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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. You're listening to Bloomberg

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Speaker 1: Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio.

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Speaker 1: It's good to have back with us. Edmund Reese, executive

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Speaker 1: vice president and CFO of the nearly seventy eight billion

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Speaker 1: dollar marketcap professional services, advisory and insurance brokerage company. Stock

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Speaker 1: up a little over two and a half percent year today,

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Speaker 1: down about five percent in reporting those earnings yesterday, and

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Speaker 1: goodb you back on the program. The company and the

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Speaker 1: team always a good read on how the business world

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Speaker 1: is feeling about the current environment when it comes to

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Speaker 1: things like risks, climate, governance issues, M and A and more.

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Speaker 1: Where do you think the biggest opportunity for growth is

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Speaker 1: for aon.

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Speaker 2: Well, First, well Tim Carroll, thanks for having me back here.

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Speaker 2: The biggest opportunity for growth is actually what we just

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Speaker 2: saw over the past two years in our three year

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Speaker 2: strategy and what we just saw in this most recent

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Speaker 2: quarter with strong results. Complexity across the risk that our

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Speaker 2: clients are facing is the biggest issue we're discussing with them.

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Speaker 2: That's the political violence and war exposures in the Middle East.

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Speaker 2: That's the hyperscaler's access to additional capacity for the AI

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Speaker 2: infrastructure builds, that's working with our clients on large scale

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Speaker 2: defense projects. All of these things are coming together and

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Speaker 2: intermingled on the minds of our clients, and we are

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Speaker 2: providing solutions to help them with that as we give

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Speaker 2: them access to our data, help them understand their risk

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Speaker 2: and then match it with capitals. And that's where we

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Speaker 2: actually saw when you look at those lines in our

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Speaker 2: P and L and on our income statement, that's where

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Speaker 2: you saw the growth.

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Speaker 1: I don't want to be crass here, but in other words,

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Speaker 1: is geopolitical uncertainty, is war? Is instability good for your business?

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Speaker 2: Well, it creates complexity for our clients and helping our

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Speaker 2: and that drives demand for us, and that is good

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Speaker 2: for our clients and good for our shareholders as well.

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Speaker 2: If you think about that geopolitical violence, you have not

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Speaker 2: just the assets themselves, the ships, the cargo, but you

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Speaker 2: also have supply chain risk, you have the political violence

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Speaker 2: and terrorism. Those things create demand because clients want to

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Speaker 2: protect their assets and they still want to be able

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Speaker 2: to invest and grow and know how to do that.

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Speaker 2: We give insight and of course that drives drives more

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Speaker 2: demand for our products and helps us with the growth.

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Speaker 3: All Right, I want to cut to the chase with you,

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Speaker 3: how freaked out is the corporate community? Because there's a

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Speaker 3: lot of you know, coming at them. You know, this

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Speaker 3: war that just you know, peace talks, not peace talks,

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Speaker 3: more attacks. There's that, there's the higher costs of maybe

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Speaker 3: doing things in your back yard in terms of production,

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Speaker 3: energy cost, there's just a lot. So how freaked out

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Speaker 3: is kind of the corporate community? In your view?

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Speaker 2: Risk has been rising, Risk has been rising, and the

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Speaker 2: inter mingleness of that risk, all of them connected, is

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Speaker 2: creating more angst, more volatility in the p and ls

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Speaker 2: and in the balance sheets of our clients. And when

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Speaker 2: these things come together, there is anks. But they still

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Speaker 2: want to invest, they still want to grow, and so

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Speaker 2: we have been investing. We've been investing in capabilities to

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Speaker 2: do what I was saying, helping them understand their exposure,

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Speaker 2: helping them connect that data to their assets and understand

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Speaker 2: how it impacts their balance sheets, and then of course

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Speaker 2: bringing in not just the traditional capital in our industry

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Speaker 2: from insurance carriers, but from other players as well, so

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Speaker 2: that our clients can still continue to grow and of course,

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Speaker 2: that helps helps our growth as well.

