J.P. Morgan: Aon’s third-quarter results beat expectations, while USI acquisition weighs on near-term earnings

Where did third-quarter results outperform?

Aon’s third-quarter revenue was 4.101 billion dollars, up 2.6% year on year, above JPMorgan’s forecast of 3.962 billion dollars and slightly above the market consensus of 4.084 billion dollars. Revenue in all four business lines—commercial risk, reinsurance, wealth and health—exceeded the bank’s expectations.
Adjusted operating profit was 1.106 billion dollars, above the bank’s forecast of 1.064 billion dollars; the adjusted operating margin was 27.0%, 0.1 percentage points above both the bank’s estimate and the market consensus.
Adjusted earnings per share were 3.36 dollars, approximately 8% above JPMorgan’s forecast of 3.12 dollars and 2% above the market consensus of 3.31 dollars. Interest and other non-operating items combined were also slightly better than the bank’s model predicted.

JPMorgan raised its adjusted earnings-per-share forecast for 2026 from 17.98 dollars to 18.16 dollars, and its forecast for 2027 from 18.87 dollars to 18.98 dollars; forecasts for 2027 and beyond face less currency-related drag, while margin assumptions are broadly unchanged.
The bank also cut its fourth-quarter 2026 earnings-per-share forecast from 4.56 dollars to 4.50 dollars, citing higher quarterly interest expense associated with the completion of the USI transaction and the timing of Aon’s delayed loan drawdown, as well as lower expected organic growth in reinsurance.
The bank expects Aon to prioritize reducing leverage and therefore assumes smaller buybacks for most of 2027; the company made no share repurchases in the third quarter.

Aon completed its acquisition of NFP in 2024 and announced the USI acquisition in August 2026, with completion expected in the fourth quarter. JPMorgan believes the two deals can help Aon expand through organic growth and acquisitions in the US middle market, where it previously lagged peers.
The bank expects USI to weigh on Aon’s earnings and cash flow in the near term but support its middle-market business over the long term. Aon’s adjusted margin is now above its level before the NFP acquisition, giving the bank greater confidence in the company’s ability to integrate lower-margin middle-market acquisition targets.
The realization of synergies affects this assessment: management expects the USI deal to generate approximately 373 million dollars in adjusted EBITDA synergies by 2028, including 93 million dollars from revenue synergies and 280 million dollars from cost synergies. Earnings forecasts could come under pressure if synergies fall short of expectations, or if USI’s pre-acquisition low-single-digit organic growth and margin of around 25% deteriorate after the acquisition.

JPMorgan maintained its Overweight rating and December 2027 price target of 362 dollars, based on 17 times its 2028 adjusted earnings-per-share forecast. The bank believes Aon’s valuation remains attractive even when measured against earnings after the near-term drag from USI.
The bank expects Aon’s organic growth to slow but remain above that of most peers; its margin expansion forecast depends on restructuring savings and operating leverage from day-to-day operations. Earnings forecasts could face downside pressure if slowing organic growth weakens operating leverage or actual savings fall short of assumptions.