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AON's PEP Touches $1B U.S. Assets & Commitments Milestone

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Aon plc (AON - Free Report) recently announced that its pooled employer plan (PEP) has reached the milestone of $1 billion in U.S. assets and commitments. Since the plan came online on Jan 1, 2021, it amassed over 40 employers providing retirement benefits to more than 30,000 workers.

AON roped in employers from a diverse mix of industries that incorporate biotech and life sciences, consumer products, energy, manufacturing, services, technology and transportation. The PEP is marked as an efficient program as it reduces employers’ 401(k) costs and workload. It enables workers to accumulate close to 11% more retirement savings, thanks to its lower fee structure than the traditional benefit programs.

Aon expects that by 2030, over 50% of U.S. employers will merge their plans into pooled employer plans. This can result in a growing demand for AON’s PEP. It is expected to reduce participant costs for employers, which can be diverted toward enriching retirement security for the employees. Further, AON plans to provide the same benefits to nonprofits in the United States. As such, it urges Congress to allow the 403(b) plan sponsors to join pooled employer plans.

This highlights AON’s ability to create products according to the needs of the clients and markets, rapidly expanding its business. Its large product portfolio and presence in different geographies enable the company to diversify its revenue sources. The company expects a mid-single-digit or greater organic revenue growth, margin improvement and double-digit free cash flow growth in 2022 and beyond.

However, despite implementing multiple cost control measures, the company's operating expenses are on the rise, which can put a dent in its profits. Also, it has been facing an unfavorable impact of forex volatility on its bottom line.

Price Performance

AON’s shares have declined 9% in the past year compared with the 10.3% fall of the industry.

Zacks Investment Research
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Zacks Rank & Key Picks

AON currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader finance space are Brown & Brown, Inc. (BRO - Free Report) , Owl Rock Capital Corporation and Ryan Specialty Holdings, Inc. (RYAN - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Based in Daytona Beach, FL, Brown & Brown sells insurance products in the domestic and international markets. The Zacks Consensus Estimate for BRO’s 2022 bottom line indicates a 5.9% year-over-year increase.

Headquartered in New York, Owl Rock Capital is a business development company. The Zacks Consensus Estimate for ORCC’s 2022 earnings signals a 6.4% year-over-year increase.

Based in Chicago, Ryan Specialty is a specialty products service provider for insurance agents, brokers and others. The Zacks Consensus Estimate for RYAN’s 2022 earnings indicates a 14.8% year-over-year increase.


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