Good morning and thank you for holding. Welcome to Aon plc's First Quarter 2019 Earnings Conference Call. [Operator Instructions]. I would also like to remind all parties that this call is being recorded. If anyone has an objection, you may disconnect your line at this time. It is important to note that some of the comments in today's call may constitute certain statements that are forward-looking in nature as defined by the Private Securities Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. Information concerning risk factors that could cause such differences are described in the press release covering our first quarter 2019 results as well as having been posted on our website. Now it is my pleasure to turn the call over to Greg Case, CEO of Aon plc. You may now begin.

Thank you, and good morning, everyone. Welcome to our first quarter 2019 conference call. Joining me here today is our CFO, Christa Davies. In addition, we have our two Co-Presidents, Eric Andersen and Mike O'Connor, joining the discussion to help lead our Q&A session with their frontline perspective of Aon United at work. Similar to previous quarters, we posted a detailed financial presentation on our website as we focus our time of these quarterly calls to provide you more insight into the longer-term view for the firm. I'd like to start today by acknowledging the tremendous work of my Aon colleagues around the world. Their collective efforts continue to strengthen the firm and create long-term momentum, reflected through positive performance across our key metrics in the first quarter, including 6% organic revenue growth, reflecting a strong start to the year, with an increased rate of growth across all solution lines; substantial operating margin expansion of 190 basis points; 8% operating income growth; and double-digit or 11% growth in EPS, overcoming meaningful FX headwinds. Our strong start to 2019 is a direct reflection of initial success from the strategic actions we've progressively taken to drive Aon United. As we've discussed previously, we've been laying the foundation for Aon United for over a decade, evolving our portfolio, investing in new content and capability and increasing our relevance with clients. In 2018, we took major steps to reinforce and amplify this progress through structural changes that broke down barriers and began to make it easier to deliver the best of the total firm to clients: 1 brand; 1 leadership team; 1 P&L to deploy capital against; 1 operating model under Aon Business Services; and most compelling, a new united global professional services firm, all focused on increasing our relevance and strengthening our ability…

Thanks so much, Greg, and good morning, everyone. We delivered a strong operational and financial performance in Q1 to start the year. Q1 results were highlighted by strong organic revenue growth that translated into operational improvement, while funding significant investment across the firm and overcoming an unfavorable near-term impact from FX translation. As I further reflect on the quarter, first, organic revenue growth accelerated 6%, continued improvement compared to our historic trend as we deliver on our goal of mid-single-digit or greater organic revenue growth over the long term. In addition to accelerating organic revenue growth, discipline around capital allocation continues to shape the portfolio towards our highest growth and return opportunities as highlighted by the divestiture of certain businesses in our talent practice after the close of the quarter. While financials were not disclosed, the divestiture of these businesses provides Aon with capital that can be reinvested, while enabling the buyer to create value for clients. Second, we delivered solid operational performance with total operating income growth of 8%, operating margin expansion of 190 basis points and double-digit earnings growth. As we noted in the earnings material, FX was modestly worse than previously anticipated due to a stronger U.S. dollar, resulting in a significant net unfavorable impact of approximately $0.13 in the quarter or a $38 million impact on operating income. Looking beyond 2019 and our restructuring initiatives, organic revenue growth portfolio mix and ongoing productivity improvements are expected to drive continued operational performance and long-term core margin expansion annually, similar to the 70 to 80 basis points of operating margin improvement achieved annually over the last decade. We continue to successfully execute our restructuring initiatives, with $45 million of incremental savings in the quarter before reinvestment, placing us well on track to deliver on our total commutative savings…

[Operator Instructions]. Speakers, our first question is from Dave Styblo of Jefferies.

I just want to take a look back at the margins here for a second. And so the restructuring savings accounted for 140 basis points of the 190 basis point margin expansion year-over-year, which leaves about 50 basis points related to more core expansion. And I think you guys have typically characterized that that's net of reinvestments in the business. So I just want to make sure I've got those moving parts right. And then, if you could direct actually talk about maybe how large those reinvestments were this year? And if there's anything else impacting the margin line, including FX, did that affect the margin at all this quarter?

