Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 2: Tim Stenoveek on Bloomberg Radio.
Speaker 1: A on reported earnings this morning, EPs and adjusted operating
Speaker 1: margin beats, top line revenues a little bit below expectations.
Speaker 1: Stock has been up about two percent intra day at
Speaker 1: its high today. Stock slightly lower year to date, and
Speaker 1: it's slightly lower in twenty twenty five. We've got a
Speaker 1: great guest to talk about the company's business, the outlook.
Speaker 1: We welcome back Edmund Reese. He's executive ep CFO of
Speaker 1: the nearly seventy five billion dollar market cap insurance brokers company.
Speaker 1: We're talking, of course about a He joins us once
Speaker 1: again in studio. Nice to have you back.
Speaker 3: How longright for having me, Carol too.
Speaker 1: Nice to have you so tell us before we get
Speaker 1: into the quarter and talk about the business specifically, we
Speaker 1: keep asking leaders what it's like to be a member
Speaker 1: of the C suite in this environment?
Speaker 3: Well, I mean, this is a very for us and
Speaker 3: for our clients. It's a very volatile and uncertain environment.
Speaker 3: There's a ton of news today that may bring some
Speaker 3: stability to it, but for us, it's requiring more of
Speaker 3: our services and demand from our clients. There's a lot
Speaker 3: going on, and we have solutions that can help our
Speaker 3: clients protect their businesses and grow their businesses. So there's
Speaker 3: a lot going on. It's an exciting time to be
Speaker 3: in my seat sitting with aon.
Speaker 2: Do you ever lie there at night before you go
Speaker 2: to sleep and say to yourself, I really hope I
Speaker 2: don't wake up to a social media post from the
Speaker 2: president about the insurance industry.
Speaker 3: Well, look, I think we all have the same objectives here,
Speaker 3: and that's really to help this economy be able to move,
Speaker 3: and we provide solutions to help the clients with that.
Speaker 3: So volatility actually for us in many cases is of
Speaker 3: positive things because we think we have data and insights
Speaker 3: and solutions that can help companies move like that. So
Speaker 3: when there's a post like that, it actually means more
Speaker 3: demand for our service costs.
Speaker 1: That's what I want to ask you. Though you mentioned
Speaker 1: volatility that your clients are dealing with, What are the
Speaker 1: biggest aspects of volatility that they keep mentioning to you?
Speaker 1: What are the risks that they are most worried about
Speaker 1: in today's environment.
Speaker 3: When I last came onto this show. I use this
Speaker 3: term the megatrens, and i'd categorize what our clients are
Speaker 3: talking about right now in those same categories. You're going
Speaker 3: to be familiar with them. When we think about technology,
Speaker 3: they're talking about data center builds and digital infrastructure, and
Speaker 3: there that is a demand supply issue to that what
Speaker 3: you're talking that's one of the top items right now
Speaker 3: in terms of growth. We had great results that we
Speaker 3: can get into that was one of the drivers of growth.
Speaker 3: They're talking about trade. I just saw a headline on
Speaker 3: your newscast here that talked about the four hundred million
Speaker 3: dollar tariff based revenue hit. They want to know how
Speaker 3: to manage their supply chains and diversify those things. They're
Speaker 3: talking about the AI impact on workforce as a result.
Speaker 3: They're talking about the storm here in New York weather,
Speaker 3: the four megatrens. So those trends I think are still
Speaker 3: top of mind. They might change each time that I
Speaker 3: come onto this show, but there's still top of mind
Speaker 3: for our clients, and that's where we're helping them.
Speaker 2: What happens to your business though, if the AI trend unwinds,
Speaker 2: if the AI trade unwinds, if we don't see the
Speaker 2: productivity and we don't necessarily see the value that is
Speaker 2: promised with AI.
Speaker 3: I think we have a long runway before we start
Speaker 3: to see right now the fact that companies are investing
Speaker 3: in AI. They're really starting to reevaluate, as an example,
Speaker 3: their workforces. What is the job architecture going to be,
Speaker 3: what's the pay structure going to be, what's the benefits
Speaker 3: going to be? We have data and analytics. We have
Speaker 3: a database Radford mcglogglin that many of your viewers here
Speaker 3: would be familiar with with over thirty million employees in it.
Speaker 3: So we know that companies are investing because we see
Speaker 3: jobs with this description and it up two thousand percent
Speaker 3: over the past couple of years. And we can help
Speaker 3: companies think about this workforce transition. We can help them
Speaker 3: think about how the upskill and reskal their employees so
Speaker 3: they can work alongside with AI. So it might change,
Speaker 3: but we think we know that the investment is large,
Speaker 3: We know that this is a long journey ahead before
Speaker 3: we start to see a shift. There's a lot of
Speaker 3: work and insight that we can give clients right now
Speaker 3: on it.
