Yeah. Let me start with just commenting on commercial risk overall and just how happy we are with the high-quality growth. What we mean by that is it is always starting with new business generation. We actually had 12 points of new business come through for the quarter. So again, that is the area that is leading. It is high quality. Retention remains in the mid-90s. Market impact overall continues to be slightly positive despite pricing pressures. So again, strength was broad-based, ongoing strength in core P&C, M&A services, and construction. Across regions, organic growth was mid-single digits or greater for this quarter. So I am going to pass over to Andy with a little bit more color.
Thanks, Nadin. We grew over construction in the U.S. and globally over a really strong third quarter in 2025, and so that is a tremendous achievement. When we look at our construction business globally, we have a big share of the global infrastructure projects, so that momentum is continuing. Our pipeline in the U.S. for digital infrastructure remains strong and is expanding all the time. So we are highly confident about the future of that business and how we are sort of partnering across risk capital with the insurers and the reinsurers. Actually, in some cases, even bringing in alternative capital to meet those needs, and they are changing all the time.
But we look at the pipeline and how it is expanding. We are really confident about the needs in digital infrastructure. They are global, so we have had tons of success in Australia. Europe, we have had success. There are permitting slowdowns, and there's energy costs that affect the timing of particular projects, and that's happening all the time. But overall, the pipeline is expanding. The investment from the hyperscalers and others is not slowing down. So, we see a tremendous opportunity across risk capital and also working with our colleagues in human capital and how they can bring some of the solutions to bear there. So, we remain really optimistic about what we're doing in that space.
Thank you. Our next question will be our final question this morning from Yaron Kinar with Mizuho Securities. Please proceed with your question.
Good morning. Thanks for allowing me on. My first question relates to margins. So, when we adjust for the 50 basis points of restructuring cost saves and fiduciary income headwind of, I think about 20 basis points by my calculation, the residual margin expansion was kind of in the 30 basis points-40 basis point range. I'm curious, why would 6% organic growth, that residual expansion wouldn't be higher? Is it that you're capitalizing on strong growth to increase platform investments, or are there other offsetting headwinds?
Yeah, let me take this one. So, that's exactly right. If you think about the margin expansion that was actually created, it's well over 100 basis points. But we chose to invest into the business, which is how we ended up with the 70 basis points on a net basis. It's all about creating durable growth for the long term. And so those are the decisions that we make every quarter and for the year.
Thank you. That concludes our question-and-answer session. I will turn the floor back to Mr. Case for final comments.
Thanks very much. I just want to thank everyone for joining the call this quarter and look forward to our discussion next quarter. Thanks so much.
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.