Dave, as we think about it, it was a terrific margin expansion, total margin expansion in the quarter, 190 basis points. As you highlighted, we have been investing significantly back into the business into high-growth, high-margin, high-return-on-capital areas. That was significant in 2019 Q1 as it was for the whole year of 2018. And so what you're seeing with the restructuring savings of 140 basis points contributing and then your core. The core is really net of significant investments in the business. And so we really think about this, Dave, as 190 basis points of margin expansion. And then I did mention in my prepared remarks, for the last 10 years, we've delivered 70 and 80 basis points a year of core margin expansion, and we expect that trend going forward post the restructuring. So we're very excited about the margin expansion in the quarter and for the calendar year 2019 outlook.

Sure. Okay. And then just on the reinsurance. Maybe taking more of a longer-term approach and understanding how the sales reorganization is helping that business to whatever extent it might be, but obviously, the business has been running in the high single digits organically for a year plus now, which obviously is quite strong relative to historical levels. I'm wondering if you can talk about if there's -- how durable that business is. Oftentimes when we see growth that high, we think of one-off items maybe being spiked out and helping it, but it's been consistent for a longer period of time at this juncture. So maybe you could talk about some of the underpinnings of the market there from what you're seeing in the pricing side to capital supply to demand.

Dave, I appreciate your raising the question. I think, actually it's inappropriate really to talk, even without Reinsurance, for sure, but more broadly about really the drivers of growth in Reinsurance because they really are consistent across what's happening across the portfolio for Aon. We need to step back and think about it. And Reinsurance colleagues did a phenomenal job and have for quite some time in the core treaty business, the fact business and what we're doing on insurance like securities as well. But if you think about consistent with Aon growth overall, the team is really doing a great job. The solution lines -- every solution line we have is up over the comparable period from the prior year, and this is the third consecutive quarter with Aon at 6%. So there's a lot going on here, and it's not driven by one-offs, it's not driven by market conditions. It's driven by, fundamentally, sort of how we're approaching the market frontline, client, leadership and the commitment really to Aon United. And it really is bringing the best of our firm to our clients, innovative things that are happening that haven't happened before. And we're strengthening our ability to scale that innovation more effectively across the firm. And as I described in my comments, in essence, if you think about the core markets we operate in, these are markets with high recurring revenue, strong client retention, and fundamentally, the demand is up. And we still operate in a world in which we don't serve clients in a complete way. We, as the industry, and all of us have opportunities, and we're trying to take advantage of that. So these are core markets with great opportunity. And then our investments that Christa just alluded to, both organic and by acquisitions, are really focused on higher growth demand areas from clients: cyber, IP, delegated, health, talent, et cetera. And in the end, what happens here is we're expanding markets and we're increasing relevance. And in doing so, we're winning more with clients, more with existing clients where our rollover is high -- at the highest levels and improving. We're winning net new clients, where new business generation is as high as it's been and improving. And again, we're back to creating net new areas to serve clients. Think about mortgage, ACT, delegated, health exchanges, World Bank, cat bond, MVG. And if you think about it, all of these areas really connect back to data and analytics. It's an absolutely vital piece of that overall equation. But maybe -- again, just because this idea of growth is so fundamental to what we're doing, Eric and Mike, let's go through a couple of examples that will sort of bring to life what's really different and what's really driving the fundamental underlying growth.

Sure, Greg. Why don't I kick it off and then Mike can follow. But just staying with the reinsurance theme, one of the areas where we're really focusing our teams is being able to use our data and analytics capability to be able to provide actionable insight for our clients, whether insurance or reinsurance partners. And one of the key areas is, by providing that insight, they're able to alter their strategy. They're able to look closely at their capital allocation capability around how they drive product and the geographies, et cetera. And just to maybe pick a simple example, we're working with 1 reinsurer who had some challenges in their property portfolio and we were able to use our world-class capabilities along with our team to be able to help them understand what was going on inside the portfolio and then make decisions around how they entered the market, where they entered the market and how they allocated capital towards those risks. So it affected their strategy as well as affected their capital allocation strategy, and honestly, created a great result for them.

