By Walden Siew

Global insurance broker Aon is benefiting from tariff uncertainty as its roster of global clients seek guidance on how to manage global trade issues and supply chain changes under the Trump administration.

The company also is seeing a boost from greater interest in updating insurance plans ahead of the hurricane season, its chief financial officer said.

Aon CFO Edmund Reese said that while the tariff turmoil hasn't directly affected Aon's professional services business, the implementation and suspension of various tariffs have significantly disrupted various clients' supply chain and business planning, creating demand for the company's risk management consulting business.

The Wall Street Journal spoke with Reese about how Aon and its clients are grappling with trade duties, growth opportunities and megatrends in the workforce and weather. Here's a condensed and edited transcript.

WSJ: How is Aon responding to U.S. tariff policy, and what are you hearing from your global clients?

Reese: Inflation is generally positive for our top line because it means insured values are going up, so not just tariffs and cost of products, but building materials, labor costs. When you're replacing loss, the wages are going up, medical costs are going up, all asset values are going up.

Those things are typically benefits for our business because we're helping broker these assets, the risk associated with these assets within their capital, and our compensation is dependent on the value of those assets.

When I think about inflation and these items, there's a bit of a headwind to our expense space, but we're always thoughtful about cost discipline and we get over that. So the tariffs, the inflation, those things are positives for our businesses.

WSJ: Aon is holding your first investor day in 20 years this week. What are the priorities that you want to communicate?

Reese: After a long history of market performance -- any metric, shareholder returns, free cash flow, organic growth -- there was a question about whether Aon had reached like a peak or was at an inflection point. I see an opportunity for us in the next phase of growth and helping investors understand that we have an outlook for sustainable organic revenue growth, helping them understand that we can both invest and drive market expansion for strong earnings growth and strong free cash flow, what I call having higher earnings power.

WSJ: Where are you looking for growth? You've had a long history of divesting assets. Are divestitures still a big part of that story?

Reese: Investors are asking, can you continue to expand margins, and we're saying not only can we expand margins, but we can invest at the same time because of Aon business services.

We divested 16 noncore assets last year, generated three-quarters of a billion dollars. If something is lower margin but high capital intensity and doesn't have the growth rates that we want, we don't have big pockets of that anymore, but we continue to actively manage the portfolio, so you'll see us divest assets.

As I think about where we're going to grow, you might remember we have commercial risk, reinsurance, we have a health business and a wealth business. Commercial risk is growing at a mid-single-digit level, particularly on the back half of the year.

WSJ: What impact have you seen from the federal pullback on consulting services?

Reese: Like many of the sectors we serve, our government contracting clients are navigating a landscape marked by financial pressures and workforce uncertainty. Our role is to help them identify and understand their unique risk exposures, both immediate and long-term. We continue to equip them with data-driven insights that support their ability to deliver critical government services.

WSJ: You've talked about megatrends in the industry, particularly changes in the workforce and weather. What are you hearing most about from clients?

Reese: The California wildfires were like a midsize hurricane. If you continue to see the type of catastrophe losses in September that we've seen over the past couple of years, where losses have now gone up to over $360 billion, of which only 40% is insured -- $360 billion, and $145 to $150 billion of it is insured -- if you have that happening again, that creates for reinsurers in particular, who are helping insurers cover that capital, that creates some pressure. You'll likely see price increases and so the hurricane season is one that's really top of mind.

Workforce is the other big one in terms of megatrends, and all the things that are going on there with what jobs will be replaced by AI. We've seen percentages that suggest nearly 40%.

Write to Walden Siew at walden.siew@wsj.com

(END) Dow Jones Newswires

June 09, 2025 06:00 ET (10:00 GMT)

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