Aon (AON.US): 3Q26 Wrap: Strong Results in Challenging Environment

Increasing EPS estimates slightly, no change to price target and Overweight rating. Although USI will be dilutive to earnings and cash flow in the near term, we think Aon's stock is attractively valued on this reduced earnings base, and longer term we see USI as being accretive to Aon's middle market franchise. AON reported 3Q26 results on 10/28/26 and hosted its earnings call the same day. Raising EPS estimates slightly: 4Q26 from $4.56 to $4.50, 2026 from $17.98 to $18.16, and 2027 from $18.87 to $18.98. For 4Q26, our model reflects higher interest expense (related to the timing of USI's close and Aon's delayed loan draw) and lower organic growth in the reinsurance segment; for 2027 and onwards, our model reflects less of a headwind from currency. 3Q26 summary: organic growth better than expected, margins slightly higher. Adjusted EPS was $3.36, ~8% above our $3.12 estimate and ~2% higher than consensus of $3.31. Adjusted operating income was $1,106 million, ~4% better than our $1,06