So, we’re very excited about the overall prospects, as we move into 2024. And maybe Eric talk a little bit about the risk capital implications of all this is coming together, and the potential around it?
Eric Andersen: Yes, sure Greg. I think certainly strong retention, strong new business, both in North America and around the world and the commercial risk business is important. But maybe I’ll use it as an opportunity to show the connectivity between sort of the risk capital framework. And maybe I’ll talk about the cat bonds that, I know you wanted to get some airtime on. We did the first-ever cyber cat bond in the quarter, which was a great opportunity for the – for our team working with one of our insurance company clients, to take the systemic cyber risks and get it into the capital markets, which does two things. It actually allows the insurer to open up the amount of limit they provide the clients, which was something that our clients were looking for.
And it also appropriately values in places that type of systemic risk into the right capital source. But the point of it is, we were then able to take that ILS structure, using the data and analytics that we did to build it, and used it to do an ILS structure for one of the largest corporates in Europe who was looking for traditional sort of cyber program, but wasn’t able to get the limit they wanted. So, taking something that we did for an insurer, using the data and analytics and structuring, bringing it to a large corporate and maybe finishing it, because Greg I know you mentioned NFP in your opening comments just to tie it through, able to take the same data and analytics that we use to build the cat bond and the corporate structure to actually power the side [ph] cue product that is built for the middle-market, which then attaches a risk transfer product to it.
So, again using data and analytics on one topic, just cyber actually to drive growth in reinsurance in commercial risk and ultimately in the middle-market, part of the commercial risk segment. So, that’s what’s driving the retention. That’s what’s driving the strong new business, and I think those opportunities exist for us across multiple areas.
Operator: Thank you. The next question is from the line of Bob Huang with Morgan Stanley. Please proceed with your questions.
Bob Huang: Hi, good morning. First question is about the Vesttoo legal settlement. Can you talk about how much of the $197 million is likely to be the full extent of the impact? In other words in the press release, you obviously mentioned there is the potential of some of that been sent back to you. What’s the progress of that? Can you maybe give a little bit more detail of how confident you are that, some of the $197 million will be paid back to Aon?
Greg Case: Listen – I would just open by saying that we strategically wanted to draw a line under this issue for our market partners and for ourselves. So that we were able to move forward together as partners. And so, the effort was made to come to an agreement with each of the affected parties, sorry. So that we could then continue to both one trade forward. But then also begin to work on recoveries together. And so, we see an opportunity for recoveries that will happen over-time, as the bankruptcy process runs its way through. And we’re confident that we’ll be able to recover meaningful amount.
Bob Huang: Okay. Thank you. Second question is on cash flow. I understand that you kind of mentioned this a little bit. Is that – on your slides, you remove the double-digit growth for the near-term, but reiterate at a long-term guidance for free cash flow. I’m assuming that it’s fair to say that is mainly due to the NFP acquisition over the next two years. Is that safe to assume that like is that the reason and can you maybe give a little bit more context in terms of, how you’re thinking about free cash flow guidance going-forward?
Christa Davies: Yes, thanks so much for the question. So firstly, I’d reiterate your point, which is we are incredibly confident in the long-term free cash flow growth of double-digits. I’m extremely excited about how NFP accelerates the long-term free cash flow growth of Aon, adding $300 million in free cash flow in 2026 and $600 million free cash flow in 2027. And look, as we think about free cash flow in 2024, we haven’t given specific guidance. But here’s how I think about it. We expect to grow free cash flow driven by operating income growth and improvements in working capital. We do expect ongoing cash tax headwinds. We’ve communicated the restructuring program, but we haven’t given specific guidance around the timing of the cash impact, and we’ve talked about the impacts of NFP.
We don’t expect to incur material costs before close. And we’ve said, we would expect to incur $12.5 million of negative interest carry expenses per quarter until deal close following the transaction-related debt issuance. We said CapEx will grow in-line with the business from $252 million in 2023. We’ve communicated legal settlements and as Eric just said, expect those to flow through over the next several years known – there will be meaningful recoveries. Ultimately, we expect to deliver underlying free cash flow growth. And we’re targeting double-digits as we move past the negative impact of restructuring and NFP, very excited about the long-term double-digit free cash flow trajectory of Aon. Lastly in 2024, we do expect a disproportionate, majority of the free cash flow to be allocated to buyback given we’re operating on a return on capital basis, and we are substantially undervalued today.