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Speaker 1: Is there enough you know, if we're talking about the

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Speaker 1: data center part of this conversation and the opportunity there,

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Speaker 1: is there actually enough insurance capacity for all the demand

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Speaker 1: that we're seeing with AI data centers.

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Speaker 2: If you think about it, these data center sites, some

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Speaker 2: of the clients that you'll be talking to later today

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Speaker 2: and actually talked about at the beginning of your program,

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Speaker 2: they're coming on that twenty billion, forty billion, fifty billion

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Speaker 2: per site. The insurance industry traditionally is about a five

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Speaker 2: trillion dollar industry across all property, across all casualty, across

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Speaker 2: health and wealth as well, and so when you bring

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Speaker 2: on data centers that are of this size, it's not

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Speaker 2: sufficient capital from traditional insurance. So we've been talking for

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Speaker 2: quite some time. For the industry to stay relevant, we

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Speaker 2: are going to need to have access to what we've

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Speaker 2: sized as a two hundred and fifty trillion opportunity. We

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Speaker 2: just need a small slice of that expand the addressable

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Speaker 2: market that's going to come from institutional investors. That's going

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Speaker 2: to come from private equity, sovereign wealth funds, and the

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Speaker 2: only way that they will enter is if we can

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Speaker 2: provide the data, just like we began this cat metastrophe

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Speaker 2: bond market, which is growing at a team rate and

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Speaker 2: we're over half of it. We're seeing it with our

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Speaker 2: treaty products aggregating risk from insurance, and we're going to

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Speaker 2: have to do the same thing for data centers here,

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Speaker 2: or you're going to see companies have it on their

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Speaker 2: own balance sheets or go out and look the fun

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Speaker 2: debt for it. But we think we certainly have interest

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Speaker 2: as asset managers want assets with uncorrelated return. We are

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Speaker 2: giving them the data to help them see that they

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Speaker 2: can get attractive yields off of that. And we do

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Speaker 2: think that we'll continue to be relevant. Is this extensive

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Speaker 2: build increasing investment in data centers continues over the next

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Speaker 2: few years.

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Speaker 3: So ed, as you guys know Ia, you have all

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Speaker 3: described in the past the data centers as a ten

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Speaker 3: billion dollar premium opportunity. Is this still a reasonable amount?

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Speaker 3: Has the company's view changed on it? Is it less?

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Speaker 3: Is it small? Numbers matter?

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Speaker 2: When we gave that estimate, the spend twenty twenty six

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Speaker 2: was less than the eight hundred billion that is estimated

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Speaker 2: to be today. The infrastructure spend over the next three

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Speaker 2: years will be at least two trillion, and when you

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Speaker 2: think about the ongoing operations of that, some estimates have

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Speaker 2: it the highest five to seven trillion, So it's only

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Speaker 2: increased since then. The question is are we going to

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Speaker 2: be able back to Tim's question of getting the sufficient

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Speaker 2: capital in to be able to ensure and manage the

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Speaker 2: risk associated with it. So we're very bullish that that's

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Speaker 2: going to be an opportunity, a tailwind for our growth

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Speaker 2: as we move forward. And we have been making the

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Speaker 2: investments on the capabilities using our data because we are

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Speaker 2: one of the largest players in the industry to give

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Speaker 2: the insights to these asset managers.

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Speaker 3: All Right, maybe a silly question, but I'm thinking somebody

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Speaker 3: at home might be listening or watching and wondering when

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Speaker 3: we talk about enough insurance capacity for AI data centered demand,

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Speaker 3: what exactly are we talking about? What is that insurance capacity?

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Speaker 2: Well, if you have, I mean think about your home,

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Speaker 2: you know, a.

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Speaker 3: Million, just protecting the data center, is that what it is?

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Speaker 2: Well, it's protecting the data center, the build of it is,

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Speaker 2: the protecting the operations of it, if weather comes in,

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Speaker 2: cyber has an impact on it, the general liability, So

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Speaker 2: it's we actually have something that we call the data

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Speaker 2: center life cycle program, not just to build the physical

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Speaker 2: facilities itself, but the ongoing operations and all the risk

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Speaker 2: that it would face. You measure risk here with data centers.

