Aon PLC - Class A

Aon plc has experienced share price pressure despite a robust business model that generates operating margins near 30% and returns on invested capital in the mid-20% range. The company benefits from a highly recurring revenue base and long-standing client relationships, which support its core business of helping large enterprise clients manage complex risks. While the recent market dynamics have led to a near 20% sell-off from its peak, this reflects a reassessment of timing rather than a deterioration in long-term value. Aon’s expertise and judgment remain central to its client relationships, suggesting strong long-term prospects.

Longtime holding Aon is among the world’s leading providers of insurance/reinsurance brokerage and human resources solutions. The company reported slowing organic revenue growth for 2025, which led to a slew of sell-side downgrades that pressured the stock price. Aon currently trades at an undemanding multiple of earnings and maintains a long track record of opportunistic acquisitions that have created value for shareholders over time.

Longtime holding Aon is among the world’s leading providers of insurance/reinsurance brokerage and human resources solutions. The company reported slowing organic revenue growth for 2025, which led to a slew of sell-side downgrades that pressured the stock price. Aon currently trades at an undemanding multiple of earnings and maintains a long track record of opportunistic acquisitions that have created value for shareholders over time.

Aon is the second largest insurance brokerage in the world, holding top positions in its major markets. It operates a capital-light, acyclical fee-generating model with a largely recurring revenue base. As organizations grow, their risk management needs become more complex, where Aon adds significant value. We expect Aon’s free cash flow to grow materially in the next few years due to a multi-year restructuring program and synergies from the NFP acquisition. With management's capacity to accelerate share repurchases, we believe Aon represents an opportune use of capital at a modest 18x forward multiple on earnings, which is still below its potential.

Aon plc has faced challenges in the current market environment, as evidenced by its performance in Q2 2025, where it returned -10.42%. This decline contributed negatively to the Fund's overall performance, indicating that the stock has not been favored by investors in the recent 'go-go' market. The Fund's position in Aon has been sized accordingly, reflecting a cautious approach to its potential in the near term. The manager's view suggests that while Aon is a quality business, it is currently out of favor, leading to a decision to trim the position.

We initiated a new position in Aon, one of the leading insurance brokerage houses in the world. Aon operates in 120 countries, with most of its revenue from the Americas. We like the company's competitive advantages of scale, breadth of clients and insurance partners, as well as its strong customer relationships and high switching costs. With roughly 80% of its business being non-discretionary due to the recurring nature of business insurance, the company benefits from persistent revenue streams and robust client retention. We expect a growth profile similar to that of a company like Accenture, with mid-to-high single-digit revenue growth and low-teens EPS growth.

Aon, one of the world’s leading insurance brokers, is well-positioned due to its non-discretionary business model, which drives persistent revenue streams and high client retention. The company reported solid earnings and is benefiting from a recent not-for-profit acquisition. Additionally, higher inflation could provide a slight tailwind to insurance brokerage revenues in the short term. The insurance industry performed well in the first quarter, and Aon rose 10%, reflecting its strong market position and growth potential.

Aon has been a strong contributor to the Fund's performance, returning 11.34% in the first quarter. The financial sector stocks, including Aon, provided the strongest performance boost during this challenging market environment. The Fund's position in Aon reflects confidence in its business model and growth potential, as it continues to perform well amidst market volatility.

Aon has demonstrated continued solid execution, contributing positively to our portfolio. The company is well-positioned within its sector, and we believe it will continue to perform well in the current market environment. Our confidence in Aon is reflected in our decision to increase our position during the quarter, as we see potential for further growth and value creation.