Speaker 1: Let's talk about earnings and unfortunately, as you know, we
Speaker 1: in the business media and journalism like to know about
Speaker 1: the outlook. You did give an outlook, and I am
Speaker 1: curious how much in terms of data centers, because you
Speaker 1: do talk about that a lot with us. How much
Speaker 1: of that is a tailwind in your guidance for twenty
Speaker 1: twenty six. I mean, should AI investment on one rapidly?
Speaker 1: Would that be meaningful to your top line broads for
Speaker 1: twenty twenty six.
Speaker 3: We have a broad based business. We're operating in one
Speaker 3: hundred and twenty countries right now. We have broad solutions
Speaker 3: across commercial risk, across reinsurance, health and wealth. The data center,
Speaker 3: the AI, the technology is a component of it. The
Speaker 3: guidance that we gave was for mid single digit or
Speaker 3: greater growth. Mid single digit or greater growth. And by
Speaker 3: the way, we're going into the third year of our
Speaker 3: three year plan. We set three year plans here and
Speaker 3: that will be a component of it.
Speaker 2: But look, we're not overly exposed.
Speaker 3: I'm not really exposed to that at.
Speaker 1: The quarter of the business.
Speaker 3: In fact, we think it's probably a tailwind that further
Speaker 3: supports the mid single digit growth that is not baked
Speaker 3: in that extreme amounts at the moment as we think
Speaker 3: about the guy.
Speaker 1: Interesting.
Speaker 2: You know, I ran into a colleague I haven't seen
Speaker 2: in a bit of time today and we were talking
Speaker 2: and I was just like, we both agreed. I can't
Speaker 2: believe January has been like this already. You know, things
Speaker 2: were kind of slow in the first few days of
Speaker 2: the new year, and then you had whatever, everything happening
Speaker 2: in Venezuela. We have everything happening at Davos. We have this,
Speaker 2: you know quote Armada on its way to Iran, the Greenland,
Speaker 2: everything there. Given what has happened in recent weeks, are
Speaker 2: you seeing clients looking to expand protection for things like trade, credit, contingent,
Speaker 2: business interruption, war terrorism, those things.
Speaker 3: I'd add to it, politically, insurance, cyber. So yes, risk
Speaker 3: is increasing, and in fact, one of the things that
Speaker 3: you showed the slide of our company, but the industry
Speaker 3: in particular, one of the things is that maybe pricing
Speaker 3: has been coming down in recent times. In clients are
Speaker 3: seeing that as an opportunity to increase their limits across
Speaker 3: the categories that you just talked about. They're seeing it
Speaker 3: as an opportunity to increase coverage. Do I have enough cyber?
Speaker 3: They're seeing it as an opportunity to expand across their
Speaker 3: overall portfolio and have better protection to grow their business,
Speaker 3: and that it has been the driver of the growth
Speaker 3: that we've seen over the first two years of our
Speaker 3: plan and why we're so confident in our outlook going
Speaker 3: in the twenty twenty six as well.
Speaker 1: One of the things I wanted to ask you, we've
Speaker 1: only got about a minute or so left here. You
Speaker 1: guys put out a review and you talked about the
Speaker 1: LA fires, and it was overall global economic losses stemming
Speaker 1: from disasters including thunderstorms and earthquakes total about two hundred
Speaker 1: and sixty billion, and I think there was global insured
Speaker 1: losses more than one hundred and twenty seven billion from
Speaker 1: natural disasters, dominated by more than one hundred billion occurring
Speaker 1: in the US after the LA fires. How do you
Speaker 1: continue to address global climate change? I mean, we've done
Speaker 1: a story here at Bloomberg about so many people who
Speaker 1: haven't been able to rebuild because there's fights between the
Speaker 1: insurers and I think utilities or the city, like who
Speaker 1: is responsible for that? That those costs mean while people
Speaker 1: don't have homes. Forgive me, I'm only saving about forty
Speaker 1: five seconds. How do you guys address this.
Speaker 3: That is one of the four mega trends that I
Speaker 3: just talked about.
Speaker 2: Well weather ether to.
Speaker 3: The point that you just made, it has been that
Speaker 3: record highs twenty five was kind of flat, but you
Speaker 3: just said one hundred and twenty seven billion, So it's
Speaker 3: been growing at record highs. California wildfires maybe forty billion itself.
Speaker 3: The storm that we're facing here is now projected to
Speaker 3: be a billion dollars, so not as much as some
Speaker 3: of the disasters that you just talked about. But the
Speaker 3: way that we help companies and clients work with the
Speaker 3: deal with this is not just coverage. It's about building
Speaker 3: reziscy in California, wildfires in some of those places prepared.
Speaker 3: It's about preparing for it. And we have the expertise,
Speaker 3: the engineering, the insight and analytics to be able to
Speaker 3: help you take the actions to help you become more
Speaker 3: resilient and prepare for that.
Speaker 1: I'm so glad we could get you in before January
Speaker 1: was over. Thank you. Edmund Reese over at aon