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Speaker 2: Our CEO likes to say, you measure it in millions

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Speaker 2: per minute in terms of operations. So imagine the risk

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Speaker 2: associated with that, and you can ensure that and will

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Speaker 2: help match that risk with the right capital.

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Speaker 1: You know, we're actually seeing a headline that's related to

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Speaker 1: this crossing the Bloomberg terminal right now. Deep Seek is

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Speaker 1: developing a massive artificial intelligence data center and Inner Mongolia,

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Speaker 1: According to people familiar with the matter, dad one gigawatt

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Speaker 1: worth of compute. The company aims to build its own

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Speaker 1: facility while leasing additional capacity from other companies. It's pushing

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Speaker 1: to bring at least part of its data center's capacity

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Speaker 1: online by the end of next year or early twenty

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Speaker 1: twenty eight. Edmund, we're speaking with Edmund re CFO of

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Speaker 1: aon We're talking data centers. We're talking insurance in the

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Speaker 1: insurance market for data centers. What do you think when

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Speaker 1: you see a headline like this. Deep Zinc developed deep

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Speaker 1: sec developing this massive AI data center in Inner Mongolia.

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Speaker 2: As you were reading it, there were three things that

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Speaker 2: were going across my mind. One is the construction, Two

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Speaker 2: is the energy associated with it, another area that is

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Speaker 2: high growth for us that you'll need to support this

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Speaker 2: data center. And the third thing is the engineering and

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Speaker 2: expertise that we have and understanding not building that in

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Speaker 2: a concentrated location, but dispersing the risk and giving insight

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Speaker 2: on that. So that is a company that could definitely

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Speaker 2: benefit from the insights that we provide from the data

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Speaker 2: here is they pursue what is going to be a

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Speaker 2: as investment and ensure that they get the returns that

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Speaker 2: they want on it.

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Speaker 3: Well, let me just go there. Then are you working

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Speaker 3: with deep Seek? Are you working with Amazon? Meta? Microsoft?

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Speaker 3: You smile For those who are listening to care.

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Speaker 2: You'll smile and say that we are. You know, we

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Speaker 2: given what we have, we have strong relationshipships across the hyperscalers.

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Speaker 2: I of course can't talk about any specific company here,

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Speaker 2: but increasingly the expertise and the engineering advice. I think

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Speaker 2: I mentioned on this program before that even before the

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Speaker 2: large data center boom here, we had advised on number

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Speaker 2: thirty percent of the data center builds in the US,

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Speaker 2: which is much larger than any other country. You have

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Speaker 2: to go to China and Germany before you start to

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Speaker 2: see the next one. We have high market share there

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Speaker 2: as well. So imagine all the engineering expertise that we

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Speaker 2: have understanding where to put the sites, how to build them,

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Speaker 2: how to ensure them themselves. And so with that expertise,

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Speaker 2: I think it drives more demand for US, and we

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Speaker 2: are in fact working with many of the the large

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Speaker 2: hyperscalers that you talk about on the show.

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Speaker 3: Just real quickly, Any signs that this stuff is slowing down,

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Speaker 3: because this is the big question or one of the

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Speaker 3: big questions. Any signs that you're like, oh this, you know,

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Speaker 3: insurance capacity for AA data centered demand, it's going to

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Speaker 3: slow down. Any signs of that, Carol.

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Speaker 2: The last five quarters, I got on our earnings call

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Speaker 2: and said that we had double digit growth and construction,

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Speaker 2: which is where this shows up, including this quarter here.

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Speaker 2: Now that is a you know, it's not where we

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Speaker 2: drive growth broad based through many different product lines, so

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Speaker 2: we're not overweighted to this, but it has been a

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Speaker 2: strong contributor for us, and we see it to be

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Speaker 2: a tailwind as we move forward. Here we just want

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Speaker 2: more time.

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Speaker 3: Yeah, I'll come back, come back soon. Thank you so much,

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Speaker 3: always always appreciated for having me again. Yeah, be well.

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Speaker 3: Edmund Rees, Executi Vice President cfo of A on joining

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Speaker 3: us right here in New York City