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