I mean, a fundamentally different kind of conversation than we've had before, beyond the placement, it was about the corporate strategy of the firm.

Ultimately, the placement is the last thing that we're doing. It's all the work that's done upfront around helping them understand what the risks are and how it's working, and then, how do you allocate capital to those risks.

Look, Mike, do you want to throw one in?

Yes. I mean, Eric covered risks, so maybe I'll touch on other parts of our business. And a recent example that I thought was quite good, actually, and I found it inspiring. We had a client in the technology services space which we were serving across risk and health, doing a great job, great client. But the team stepped back in a really Aon United's fashion and said, "What's the biggest challenge that this client has?" And the biggest challenge this client has was talent. The growth of that firm, the growth of this client, the success of this client is going to depend on can they actually attract and retain talent. So our team said, "What can we do to help?" And we rallied. We brought together colleagues from health. We're brought together colleagues from talent rewards. We brought together the whole firm and sat with this client and said, "What can we do differently?" And we reached back and grabbed the data and analytics that we have in all these practice areas and said, "Can we use this to actually improve performance?" And on the health side, last year, we rolled out a set of tools, and we called it Aon Architect, which we built in our innovation center in Singapore. And that doesn't happen without bringing together our actuarial team, our data scientists and our practitioners to say, "Can we pull together all the data, all of our experience from around the world and house it and use it?" And what we ended up building was a cloud-based, data-driven machine learning tool, which has an algorithm that draws upon all that data that says, "If a client gives us sort of parameters that they want to build their health program around, can we optimize it? Can we…

Okay, I know a little bit of an extended answer, but we wanted to give you a sense on sort of, again, back to the spirit of what we're trying to do with these calls, this is about the long-term future of the firm and what we're trying to accomplish fundamentally underpinning everything we're doing from a growth standpoint, starts and stops with clients, and it is really a much, much broader approach and picture than anything we've ever taken before. So hopefully that gives you some background.

Our next question is from Elyse Greenspan of Wells Fargo.

My first question, just on the free cash flow that you guys saw in the quarter. I know that Q1 is typically your low -- lower cash quarter, but you did have a legacy litigation-related payment. Was this contemplated when you guys had set kind of the double-digit growth on an adjusted free cash flow basis for the year? And you can just kind of give us an outlook on the growth trends over the remaining 3 quarters.

Thanks, Elyse. Yes. We definitely are on track to double-digit free cash flow for the full year 2019, and legacy litigation was encompassed in that guidance, Elyse. And what we would say is exactly what you said about Q1. It's our seasonally smallest this quarter. We had big outflows of cash. We always have big outflows of cash in Q1 due to annual incentives. In this quarter, we had additional outflows of cash related to legacy litigation and restructuring. And so what you see is we're on track to double-digit free cash flow for 2019. And we're really excited about the free cash flow growth over the course of '19 and particularly '19 and '20, given the declining uses of cash in restructuring CapEx and pension adds $620 million of free cash flow just in the next 18 months.

Okay. And then in terms of organic. Last quarter -- last Q1, sorry, there were some timing where some business in a few of your segments had shifted from the Q1 to Q2. Was there any kind of timing impact on organic this first quarter that we should think about when thinking about Q2 or any other quarters of the rest of the year?

There really wasn't, Elyse. And so we described before the fundamentals of the drivers of growth are what we're talking about in terms of how we're interacting with the clients and the things we're bringing to the table. So there is no -- there was nothing that affected it in Q1.

Okay. Great. And then in terms of you guys mentioned you've done some acquisitions that have helped your organic growth. As we sit here today, can you just give us an updated view on the deal flow that you see out there and types of things and sizes and geographies of deals that you guys are looking at and contemplating?

Yes. I mean, Elyse, we are incredibly excited about our M&A pipeline. It is the largest we have had in the company's history. I think I mentioned that on the Q4 call. And it is 100% focused on our highest revenue growth, highest margin, highest return on capital areas. It mirrors the areas we have been investing in organically and inorganically in the last couple of years. So it's things like data analytics, health elective benefits, Affinity, delegated investment management, cyber, intellectual property. And so we're incredibly excited about the M&A pipeline, Elyse. Having said that, we continue to be really disciplined about return on capital. And I would say, on a return on capital basis, that's exactly how we allocate cash across the firm. And share repurchase remains the highest return on capital across Aon. And so we're very excited about the share repurchase outlook for Aon in the balance of the year.

