AON: AI Risk Solutions Will Drive Future Upside In Insurance Services

The analyst price target for Aon has been trimmed modestly to about $399 from roughly $401, as analysts balance slightly higher long term earnings estimates and solid Q3 execution against tempered sector expectations and a mixed risk/reward backdrop.

Analyst Commentary

Street research reflects a sharply divided view on Aon, with some bullish analysts highlighting solid execution and emerging growth drivers, while bearish analysts emphasize limited upside to current valuations and lingering sector headwinds.

Bullish Takeaways

Bullish analysts point to an improved risk reward profile following a solid Q3, arguing that resilient earnings and operational delivery support a premium multiple relative to broader insurance peers.
Recent upward revisions to medium term EPS estimates, even if modest, are seen as evidence that underlying earnings power is still being underestimated by the market.
Exposure to capital markets activity and potential data center related projects is framed as an incremental growth engine that could support mid single digit to high single digit revenue growth.
Commentary that Q3 was a relatively calm loss season, with limited catastrophe impact on earnings, supports the view that Aon can convert stable fundamentals into steady margin and cash flow expansion.

Bearish Takeaways

Bearish analysts argue that, even with slightly higher out year EPS forecasts, the current share price leaves limited room for upside relative to their reduced target values, which in turn constrains near term total return potential.
Some see the sector underperforming the broader market and note that mixed stock price performance after Q3 highlights investor skepticism around the durability of growth and pricing power.
Concerns persist that, despite benign recent catastrophe activity, macro uncertainties and uneven fundamentals across global P&C markets could limit multiple expansion.
The decision to maintain cautious ratings despite earlier target price increases reinforces the view that Aon is fairly valued on a risk adjusted basis, with perceived better opportunities elsewhere in insurance services.

What's in the News

OpenAI has turned to Aon to secure up to $300 million in specialized insurance coverage for AI related risks, underscoring growing demand for bespoke risk transfer solutions in the artificial intelligence sector (Financial Times).
From July 1, 2025 to September 30, 2025, Aon repurchased 690,593 shares, or 0.32 percent of shares outstanding, for approximately $250 million, as part of its ongoing capital return program (company disclosure).
Since the buyback authorization announced on April 19, 2012, Aon has repurchased about 174.2 million shares, representing 66.8 percent of shares outstanding, for a total value of roughly $25.9 billion (company disclosure).

Valuation Changes

Fair value has decreased slightly to about $399.37 from roughly $400.50, reflecting a modest reduction in intrinsic value assumptions.
The discount rate is essentially unchanged at approximately 7.34 percent, indicating no material shift in the risk profile applied to future cash flows.
Revenue growth expectations have edged down marginally to about 5.05 percent from roughly 5.06 percent, signaling a slightly more conservative top line outlook.
Net profit margin has increased very slightly to approximately 19.40 percent from about 19.40 percent, implying a negligible improvement in long term profitability assumptions.
Future P/E has declined modestly to roughly 27.21x from about 27.28x, suggesting a small compression in the valuation multiple assigned to forward earnings.

Strategic acquisitions and investments in middle-market opportunities and Aon Business Services are driving revenue growth and improving operational efficiencies.
Client demand for risk solutions and strategic capital allocation are expected to enhance sustainable revenue growth and shareholder returns.
Aon's revenue growth may be constrained by macroeconomic volatility, softer market conditions, higher debt, and unfavorable currency fluctuations.

Catalysts

About Aon

A professional services firm, provides a range of risk and human capital solutions worldwide.What are the underlying business or industry changes driving this perspective?

The acquisition of NFP has provided Aon with high-quality middle-market EBITDA through targeted acquisitions, which is expected to contribute significantly as the year progresses, impacting revenue growth.
Aon's 3x3 Plan and the deployment of Risk Analyzers have increased new business and improved client retention, strengthening the foundation for ongoing revenue growth and margin expansion.
Investment in priority hires and expanding Aon Business Services (ABS) capabilities are creating capacity to fund growth initiatives and drive operational efficiencies, benefiting net margins and earnings.
Despite macroeconomic uncertainties, Aon sees increased demand from clients for their risk solutions, as they navigate complex trade and economic environments, supporting sustainable revenue growth.
Aon's commitment to capital allocation, including continued leverage reduction and strategic middle-market acquisitions, is expected to enhance free cash flow growth and shareholder returns.

Aon Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Aon's revenue will grow by 5.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 15.5% today to 19.5% in 3 years time.
Analysts expect earnings to reach $3.8 billion (and earnings per share of $19.0) by about September 2028, up from $2.6 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.2x on those 2028 earnings, down from 30.4x today. This future PE is greater than the current PE for the US Insurance industry at 14.3x.
Analysts expect the number of shares outstanding to decline by 0.3% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.2%, as per the Simply Wall St company report.

Aon Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The unpredictable and turbulent business environment, including macroeconomic volatility and geopolitical risks, could impact client discretionary spending, thereby affecting Aon's revenue growth.
Tariff issues and trade complexities present significant risks for clients, potentially impacting Aon's ability to maintain steady revenue growth if clients reduce spending on insurance and risk advisory services.
Softer market conditions in Commercial Risk, particularly with April 1 property rates in the U.S. and Japan down 5% to 20%, may limit revenue growth despite efforts to offset pricing impacts with expanded service offerings.
The higher debt burden and interest costs following the NFP acquisition may pressure net margins and pose challenges in achieving expected earnings growth if cash flows don't improve as projected.
Currency exposure and a stronger dollar hurt Aon's margins in Q1 2025; such forex impacts could continue to affect earnings if unfavorable exchange rate movements persist.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $411.828 for Aon based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $451.0, and the most bearish reporting a price target of just $349.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $19.7 billion, earnings will come to $3.8 billion, and it would be trading on a PE ratio of 28.2x, assuming you use a discount rate of 7.2%.
Given the current share price of $366.38, the analyst price target of $411.83 is 11.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

AON: Future Revenue Upside Will Be Driven By Core Insurance Focus