And these are really starting, Elyse, as we think about sort of these opportunities, these are opportunities to bring in content capability that we can scale. This is back to kind of the data and analytics piece that we've talked about in terms of how we take this and how we actually broaden it out from a client standpoint. Or actually, we're seeing action now. We're seeing clients who've asked us for this kind of insight. And that's a direct response to that are some of these acquisitions that we've done to bring in content and capability. And particularly as you think about some of the things that we've done in cyber and things that we've done in the health side and the talent side and the risk side, they've really started to make a difference. Again, just in the spirit of the call, a couple of examples sort of come to mind, I was thinking about, Eric, we talked about it a couple of days ago, maybe we share it with the group and [indiscernible].

Sure. There was a -- Sure, Greg. There is a -- just a quick story just to underscore some of the points around how we're trying to globally integrate and use all the different solution lines to drive new outcomes for clients. We had a large European manufacturer who had a sizable Latin American presence but was having volatile challenges around the pricing of their health care for their employees in Latin America. And we were able to use the European client leader, the Latin American teams, who then drew upon the global solution capabilities. And we were able to provide a solution that reduced the volatility and helped them better manage the outcome, with an added benefit of being able to actually collect the health data on their Latin employees, which will ultimately give them the tools that they need to improve wellness. And so that ability for our own employees to be able to work collectively like that, really exciting for them and really gets them going. So it's been a -- was a great example, I thought.

Again, Elyse, trying to help you understand, this is really about content we scale, and when we scale it and it responds to client needs that's -- and we're taking an approach which is fundamentally different around bringing colleagues together in unique groups. These are the kinds of outcomes driven by clients. So that's really what's driving our acquisition appetite.

Our next question is from Greg Peters of Raymond James.

I'll take a swing at two questions. First, in your comments, you talked about organic growth driving margin expansion beyond 2019. I think you mentioned, if you look over the last 10 years, you have an annual average increase of 80 bps to 90 bps. I'm just curious if you guys have a view about any type of structural ceiling that might exist on margin expansion, considering that many of your competitors are running at lower margins?

Thanks so much, Greg, for the question. What I would say is we see substantial margin expansion over the long term for Aon, really driven by 3 key things. The first is accelerating organic revenue growth. The second is a mix shift to higher growth, higher margin businesses. And the third is the productivity we're building into the business through the Aon operating model, driven by ABS. And to your kind of margin ceiling question, one of the things that we're observing is as -- due to the investments we made in data and analytics, $400 million a year for the last 11 years now, we are getting greater operating leverage in the business because we're really driving greater value for clients. And data analytics is at the heart of that and these data analytics solutions are having a huge impact on clients in terms of the value they provide.

If you really back into it, Greg, and thinking about sort of the definition of client need and how we respond to client need, in the examples that Eric and Mike have gone through today really aren't traditional examples. They're sort of net new examples that are out there. And they're very high value-added examples with content and capability that really create a way for us to add value in ways that clients recognize and, frankly, we get paid for because we're adding meaningful value to clients. And for us, we think there's -- this is a massive opportunity. Again, back to the growth drivers in the quarter. It's both kind of net new opportunities. We're creating new markets. You think about what we did in mortgage, that's net new market. What we're doing in cyber, taking a $4 billion business and driving it forward to more of a -- hopefully, a $10 million, $20 million, $30 million, $40 million, $50 million, 100 -- $100 million business over time. This is a very, very substantial net new opportunity. So for us, as we add value to clients, we believe we're going to continue to be compensated for it and margins are going to continue to go up.

Okay. I realize your health business is a global business. And it also, in the U.S., there's been a lot of attention around the political arena and recently Medicare For All. And I'm curious about your perspective on the health business in North America. I know you guys have been a leader in a bunch of different initiatives, including private health insurance exchanges. And considering the political landscape is changing, I'm curious about your long-term perspective on that business.

For us, health comes back, as does everything else, to clients and client need. And when you think about sort of what's really happening with all these different options, are we fundamentally addressing questions around our -- is the population becoming healthier and are we decreasing the premium or cost of health care. And really nothing is addressing that at this point in time. But if you think back to your broader question, start with Aon, we've got a -- the broadest set of solutions globally serving clients of all sizes, segments, industries, the full spectrum of funding choices out there. As you said, roughly half our business is outside the U.S., including, frankly, very, very productive strong growth in areas that support clients today in existing single-payer systems like the U.K. and Canada. So let's assume that all happened, we've operated extremely successfully in those markets. Why, because were helping companies help their employees succeed and do better on the health side. And that demand is going to continue and we can succeed in that marketplace. Our U.S. business, as what you could describe it, is really broken into two pieces. One, addressing the question you're asking specifically, clients who -- advice and solutions for medical and dental. And the other, serving clients with advice and solutions around voluntary benefits, executive benefits, global benefits, et cetera. So we see a tremendous opportunity to help clients help their colleagues or help their employees on this really, really difficult topic of health. We will always come back to if we can help clients inject choice, transparency and accountability for their employees, we're going to improve the situation, and we are very confident that we're going to have success in whatever end state sort of that ends up. I would also observe, if anything this monumental, and obviously, it would be monumental, happened, the transition also creates massive client uncertainty and ambiguity, which we would be in the breach trying to help them sort through. So in the end, we are very confident in the end state, and we're confident in the transition.

Our next question is from Mike Zaremski of Credit Suisse.

First, I have a follow-up. In terms of the Intellectual Property Solutions and mortgage, which are areas that Aon is pioneering insurance demand for. What do you estimate is the size of insurance for those lines of businesses today. And maybe you can help us frame how to think about their long-term potential size.

Well, let's start, actually, with intellectual property. I think it's a good one to start with. Because, again, back to the whole idea sort of net new on the horizon, step back in time and think about kind of intellectual property has always been out there, but in 1975 it was 20% to 25% of the overall kind of assets on the balance sheet. Today, it's more like 80% plus. And if you asked the question, how has our industry responded, how have we helped clients think about that? And the answer is it's actually quite, quite limited. This is why -- back to kind of our New Ventures Group identified this as a priority area. We've got assets around this focused in ways we never have before. We're doing things to help clients understand how do they value their intellectual property, how do they think about it, how do they assess it. We've also helped them understand sort of how to benchmark it and understand how they create value against it , and obviously, how you protect it around liability, cover for patent copyright, trademark infringement, et cetera. Thinking about IP as collateral. If it's truly an asset, how do you actually get value out of it? And then, if someone does something bad to you, if they steal it, how do you protect yourself against it. So for us, this is a -- we think, a massive emerging opportunity, largely underserved. And I want to be really clear, we've got -- we're in the market now. We've got clients, ready-made clients sort of that we're actually doing real work with in a very meaningful way. Again Eric and Mike, you guys are living this every day at the front line. Pick a couple that you think are interesting to talk about.

Sure Greg, maybe I'll start. And then Eric, if you have any that you want to add on. I mean I think this, as, Greg, you noted it, if you think about IP and step back, the reality is this is relevant to all our clients all around the world. And when you actually start to engage with the clients around it, you realize that this needs to be top of the agenda for a lot of those clients. And I'd just use one example, a very sophisticated financial services organization, we sat down and talked to them with our IP Solutions team, and it was really interesting. The dialogue really was in two buckets. One was around offense and one was around defense. On offense, that firm is literally spending their time and their IP organization within it just thinking about how do they actually define the spaces where the business can grow. How do they actually map the landscape. And we were really engaged in a strategy conversation. We were talking to them about what their current IP was, how strong their portfolio was and where there was whitespace. And that, to me, is really interesting in building really strong client relationships. And that's all about their offense, how they get stronger as a firm, how they grow. Then we flip over and talked about defense. That team, internally, had a responsibility in that client to defend the IP they had to basically make sure they were actually managing risk. And that quickly turned to how do we actually think about the risk they have. How do we quantify that with them, and then ultimately, do we transfer some of that. And last year, we stood up an industry leading IP liability solution in London. And the client quickly said, "This now is relevant. The capacity you've brought, the sophistication of the underwriting community that you've brought together is different than it has been in the past." And it quickly led to, we should transfer more risk. And to me, that's a perfect example of us engaging with clients in an Aon United way, helping them play both offense and defense.

So again, so you see us, Mike, there from that standpoint, how many companies around the world have this issue? We would say most. What are the real solutions in the market today that help them address it? And they're minimal. And so, we see this is a true kind of emerging area that we think could be substantial. Just quickly on mortgage. If you think about it, once upon a time, mortgages sort of were funded and originated in a certain way. We had some trauma in 2007, 2008, 2009, created some need. We came in and actually helped bring insurance capital to bear on behalf of the U.S. mortgage instrument, which is the single largest financial instrument in the world, and in creating what literally is, over time, a market that's greater than $10 billion in premium, really phenomenal, and it was really on single-family. And we are about to sort of roll that now into multifamily sort of in the next wave of that. So these are opportunities that bring real solutions, reduce volatility, bring real pricing insight into this marketplace and another example of where you can bring insurance-linked capital sort of to bear on behalf of a client to reduce volatility or to improve operating performance.

Okay. That's helpful. One follow-up. In February, the U.K. Financial Conduct Authority published their wholesale broking practice study and essentially okayed the industry's practices for most part. Do you feel that will speed up the trend towards risk facilities?

Yes. We don't really look at it that way. In essence, what -- the market overview, the work that was done, frankly, for us, just reconfirmed what we see every day. This is a highly competitive market, a transparent market. Our focus, our objectives remain exactly the same. And that is to match capital with risk around the world in any way we can. And that's traditional-based capital from the insurance world but also the nontraditional capital as well. And so for us, it really didn't change our point of view in any way, shape or form. We are absolutely focused on helping clients understand, measure and mitigate risk and bringing to bear solutions in any way we can. So really it didn't change anything.

Our next question is from Brian Meredith of UBS.

I'm just curious, Eric and Mike, I'm wondering if you could talk about what's going on in the commercial P&C market, particularly E&S? There's been a lot of discussion recently that things have kind of really picked up with respect to pricing in E&S markets, given some stress at Lloyd's and other carriers. Are you seeing the same things? And kind of what's your take on what's going on in the market right now, commercial market?

Just quickly, Brian. So I will come back on pricing. Same conversation we've had really for the last number of quarters. When you think about pricing overall as it relates to sort of the results for us and where we are, pricing has had minimal marginal impact, if at all, really, from the standpoint of sort of how it's affected us. This is really about market impact overall. It's insured values and pricing on top of it. And the pricing piece has really been -- it's been marginal. The fundamentals of growth, from our standpoint, really have to do with the factors we've talked about in the call today. It really is around sort of the underlying things we do with clients every day, and that's really what's driving overall performance. And sort of that's the overall market view. Eric or Mike, anything else you'd like to add to that?

The only thing I would add to it, Greg, is that we take a client-by-client approach, and they look at their own risk portfolio and their own risk program. A lot of work goes into risk managing as opposed to risk transferring. But ultimately, when they risk transfer, they make the best trades for them. That make sense?

And I think the only thing I'd add, Eric, is we've enabled our field with data and analytics to basically dive deep into each client and be able to actually represent that effectively. And the second part is we have a global network. We will find the right solution and match capital with need wherever it is in the world.

Great. And then Greg, my second question, I just noticed in the presentation you talked about double-digit growth in China health care. Could you just give us a sense of where you are in China? How big is that as a percentage of your kind of overall business? And kind of what are the opportunities there for you all?

There's a tremendous set of opportunities there, Brian, as you might expect. We've been in China for well over a decade, a very successful joint venture sort of in China with our joint venture partner, COFCO, and a tremendous opportunity. And we're making substantial investments. In fact, our New Ventures Group is focused on China as one of the key areas we're looking at. And we see the opportunities, by the way, on the risk side. We see opportunities on the health side, on the talent side, on the retirement investment side. So it really is across the board. And while not a big part of the overall results today, we see tremendous promise going forward much like intellectual property, not a big part of the results but with huge, huge upside and opportunity for us going forward, and China continues to be a big focus.

Our next question is from Josh Shanker of Deutsche Bank.

Two questions basically around the same area. I'm trying to just get a better sense of understanding how your working capital needs are going to change with regards to a cash flow over the next 9 months and into the 2020 year? And also, looking at the market rally in the first quarter of the year, trying to understand how to think about contributions to pensions above expenses in the income statement.

Sure, Josh. Firstly, on working capital. We see opportunity for improved cash flow from working capital. As I've said it previously, we've got about $500 million of excess receivables in working capital sitting on our balance sheet. We do believe that we're going to get to working capital neutral over the long term. And so there's about $500 million of excess cash coming from working capital over that period of time. So we do see the opportunity to improve cash flow from working capital. There's no need for increased working capital, if that was really your question. And then on pensions, you can see on Page 24 of the presentation. Our pension contributions are coming down significantly. You saw, in 2018, which is the peak year of pension contributions, $252 million. They're coming down to $117 million in pension cash contributions by 2020, so a substantial drop. And obviously if interest rates were continued to rise, the impact of the discount rate, you could see that come down even further.

Our next question is from Andrew Molloy of Bank of America.

My question follows Elyse's question really and is really focused on financial and balance sheet policy. We've seen a pickup of debt financed M&A in the space recently and wanted to know your thoughts and philosophy on the M&A pipeline using balance sheet to finance the potential deal flow and commitment to the 2 to 2.5 leverage rage that's in your presentation.

Great. Thanks so much for the question, Andrew. Our current investment grade rating is incredibly important to us. We do have opportunity for more debt, as I mentioned in my prepared remarks, given growing EBITDA are driven by growing revenue, operating leverage, disciplined expense management and decreased restructuring expense keeping leverage levels the same. We think about the right leverage levels as debt-to-EBITDA in the 2.25x on a GAAP basis. So we absolutely see the opportunity for increased debt as EBITDA grows, but leverage will remain the same. And as I mentioned in terms of how we utilize the substantial free cash flow we're going to generate, we're deploying that on a return on capital basis. And we're optimizing share repurchase, organic investment and M&A based on return on capital. Share repurchase remains our highest return on capital opportunity across Aon given our free cash flow valuation of the firm.

And your last question is from Sean Reitenbach of KBW.

Obviously, Aon has posted strong organic growth recently. Would organic growth or margin expansion, for that matter, be stronger without Brexit as an overhang?

Yes, Sean. When you think about Brexit, it has tremendous, obviously, trauma and implications for our clients around the world, and we've gone to great pains and efforts to sort of protect them sort of in, frankly, whatever scenario. And if you know, then let us know what that's going to be, but we've protected every scenario around that on behalf of our clients. It's been an added expense for us, no doubt about that, added level of investment, and frankly, has drawn attention from our senior leaders down to our frontline leaders in every way. But net-net, we want to be prepared for our clients, and we're going to work through it in every way we can. For us specifically, we feel very good about our ability to work around that.

Okay. That's helpful. And then, finally, on share repurchases have decelerated it looks like each quarter since first quarter '18. I know you have mentioned it as your highest return on capital investment, so just wondering what's driving the deceleration whether you expect it to pick back up for the rest of 2019.

Thanks for the question, Sean. We certainly do expect it to pick back up in the balance of the year. And as we think about Q1, it's our seasonally smallest cash flow quarter. We traditionally have big outflows of cash on our annual incentives in Q1. And this Q1 specifically, we had additional cash outflows on legacy litigation and restructuring. We are on track for double-digit free cash flow for 2019, and share repurchase remains our highest return on capital opportunity, so you'll see share repurchase pick up for the balance of the year.

Thank you. I would now like to turn the call back over to Greg Case for closing remarks.

I just wanted to thank everybody for joining us this quarter and look forward to our discussion next quarter. Thanks very much.

Thank you and that concludes today's conference. Thank you all for participating. You may now disconnect.